What is the duty of guaranty associations in Hawaii?

Guaranty associations in Hawaii serve a critical role in protecting policyholders when an insurance company becomes insolvent. The primary duty of these associations is to ensure that the claims of policyholders are paid, even if their insurance provider goes out of business. This protection helps maintain public confidence in the insurance system, as individuals can feel secure knowing they have recourse to recover their claims in the unfortunate event that their insurer fails.

This function is particularly important because it provides a safety net for those who would otherwise face financial hardship due to unpaid claims. By stepping in to cover the claims of a licensed insured, guaranty associations play a vital role in the insurance landscape, promoting stability and consumer protection.

While other options might relate to the broader functions of the insurance industry, they do not accurately reflect the specific responsibilities of guaranty associations.