Who will the Guaranty Association help pay after an insolvency occurs?

The correct answer highlights the primary purpose of a Guaranty Association, which is to protect policyholders in the event that an insurance company becomes insolvent. When an insurer can no longer fulfill its financial obligations due to insolvency, the Guaranty Association steps in to ensure that policyholders are compensated for their covered claims. This function serves to maintain public confidence in the insurance system by providing a safety net for consumers who may otherwise face significant financial loss due to the failure of their insurance provider.

In this scenario, the focus is on the policyholders, who depend on the insurance policies they purchased for financial protection. The Guaranty Association typically covers claims up to a certain limit and, by doing so, mitigates the impact of the insurance company's failure on individuals and businesses.

Other options, such as stockholders, regulators, or insurance agents, do not align with the primary mission of the Guaranty Associations, which is to serve the interests of policyholders. Stockholders have invested in the company and their financial interests are separate from those of consumers. Regulators oversee the insurance market and may take actions during insolvency but do not receive payouts for themselves. Insurance agents, while they might be affected by the insolvency in terms of lost commissions