What is a primary function of the Michigan Property and Casualty Guaranty Association?

The primary function of the Michigan Property and Casualty Guaranty Association is to provide financial protection to policyholders in the event that an insurance company becomes insolvent. This association operates as a safety net, ensuring that individuals and businesses who have purchased insurance coverage are still able to receive claims payments even if their insurer can no longer meet its financial obligations.

This protection is vital for maintaining public confidence in the insurance market, as it assures policyholders that their insurance policies will be honored, safeguarding them from potential financial loss due to an insurer's failure. The guaranty association helps to stabilize the insurance market by mitigating the impact of insurer bankruptcies on insured homeowners and businesses.

The other options, while related to insurance practices, do not align with the core mission of the association. For instance, increasing tax revenue and regulating insurance premium rates are functions typically managed by governmental agencies rather than a guaranty association, while selling surplus lines insurance is a different process that involves placing coverage with non-admitted insurers.