What does the Washington Insurance Guaranty Association do?

The Washington Insurance Guaranty Association is designed to protect policyholders in the event that their insurance company becomes insolvent or goes bankrupt. This association ensures that consumers do not suffer financial losses due to the failure of their insurance providers by providing coverage for unpaid claims and other obligations to policyholders of the bankrupt insurer.

When an insurance company fails, the association steps in to cover certain claims up to specified limits, offering a safety net for policyholders during potentially distressing situations. This role is essential in maintaining consumer confidence in the insurance market and helping ensure that individuals and businesses do not face catastrophic losses due to the unexpected failure of their insurance provider.

In contrast, the other options presented do not accurately reflect the functions of the Washington Insurance Guaranty Association. Insuring fraternal benefit societies, covering health care service contractors, and managing state lottery claims fall outside the remit of what the association is established to do. Thus, the correct answer highlights the crucial protective role played by the association in the broader context of consumer insurance protections in Washington.