Chapter 158
2009 -- H 5771 SUBSTITUTE A
Enacted 07/16/09
A N A C T
RELATING TO
INSURANCE - RHODE
Introduced By: Representative Robert A. Watson
Date Introduced: February 26, 2009
It is enacted by the
General Assembly as follows:
SECTION 1. Sections 27-34.3-3, 27-34.3-8, 27-34.3-9,
27-34.3-10, 27-34.3-11, 27-34.3-
14 and 27-34.3-18 of the
General Laws in Chapter 27-34.3 entitled "Rhode Island Life and Health
Insurance Guaranty
Association Act" are hereby amended to read as
follows:
27-34.3-3.
Coverage and limitations. -- (a) This chapter shall provide coverage for the
policies and contracts specified in subsection (b) of this
section:
(1) To persons who,
regardless of where they reside (except for nonresident certificate
holders under group policies or contracts), are the
beneficiaries, assignees or payees of the
persons covered under subsection (2); and
(2) To persons who are
owners of or certificate holders under the policies or contracts
(other than unallocated
annuity contracts, and structured settlement annuities) and in each case
who:
(i)
Are residents; or
(ii) Are not residents,
but only under all of the following conditions:
(A) The insurer that
issued the policies or contracts is domiciled in this state;
(B) The states in which
the persons reside have associations similar to the association
created by this chapter; and
(C) The persons are not
eligible for coverage by an association in any other state due to
the fact that the insurer was not licensed in the state
at the time specified in the state's guaranty
association law.
(3) For unallocated
annuity contracts set forth in subsection (b) of this section,
paragraphs (1) and (2) of this subsection shall not apply, and
this chapter shall (except as
provided in paragraphs (5) and (a)(6) of this subsection)
provide coverage to:
(i)
Persons who are owners of the unallocated annuity contracts if the contracts
are
issued to or in connection with a specific benefit plan
whose plan sponsor has its principal place
of business in this state; and
(ii) Persons who are
owners of unallocated annuity contracts issued to or in connection
with government lotteries if the owners are residents.
(4) For structured
settlement annuities specified in subsection (b)(1),
paragraphs (1) and
(2) of this subsection shall
not apply, and this chapter shall (except as provided in paragraphs (5)
and (6) of this subsection) provide coverage to a person
who is a payee under a structured
settlement annuity (or beneficiary of a payee if the payee is
deceased), if the payee:
(i)
Is a resident, regardless of where the contract owner resides; or
(ii) Is not a resident,
but only under both of the following conditions:
(A) (I) The contract owner of the structured settlement annuity is a
resident; or
(II) The contract owner
of the structured settlement annuity is not a resident but the
insurer that issued the structured settlement annuity is
domiciled in this state; and
The state in which the
contract owner resides has an association similar to the
association created by this chapter; and
(B) Neither the payee
or beneficiary, nor the contract owner is eligible for coverage by
the association of the state in which the payee or
contract owner resides.
(5) This chapter shall
not provide coverage to:
(i)
A person who is a payee or beneficiary of a contract owner resident of this
state, if the
payee or beneficiary is afforded any coverage by the
association of another state; or
(ii) A person covered
under paragraph (3) of this subsection, if any coverage is provided
by the association of another state to the person.
(6) This chapter is
intended to provide coverage to a person who is a resident of this state
and, in special circumstances, to a nonresident. In order
to avoid duplicate coverage, if a person
who would otherwise receive coverage under this chapter
is provided coverage under the laws of
any other state, the person shall not be provided
coverage under this chapter. In determining the
application of the provisions of this paragraph in situations
where a person could be covered by
the association of more than one state, whether as an
owner, payee, beneficiary, or assignee, this
chapter shall be construed in conjunction with other state
laws to result in coverage by only one
association.
(b) (1) This chapter shall provide coverage to the persons specified
in subsection (a) of
this section for direct, non-group life, health, or
annuity policies or contracts and supplemental
policies or contracts to any of these, for certificates under
direct group policies and contracts, and
for unallocated annuity contracts issued by member
insurers, except as limited by this chapter.
Annuity contracts and certificates under group annuity
contracts include, but are not limited to,
guaranteed investment contracts, deposit administration
contracts, unallocated funding
agreements, allocated funding agreements, structured settlement
annuities, annuities issued to or
in connection with government lotteries and any
immediate or deferred annuity contracts.
(2) This chapter shall
not provide coverage for:
(i)
A portion of a policy or contract not guaranteed by the insurer, or under which
the
risk is borne by the policy or contract owner;
(ii) A policy or
contract of reinsurance, unless assumption certificates have been issued
pursuant to the reinsurance policy or contract;
(iii) A portion of a
policy or contract to the extent that the rate of interest on which it is
based, or the interest rate, crediting rate or similar
factor determined by use of an index or other
external reference stated in the policy or contract employed
in calculating returns or changes in
value:
(A) Averaged over the
period of four (4) years prior to the date on which the member
insurer becomes an impaired or insolvent insurer under this
chapter, whichever is earlier, exceeds
the rate of interest determined by subtracting two (2)
percentage points from Moody's corporate
bond yield average averaged for that same four-year (4)
period or for such lesser period if the
policy or contract was issued less than four (4) years
before the member insurer becomes an
impaired or insolvent insurer under this chapter, whichever is
earlier; and
(B) On and after the
date on which the member insurer becomes an impaired or insolvent
insurer under this chapter, whichever is earlier, exceeds the
rate of interest determined by
subtracting three (3) percentage points from Moody's
corporate bond yield average as most
recently available;
(iv)
A portion of a policy or contract issued to a plan or program of an
employer,
association or other person to provide life, health or annuity
benefits to its employees, members
or others to the extent that the plan or program is
self-funded or uninsured, including but not
limited to benefits payable by an employer, association or
other person under:
(A) A multiple employer
welfare arrangement as defined in 29 U.S.C. section
1144;
(B) A minimum premium
group insurance plan;
(C) A stop-loss group
insurance plan; or
(D) An administrative
services only contract;
(v) A portion of a
policy or contract to the extent that it provides for:
(A) Dividends or
experience rating credits;
(B) Voting rights; or
(C) Payment of any fees
or allowances to any person, including the policy or contract
owner, in connection with the service to or administration
of the policy or contract.
(vi)
A policy or contract issued in this state by a member insurer at a time
when it was
not licensed or did not have a certificate of authority
to issue the policy or contract in this state;
(vii) An unallocated
annuity contract issued to or in connection with a benefit plan
protected under the federal pension benefit guaranty
corporation, regardless of whether the
federal pension benefit guaranty corporation has yet become
liable to make any payments with
respect to the benefit plan;
(viii) A portion of
unallocated annuity contract that is not issued to or in connection with
a specific employee, union or association of natural
persons benefit plan or a government lottery;
(ix) A portion of a
policy or contract to the extent that the assessments required by
section 27-34.3-9 with respect to the policy or contract are
preempted by federal or state law; and
(x) An obligation that
does not arise under the express written terms of the policy or
contract issued by the insurer to the contract owner or policy
owner, including, without limitation:
(A) Claims based on
marketing materials;
(B) Claims based on
side letters, riders or other documents that were issued by the
insurer without meeting applicable policy form filing or
approval requirements;
(C) Misrepresentations
of or regarding policy benefits;
(D) Extracontractual
claims; or
(E) A claim for
penalties or consequential or incidental damages;
(xi)
A contractual agreement that establishes the member insurer's obligations to
provide
a book value accounting guaranty for defined
contribution benefit plan participants by reference
to a portfolio of assets that is owned by the benefit
plan or its trustee, which in each case is not an
affiliate of the member insurer;
(xii) A portion of a
policy or contract to the extent it provides for interest or other
changes in value to be determined by the use of an index or
other external reference stated in the
policy or contract, but which have not been credited to the
policy or contract, or as to which the
policy or contract owner's rights are subject to forfeiture,
as of the date the member insurer
becomes an impaired or insolvent insurer under this chapter,
whichever is earlier. If a policy's or
contract's interest or changes in value are credited less
frequently than annually, then, for
purposes of determining the values that have been credited and
are not subject to forfeiture under
this paragraph, the interest or change in value determined
by using the procedures defined in the
policy or contract will be credited as if the contractual
date of crediting interest or changing
values was the date of impairment or insolvency, whichever
is earlier, and will not be subject to
forfeiture; and
(xiii) Any transaction
or combination of transactions between a protected cell and the
general account or another protected cell of a protected cell
company organized under chapter 64
of this title.; or
(xiv) A policy or
contract providing any hospital, medical, prescription drug or other
health care benefits pursuant to Part C or Part D of
subchapter XVIII, chapter 7 of title 42 of the
pursuant thereto.
(c) The benefits that
the association may become obligated to cover shall in no event
exceed the lesser of:
(1) The contractual
obligations for which the insurer is liable or would have been liable
if it were not an impaired or insolvent insurer; or
(2) (i) With respect to any one life,
regardless of the number of policies or contracts:
(A) Three hundred
thousand dollars ($300,000) in life insurance death benefits, but not
more than one hundred thousand dollars ($100,000) in net
cash surrender and net cash withdrawal
values for life insurance;
(B) In health insurance
benefits:
(I) One hundred
thousand dollars ($100,000) for coverages not
considered as disability
insurance or basic hospital, medical and surgical insurance or
major medical insurance or long-
term care insurance,
including any net cash surrender and net cash withdrawal values;
(II) Three hundred
thousand dollars ($300,000) for disability insurance and three
hundred thousand dollars ($300,000) for long-term care
insurance;
(III) Five hundred
thousand dollars ($500,000) for basic hospital, medical and surgical
insurance; or
(C) One hundred
thousand dollars ($100,000) Two hundred fifty thousand dollars
($250,000)
in the present value of annuity benefits, including net cash surrender and net
cash
withdrawal values;
(ii) With respect to
each individual participating in a governmental retirement plan
established under section 401, 403(b) or 457 of the U.S. Internal
Revenue Code, 26 U.S.C.
section 401, 403(b) or 457, covered by an unallocated annuity
contract or the beneficiaries of
each such individual if deceased, in the aggregate, one
hundred thousand dollars ($100,000) Two
hundred fifty thousand dollars ($250,000) in present value annuity benefits, including net cash
surrender and net cash withdrawal values;
(iii) With respect to
each payee of a structured settlement annuity or beneficiary or
beneficiaries, of the payee if deceased, one hundred thousand
dollars ($100,000) two hundred
fifty thousand dollars ($250,000) in present value annuity benefits, in the aggregate,
including net
cash surrender and net cash withdrawal values if any;
(iv)
However in no event shall the association be obligated to cover more
than: (A) an
aggregate of three hundred thousand dollars ($300,000) in
benefits with respect to any one life
under this paragraph and paragraphs (i),
(ii) and (iii) of this subdivision except with respect to
benefits for basic hospital, medical and surgical insurance
and major medical insurance under
subparagraph 2(i)(B) of this subsection,
in which case the aggregate liability of the association
shall not exceed five hundred thousand dollars ($500,000)
with respect to any one individual; or
(B) with respect to one owner
of multiple non-group policies of life insurance, whether the policy
owner is an individual, firm, corporation or other person,
and whether the persons insured are
officers, managers, employees or other persons, more than five
million dollars ($5,000,000) in
benefits, regardless of the number of policies and contracts
held by the owner;
(v) With respect to
either: (A) one contract owner provided coverage under subsection
(a)(3)(i); or (B) one plan
sponsor whose plans own directly or in trust any one or more
unallocated annuity contracts not included in paragraph (ii) of
this subdivision, five million
dollars ($5,000,000) in benefits, irrespective of the number
of contracts with respect to the
contract owner or plan sponsor. Provided, however, in the case
where one or more unallocated
annuity contracts that are covered contracts under this
chapter and are owned by a trust or other
entity for the benefit of two (2) or more plan sponsors,
coverage shall be afforded by the
association if the largest interest in the trust or entity owning
the contract or contracts is held by a
plan sponsor whose principal place of business is in this
state and in no event shall the association
be obligated to cover more than five million dollars
($5,000,000) in benefits with respect to all
such unallocated contracts;
(vi)
The limitations set forth in this subsection are limitations on the
benefits for which
the association is obligated before taking into account
either its subrogation and assignment rights
or the extent to which those benefits could be provided
out of the assets of the impaired or
insolvent insurer attributable to covered policies. The costs
of the association's obligations under
this chapter may be met by the use of assets attributable
to covered policies or reimbursed to the
association pursuant to its subrogation and assignment rights.
(d) In performing its
obligations to provide coverage under section 27-34.3-8, the
association shall not be required to guarantee, assume, reinsure
or perform, or cause to be
guaranteed, assumed, reinsured or performed, contractual
obligations of the insolvent or impaired
insurer under a covered policy or contract that do not
materially affect the economic values or
economic benefits of the covered policy or contract.
27-34.3-8.
Powers and duties of the association. -- (a) If a
member insurer is an
impaired insurer, the association may, in its discretion, and
subject to any conditions imposed by
the association that do not impair the contractual
obligations of the impaired insurer, and that are
approved by the commissioner:
(1) Guarantee, assume
or reinsure, or cause to be guaranteed, assumed, or reinsured, any
or all of the policies or contracts of the impaired
insurer;
(2) Provide the monies,
pledges, loans, notes, guarantees or other means that are proper
to effectuate subdivision (1) of this subsection and
assure payment of the contractual obligations
of the impaired insurer pending action under subdivision
(1) of this subsection.
(b) If a member insurer
is an insolvent insurer, the association shall, in its discretion,
either:
(1) (i) (A) Guaranty, assume or reinsure,
or cause to be guaranteed, assumed or
reinsured, the policies or contracts of the insolvent insurer;
or
(B) Assure payment of
the contractual obligations of the insolvent insurer; and
(ii) Provide monies,
pledges, loans, notes, guarantees, or other means that are reasonably
necessary to discharge the association's duties; or
(2) Provide benefits
and coverages in accordance with the following
provisions:
(i)
With respect to life and health insurance policies and annuities, assure
payment of
benefits for premiums identical to the premiums and benefits
(except for terms of conversion and
renewability) that would have been payable under the policies or
contracts of the insolvent
insurer, for claims incurred:
(A) With respect to
group policies and contracts, not later than the earlier of the next
renewal date under such policies or contracts or forty-five
(45) days, but in no event less than
thirty (30) days after the date on which the association
becomes obligated with respect to the
policies or contracts;
(B) With respect to nongroup policies, contracts and annuities not later than
the earlier of
the next renewal date (if any) under the policies or
contracts or one year, but in no event less than
thirty (30) days from the date on which the association
becomes obligated with respect to the
policies and contracts;
(ii) Make diligent
efforts to provide all known insured or annuitants (for non-group
policies and contracts) or group policy owners with respect to
group policies or contracts thirty
(30) days notice of the
termination (pursuant to subparagraph (i) of this
paragraph) of the benefits
provided;
(iii) With respect to nongroup life and health insurance policies and annuities
covered by
the association, make available to each known insured or
annuitant, or owner if other than the
insured, or annuitant and with respect to an individual
formerly insured or formerly an annuitant
under a group policy who is not eligible for replacement
group coverage, make available
substitute coverage on an individual basis in accordance with
the provisions of subdivision (iv) of
this subsection, if the insureds
or annuitants had a right under law or the terminated policy to
convert coverage to individual coverage or to continue an
individual policy or annuity in force
until a specified age or for a specified time, during which
the insurer had no right unilaterally to
make changes in any provision of the policy or annuity or
had a right only to make changes in
premium by class;
(iv) (A) In providing the substitute coverage required under
subdivision (iii) of this
subsection, the association may offer either to reissue the
terminated coverage or to issue an
alternative policy.
(B) Alternative or
reissued policies shall be offered without requiring evidence of
insurability, and shall not provide for any waiting period or
exclusion that would not have applied
under the terminated policy.
(C) The association may
reinsure any alternative or reissued policy.
(v) (A) Alternative
policies adopted by the association shall be subject to the approval of
the domiciliary insurance commissioner and the
receivership court. The association may adopt
alternative policies of various types for future issuance without
regard to any particular
impairment or insolvency.
(B) Alternative
policies shall contain at least the minimum statutory provisions required
in this state and provide benefits that shall not be
unreasonable in relation to the premium
charged. The association shall set the premium in accordance
with a table of rates which it shall
adopt. The premium shall reflect the amount of insurance to
be provided and the age and class of
risk of each insured, but shall not reflect any changes in
the health of the insured after the original
policy was last underwritten.
(C) Any alternative
policy issued by the association shall provide coverage of a type
similar to that of the policy issued by the impaired or
insolvent insurer, as determined by the
association.
(vi)
If the association elects to reissue terminated coverage at a premium
rate different
from that charged under the terminated policy, the premium
shall be set by the association in
accordance with the amount of insurance provided and the age and
class of risk, subject to
approval of the domiciliary insurance commissioner and the
receivership court.
(vii) The association's
obligations with respect to coverage under any policy of the
impaired or insolvent insurer or under any reissued or
alternative policy shall cease on the date
such coverage or policy is replaced by another similar
policy by the policy owner, the insured, or
the association.
(viii) When proceeding
under paragraph (b)(2) of this section with respect to
any policy
or contract carrying guaranteed minimum interest rates,
the association shall assure the payment
or crediting of a rate of interest consistent with
section 27-34.3-3(b)(2)(iii).
(c) Nonpayment of
premiums within thirty-one (31) days after the date required under
the terms of any guaranteed, assumed, alternative or
reissued policy or contract or substitute
coverage shall terminate the association's obligations under
the policy or coverage under this
chapter with respect to the policy or coverage, except with
respect to any claims incurred or any
net cash surrender value which may be due in accordance
with the provisions of this chapter.
(d) Premiums due for
coverage after entry of an order of liquidation of an insolvent
insurer shall belong to and be payable at the direction of
the association., and If the liquidator of
an insolvent insurer requests, the association shall
provide a report to the liquidator regarding
such premium collected by the association. the The association shall be liable for unearned
premiums due to policy or contract owners arising after the
entry of the order.
(e) The protection
provided by this chapter shall not apply where any guaranty protection
is provided to residents of this state by laws of the
domiciliary state or jurisdiction of the impaired
or insolvent insurer other then this state.
(f) In carrying out its
duties under subsection (b), the association may:
(1) Subject to approval
by a court of competent jurisdiction in this state, impose
permanent policy or contract liens in connection with any
guarantee, assumption or reinsurance
agreement, if the association finds that the amounts which can
be assessed under this chapter are
less than the amounts needed to assure full and prompt
performance of the association's duties
under this chapter, or that the economic or financial
conditions as they affect member insurers are
sufficiently adverse to render the imposition of such permanent
policy or contract liens, to be in
the public interest;
(2) Subject to approval
by a court of competent jurisdiction in this state, impose
temporary moratoriums or liens on payments of cash values and
policy loans, or any other right to
withdraw funds held in conjunction with policies or contracts,
in addition to any contractual
provisions for deferral of cash or policy loan value. In
addition, in the event of a temporary
moratorium or moratorium charge imposed by the receivership
court on payment of cash values
or policy loans, or on any other right to withdraw funds
held in conjunction with policies or
contracts, out of the assets of the impaired or insolvent
insurer, the association may defer the
payment of such cash values, policy loans or other rights by
the association for the period of the
moratorium or moratorium charge imposed by the receivership
court, except for claims covered
by the association to be paid in accordance with a
hardship procedure established by the
liquidator or rehabilitator and
approved by the receivership court.
(g) A deposit in this
state, held pursuant to law or required by the commissioner for the
benefit of creditors, including policy owners, not turned
over to the domiciliary liquidator upon
the entry of a final order of liquidation or order
approving a rehabilitation plan of an insurer
domiciled in this state or in a reciprocal state, pursuant to
section 27-14.3-56, shall be promptly
paid to the association. The association shall be entitled
to retain a portion of any amounts so paid
to it equal to the percentage determined by dividing the
aggregate amount of policy owners'
claims related to that insolvency for which the association
has provided statutory benefits by the
aggregate amount of all policy owners' claims in this state
related to that insolvency and shall
remit to the domiciliary receiver the amount so paid to the
association and less the amount
retained pursuant to this subsection. Any amount so paid to
the association less the amount and
retained by it shall be treated as a distribution of estate
assets pursuant to section 27-14.3-38 or
similar provision of the state of domicile of the impaired or
insolvent insurer applicable state
insurance law dealing with early access disbursements.
(h) If the association
fails to act within a reasonable period of time with respect to an
insolvent insurer, as provided in subsection (b) of this
section, the commissioner shall have the
powers and duties of the association under this chapter with
respect to the insolvent insurers.
(i)
The association may render assistance and advice to the commissioner, upon the
commissioner's request, concerning rehabilitation, payment of claims,
continuance of coverage,
or the performance of other contractual obligations of
any impaired or insolvent insurer.
(j) The association
shall have standing to appear or intervene before any court or agency
in this state with jurisdiction over an impaired or
insolvent insurer concerning which the
association is or may become obligated under this chapter or with
jurisdiction over any person or
property against whom the association may have rights through
subrogation or otherwise.
Standing shall extend to all matters germane to the
powers and duties of the association,
including, but not limited to, proposals for reinsuring,
modifying or guaranteeing the policies or
contracts of the impaired or insolvent insurer and the
determination of the polices or contracts and
contractual obligations. The association shall also have the
right to appear or intervene before a
court or agency in another state with jurisdiction over an
impaired or insolvent insurer for which
the association is or may become obligated or with
jurisdiction over any person or property
against whom the association may have rights through
subrogation or otherwise.
(k) (1) A person receiving benefits under this chapter shall be
deemed to have assigned
the rights under, and any causes of action against any
person for losses arising under, resulting
from or otherwise relating to, the covered policy or
contract to the association to the extent of the
benefits received because of this chapter, whether the
benefits are payments of or on account of
contractual obligations, continuation of coverage or provision of
substitute or alternative
coverage. The association may require an assignment to it of
these rights and causes of action by
any payee, policy or contract owner, beneficiary, insured
or annuitant as a condition precedent to
the receipt of any right or benefits conferred by this
chapter upon the person.
(2) The subrogation
rights of the association under this subsection shall have the same
priority against the assets of the impaired or insolvent
insurer as that possessed by the person
entitled to receive benefits under this chapter.
(3) In addition to
subdivisions (1) and (2) of this subsection, the association shall have
all common law rights of subrogation and any other
equitable or legal remedy that would have
been available to the impaired or insolvent insurer or
owner, beneficiary or payee, of a policy or
contract with respect to the policy or contracts including
without limitation, in the case of a
structured settlement annuity, any rights of the owner,
beneficiary or payee of the annuity, to the
extent of benefits received pursuant to this chapter,
against a person originally or by succession
responsible for the losses arising from the personal injury relating
to the annuity or payment
therefore, excepting any such person responsible solely by
reason of serving as an assignee in
respect of a qualified assignment under section 130 of the
United States Internal Revenue Code,
26 U.S.C. section 130.
(4) If the preceding
provisions of this subsection are invalid or ineffective with respect to
any person or claim for any reason, the amount payable by
the association with respect to the
related covered obligations shall be reduced by the amount
realized by any other person with
respect to the person or claim that is attributable to the
policies, or portion thereof, covered by the
association.
(5) If the association
has provided benefits with respect to a covered obligation and a
person recovers amounts to which the association has rights
as described in the preceding
paragraphs of this subsection, the person shall pay to the
association the portion of the recovery
attributable to the policies, or portions thereof, covered by the
association.
(l) In addition to the
rights and powers provided in this chapter, the association may:
(1) Enter into any
contracts as are necessary or proper to carry out the provisions and
purposes of this chapter;
(2) Sue or be sued,
including taking any legal actions necessary or proper to recover any
unpaid assessments under section 27-34.3-9 and to settle
claims or potential claims against it;
(3) Borrow money to effect the purposes of this chapter; any notes or other
evidence of
indebtedness of the association not in default shall be legal
investments for domestic insurers and
may be carried as admitted assets;
(4) Employ or retain
persons as are necessary or appropriate to handle the financial
transactions of the association, and to perform any other
functions as become necessary or proper
under this chapter;
(5) Take such legal
action that may be necessary or appropriate to avoid or recover
payment of improper claims;
(6) Exercise, for the
purposes of this chapter and to the extent approved by the
commissioner, the powers of a domestic life or health insurer, but
in no case may the association
issue insurance policies or annuity contracts other than
those issued to perform its obligations
under this chapter;
(7) Organize itself as a corporation or another legal form permitted by
the laws of this
state;
(8) Request information
from a person seeking coverage from the association in order to
aid the association in determining its obligations under
this chapter with respect to the person, and
the person shall promptly comply with the request; and
(9) Take other
necessary or appropriate action to discharge its duties and obligations
under this chapter or to exercise its powers under this
chapter.
(m) The association may
join an organization of one or more other state associations of
similar purposes, to further the purposes and administer the powers
and duties of the association.
(n) (1) (a) At any time within one hundred eighty (180) days of the
date of the order of
liquidation, one
year after the date on which the association becomes responsible for the
obligations of a member insurer (the coverage date), the association may elect to succeed to the
rights and obligations of the ceding member insurer,
that accrue on or after the coverage date and
that relate to contracts policies or annuities
covered, in whole or in part, by the association, in
each case under
any one or more indemnity reinsurance agreements contracts
entered into by the
member insolvent insurer as a ceding
insurer and its reinsurers and selected by
the association.
However, the association may not exercise an election
with respect to a reinsurance agreement if
the receiver, rehabilitator or
liquidator of the member insurer has previously and expressly
disaffirmed the reinsurance agreement. Any such assumption shall be effective as of the
date of
the order of liquidation. The election shall be effected by a notice to the
receiver, rehabilitator or
liquidator and the
association or the national organization of life and health insurance guaranty
associations (NOLHGA) on its behalf sending written notice, return
receipt requested to the
affected reinsurers.
(b) To facilitate the
earliest practicable decision about whether to assume any of the
contracts of reinsurance, and in order to protect the financial
position of the estate, the receiver
and each reinsurer of the
ceding member insurer shall make available upon request to the
association or to NOLHGA on its behalf as soon as possible after
commencement of formal
delinquency proceedings: (i) Copies of
in-force contracts of reinsurance and all related files and
records relevant to the determination of whether such
contracts should be assumed, and (ii)
Notices of any defaults under the reinsurance
contracts or any known event or condition which
with the passage of time could become a default under the
reinsurance contracts.
(c) The following
subparagraphs (i) through (iv)
shall apply to reinsurance contracts so
assumed by the association.
If the association
makes an election, subparagraphs (i) through (iv) below shall apply
with respect to the agreements selected by the
association:
(i)
The association shall be responsible for all unpaid premiums due under the
agreements reinsurance contracts (for periods both
before and after the coverage date), of the
order of liquidation, and shall be responsible for the performance of all other obligations
to be
performed after the coverage date of the order of
liquidation, in each case which relate to
contracts policies and annuities covered, in whole or in
part, by the association. The association
may charge contracts policies or annuities covered
in part by the association, through reasonable
allocation methods, the costs for reinsurance in excess of the obligations
of the association and
shall provide notice and an accounting of these charges to
the liquidator;
(ii) The association
shall be entitled to any amounts payable by the reinsurer
under the
agreements reinsurance contracts with respect to losses
or events that occur in periods after the
coverage date of the order of liquidation and that
relate to contracts policies or annuities covered
by the association, in whole or in part, by the association provided, that,
upon receipt of any such
amounts, the association shall be obliged to pay to the
beneficiary under the policy or contract
annuity on account of which the amounts were paid a portion of
the amount equal to the excess
lesser of:
(A) The amount received
by the association; over or
(B) The benefits
paid by the association on account of the policy or contract less the
retention of the impaired or insolvent member insurer
applicable to the loss or event;
(B) The excess of the
amount received by the association; over the amount equal to the
benefits paid by the association on account of the policy or
annuity less the retention of the
insurer applicable to the loss or event;
(iii) Within thirty
(30) days following the association's election, the association and each
indemnity reinsurer shall calculate
the net balance due to or from the association under each such
reinsurance agreement as of the date of the association's
election, giving full credit to all items
paid by either the member insurer (or its receiver, rehabilitator or liquidator) or the indemnity
reinsurer during the period between the coverage date and the
date of the association's election.
Either the association or indemnity reinsurer shall pay the net balance due the other within
five
(5) days of the completion of
the aforementioned calculation. If the receiver, rehabilitator
or
liquidator has received any amounts due the association pursuant
to subparagraph (ii), the
receiver, rehabilitator or
liquidator shall remit the same to the association as promptly as
practicable.
Within thirty (30)
days following the association's election (the "election date"), the
association and each reinsurer under
contracts assumed by the association shall calculate the net
balance due to or from the association under each such reinsurance
contract as of the election date
with respect to policies or annuities covered, in whole or
in part, by the association which
calculation shall give, full credit to all items paid by either the
insurer or its receiver or the
reinsurer prior to the election date. The reinsurer
shall pay the receiver any amounts due for
losses or events prior to the date of the order of
liquidation, subject to any set-off for premiums
unpaid for periods prior to the date, and the association or
reinsurer shall pay any remaining
premiums in each case within five (5) days of the completion
of the aforementioned calculation.
Any disputes over the amounts due to either the
association or the reinsurer shall be resolved by
arbitration pursuant to the terms of the affected reinsurance
contracts or, if the contract contains
no arbitration clause, as otherwise provided by law. If
the receiver has received any amounts due
the association pursuant to paragraph (ii), the receiver,
shall remit the same to the association as
promptly as practicable.
(iv) If
the association, within sixty (60) days of the election, pays the premiums due
for
periods both before and after the coverage date, that relate
to contracts covered by the association,
(in whole or in part), the reinsurer shall not be entitled to terminate the
reinsurance agreements
insofar as the agreements relate to contracts covered by the
association, (in whole or in part) and
shall not be entitled to set off any unpaid premium due for
periods prior to the coverage date
against amounts due to the association. If the association or receiver, on the
association’s behalf,
within sixty (60) days of the election date, pays the unpaid
premiums due for periods both before
and after the election date, that relate to policies or
annuities covered in whole or in part by the
association the reinsurer shall not be
entitled to terminate the reinsurance contracts for failure to
pay premium insofar as the reinsurance contracts relate
to policies or annuities covered in whole
or in part by the association and shall not be entitled
to set off any unpaid amounts due under
other contracts, or unpaid amounts due from parties other
than the association against amounts
due to the association.
(2) During the period
from the date of the order of liquidation until the election date (or,
if the election date does not occur, until one hundred
eighty (180) days after the date of the order
of liquidation).
(a)(i) Neither the association nor the reinsurer
shall have any rights or obligations under
reinsurance contracts that the association has the right to
assume under subdivision (n)(1),
whether for periods prior to or after the date of the order
of liquation; and
(ii) The reinsurer, the receiver and the association shall, to the
extent practicable, provide
each other data and records reasonably requested;
(b) Provided that
once the association has elected to assume a reinsurance contract, the
parties' rights and obligations shall be governed by
subdivision (n)(1).
(3) If the
association does not elect to assume a reinsurance contract by the election
date
pursuant to subdivision (n)(1), the association shall have no rights
or obligations, in each case for
periods both before and after the date of the order of
liquidation, with respect to the reinsurance
contract.
(4) When policies or
annuities, or covered obligations with respect thereto, are transferred
to an assuming insurer, reinsurance on the policies or
annuities may also be transferred by the
association, in the case of contracts assumed under subdivision
(n)(1), subject to the following:
(2) In the event the
association transfers its obligations to another insurer, and if the
association and the other insurer agree, the other insurer shall
succeed to the rights and
obligations of the association under paragraph (1) effective as
of the date agreed upon by the
association and the other insurer and regardless of whether the
association has made an election
referred to above in paragraph (1) provided that:
(i)
The indemnity reinsurance agreements shall automatically terminate for new
reinsurance unless the indemnity reinsurer
and the other insurer agree to the contrary;
(a) Unless the reinsurer and the assuming insurer agree otherwise, the
reinsurance
contract transferred shall not cover any new policies of
insurance or annuities in addition to those
transferred;
(ii) (b) The obligations described in paragraph (n)(1)(ii)
of this subsection section shall
not apply on and after the date the indemnity
reinsurance agreement is transferred to the third-
party insurer; with
respect to matters arising after the effective date of the transfer;
(iii) (c)
This paragraph (2) shall not apply if the association has previously
expressly
determined in writing that it will not exercise the election
referred to in paragraph (1); Notice
shall be given in writing, return receipt requested, by the
transferring party to the affected
reinsurer not less than thirty (30) days prior to the effective
date of the transfer.
(3) (5) The provisions of subsection (n) shall supercede supersede
the provisions of any
law of this state or of any affected reinsurance agreement
contract that provides for or requires
any payment of reinsurance proceeds, on account of losses
or events that occur in periods after
the coverage date of the order of liquidation,
to the receiver, liquidator or rehabilitator
of the
insolvent member insurer or any other person. The
receiver, rehabilitator or liquidator shall
remain entitled to any amounts payable by the reinsurer under the reinsurance agreement
contracts with respect to losses or events that occur in
periods prior to the coverage date of the
order of liquidation (subject to applicable setoff
provisions); and.
(4) (6) Except as otherwise expressly provided in this chapter
section, nothing in this
section (n) herein
shall:
(i)
Alter Shall alter or modify the
terms and conditions of the indemnity any reinsurance
contract. agreements of the insolvent member insurer; or
(ii)
Abrogate Nothing in this section shall abrogate or limit any rights
of any reinsurer to
claim that it is entitled to rescind a reinsurance contract.
agreement; or
(iii) Shall Nothing
in this section shall give a policy owner holder or
beneficiary an
independent cause of action against an indemnity reinsurer that is not otherwise set forth in the
indemnity reinsurance agreement contract. Nothing
in this section shall limit or affect the
association's rights as a creditor of the estate against the assets
of the estate. Nothing in this
section shall apply to reinsurance agreements covering
property or casualty risks.
(o) The board of
directors of the association shall have discretion and shall exercise
reasonable business judgment to determine the means by which the
association is to provide the
benefits of this chapter in an economical and efficient
manner.
(p) Where the
association has arranged or offered to provide the benefits of this chapter
to a covered person under a plan or arrangement that
fulfills the association's obligations under
this chapter, the person shall not be entitled to benefits
from the association in addition to or other
than those provided under the plan or arrangement.
(q) In carrying out its
duties in connection with guaranteeing, assuming or reinsuring
policies or contracts under subsection (a) or (b) of this
section, the association may, subject to
approval of the receivership court, issue substitute coverage
for a policy or contract that provides
an interest rate, crediting rate or similar factor
determined by use of an index or other external
reference stated in the policy or contract employed in
calculating returns or changes in value by
issuing an alternative policy or contract in accordance with
the following provisions:
(r) Venue in a suit
against the association arising under this chapter shall be in
relates to a cause of action arising under this chapter.
(1) In lieu of the
index or other external reference provided for in the original policy or
contract, the alternative policy or contract provides for:
(i)
A fixed interest rate; or
(ii) Payment of
dividends with minimum guarantees; or
(iii) A different
method of calculating interest or changes in value.
(2) There is no
requirement for evidence of insurability, waiting period or other
exclusion that would not have applied under the replaced policy
or contract; and
(3) The alternative
policy or contract is substantially similar to the replaced policy or
contract in all other material terms.
27-34.3-9.
Assessments. -- (a) For the purpose of providing
the funds necessary to carry
out the powers and duties of the association, the board
of directors shall assess the member
insurers, separately for each account, at such time and for
such amounts as the board finds
necessary. Assessments shall be due not less than thirty (30)
days after prior written notice to the
member insurers and shall accrue interest at nine percent
(9%) per annum on and after the due
date.
(b) There shall be two
(2) classes of assessments, as follows:
(1) Class A assessments
shall be authorized and called for the purpose of meeting
administrative and legal costs and other expenses. Class A
assessments may be authorized and
called whether or not related to a particular impaired or
insolvent insurer.
(2) Class B assessments
shall be authorized and called to the extent necessary to carry
out the powers and duties of the association under
section 27-34.3-8 with regard to an impaired or
an insolvent insurer.
(c) (1) The amount of any Class A assessment shall be determined by
the board and may
be authorized and called on a pro rata or non-pro rata
basis. If pro rata, the board may provide
that it be credited against future Class B assessments.
The total of all non-pro rata assessment
shall not exceed one hundred fifty dollars ($150) three
hundred dollars ($300) per member insurer
in any one calendar year. The amount of any Class B
assessment shall be allocated for assessment
purposes among the accounts pursuant to an allocation formula
that may be based on the
premiums or reserves of the impaired or insolvent insurer or
any other standard deemed by the
board in its sole discretion as being fair and reasonable
under the circumstances.
(2) Class B assessments
against member insurers for each account and subaccount
shall
be in the proportion that the premiums received on
business in this state by each assessed member
insurer or policies or contracts covered by each account for
the three (3) most recent calendar
years for which information is available preceding the year
in which the insurer became
insolvent, (or, in the case of an assessment with respect to an
impaired insurer, the three (3) most
recent calendar years for which information is available
preceding the year in which the insurer
became impaired) bears to premiums received on business in
this state for such calendar years by
all assessed member insurers.
(3) Assessments for
funds to meet the requirements of the Association with respect to an
impaired or insolvent insurer shall not be authorized or
called until necessary to implement the
purposes of this chapter. Classification of assessments under
subsection (b) of this section and
computation of assessments under this subsection shall be made
with a reasonable degree of
accuracy, recognizing that exact determinations may not always
be possible. The association shall
notify each member insurer of its anticipated pro rata share
of an authorized assessment not yet
called within one hundred eighty (180) days after the
assessment is authorized.
(d) The association may
abate or defer, in whole or in part, the assessment of a member
insurer if, in the opinion of the board, payment of the assessment
would endanger the ability of
the member insurer to fulfill its contractual
obligations. In the event an assessment against a
member insurer is abated, or deferred in whole or in part,
the amount by which the assessment is
abated or deferred may be assessed against the other member
insurers in a manner consistent with
the basis for assessments set forth in this section. Once
the conditions which have caused a
deferral have been removed or rectified, the member insurer
shall pay all assessments that were
deferred pursuant to a repayment plan approved by the
association.
(e)
(1) (i) Subject to the provisions of subparagraph
(ii) of this paragraph, the total of all
assessments authorized by the association with respect to a
member insurer for each subaccount
of the life insurance and annuity account and for the
health account shall not in any one calendar
year exceed three percent (3%) of that member insurer's
average annual premiums received in
this state on the policies and contracts covered by the subaccount or account during the three (3)
calendar years preceding the year in which the insurer became
an impaired or insolvent insurer.
(ii) If two (2) or more
assessments are authorized in one calendar year with respect to
insurers that become impaired or insolvent in different
calendar years, the average annual
premiums for purposes of the aggregate assessment percentage
limitation referenced in
subparagraph (i) of this paragraph shall
be equal and limited to the higher of the three (3) year
average annual premiums for the applicable subaccount or account as calculated pursuant to this
section.
(iii) If the maximum
assessment, together with the other assets of the association in any
account, does not provide in any one year in either account
an amount sufficient to carry out the
responsibilities of the association, the necessary additional funds
shall be assessed as soon after
this as permitted by this chapter.
(2) The board may
provide in the plan of operation a method of allocating funds among
claims, whether relating to one or more impaired or
insolvent insurers, when the maximum
assessment will be insufficient to cover anticipated claims.
(3) If the maximum
assessment for a subaccount of the life and annuity
account in any
one year does not provide an amount sufficient to carry
out the responsibilities of the association,
then pursuant to subdivision (c)(2) of this section, the
board shall assess the other subaccounts of
the life and annuity account for the necessary additional
amount, subject to the maximum stated
in subdivision (1) of this subsection.
(f) The board may, by
an equitable method as established in the plan of operation, refund
to member insurers, in proportion to the contribution of
each insurer to that account, the amount
by which the assets of the account exceed the amount the
board finds is necessary to carry out
during the coming year the obligations of the association
with regard to that account, including
assets accruing from assignment, subrogation, net realized
gains and income from investments. A
reasonable amount may be retained in any account to provide
funds for the continuing expenses
of the association and for future claims.
(g) It shall be proper
for any member insurer, in determining its premium rates and
policy owner dividends as to any kind of insurance within
the scope of this chapter, to consider
the amount reasonably necessary to meet its assessment
obligations under this chapter.
(h) The association
shall issue to each insurer paying an assessment under this chapter,
other than Class A assessment, a certificate of contribution,
in a form prescribed by the
commissioner, for the amount of the assessment so paid. All
outstanding certificates shall be of
equal dignity and priority without reference to amounts or
dates of issue. A certificate of
contribution may be shown by the insurer in its financial
statement as an asset in such form and
for such amount, if any, and period of time as the
commissioner may approve.
(i)
(1) A member insurer that wishes to protest all or
part of an assessment shall pay
when due the full amount of the assessment as set forth in
the notice provided by the association.
The payment shall be available to meet association
obligations during the pendency of the protest
or any subsequent appeal. Payment shall be accompanied
by a statement in writing that the
payment is made under protest and setting forth a brief
statement of the grounds for the protest.
(2) Within sixty (60)
days following the payment of an assessment under protest by a
member insurer, the association shall notify the member
insurer in writing of its determination
with respect to the protest unless the association
notifies the member insurer that additional time
is required to resolve the issues raised by the protest.
(3) Within thirty (30)
days after a final decision has been made, the association shall
notify the protesting member insurer in writing of that
final decision. Within sixty (60) days of
receipt of notice of the final decision, the protesting
member insurer may appeal that final action
to the commissioner.
(4) In the alternative
to rendering a final decision with respect to a protest based on a
question regarding the assessment base, the association may
refer the protest to the commissioner
for a final decision, with or without a recommendation
from the association.
(5) If the protest or
appeal on the assessment is upheld, the amount paid in error or
excess shall be returned to the member company. Interest on
a refund due a protesting member
shall be paid at the rate actually earned by the
association.
(j) The association may
request information of member insurers in order to aid in the
exercise of its power under this section and member insurers
shall promptly comply with a
request.
27-34.3-10.
Plan of operation. -- (a) (1) The
plan of operation as previously established
and approved under this section shall continue to be
effective. The association may amend the
plan of operation when necessary or suitable to assure the
fair, reasonable and equitable
administration of the association. Amendments shall become effective
upon the commissioner's
written approval.
(2) If at any time the
association fails to submit suitable amendments to the plan, the
commissioner shall, after notice and hearing, adopt and promulgate
any reasonable rules
necessary or advisable to effectuate the provisions of this
chapter. The rules shall continue in
force until modified by the commissioner or superseded by
amendments to the plan submitted by
the association and approved by the commissioner.
(b) All member insurers
shall comply with the plan of operation.
(c) The plan of
operation shall, in addition to requirements enumerated in this chapter:
(1) Establish
procedures for handling the assets of the association;
(2) Establish the
amount and method of reimbursing members of the board of directors
under section 27-34.3-7;
(3) Establish regular
places and times for meetings including telephone conference calls
of the board of directors;
(4) Establish
procedures for records to be kept of all financial transactions of the
association, its agents, and the board of directors;
(5) Establish the
procedures by which selections for the board of directors will be made
and submitted to the commissioner;
(6) Establish any
additional procedures for assessments under section 27-34.3-9;
(7) Contain additional
provisions necessary or proper for the execution of the powers and
duties of the association.
(8) Establish
procedures whereby a director may be removed for cause, including in the
case where a member insurer director becomes an impaired
or insolvent insurer; and
(9) Require the board
of directors to establish a policy and procedures for addressing
conflicts of interests.
(d) The plan of
operation may provide that any or all powers and duties of the
association, except those under section 27-34.3-8( l )(3) and
section 27-34.3-9, are delegated to a
corporation, association, or other organization which performs or
will perform functions similar
to those of this association, or its equivalent, in two
(2) or more states. This corporation,
association, or organization shall be reimbursed for any payments
made on behalf of the
association and shall be paid for its performance of any function
of the association. A delegation
under this subsection shall take effect only with the
approval of both the board of directors and
the commissioner, and may be made only to a corporation,
association, or organization which
extends protection not substantially less favorable and
effective than that provided by this
chapter.
27-34.3-11.
Duties and powers of the commissioner. -- In
addition to the duties and
powers enumerated in this chapter,
(a) The commissioner
shall:
(1) Upon request of the
board of directors, provide the association with a statement of
the premiums in this and any other appropriate states for
each member insurer;
(2) When an impairment is declared and the amount of the impairment
is determined,
serve a demand upon the impaired insurer to make good the
impairment within a reasonable time;
notice to the impaired insurer shall constitute notice to
its shareholders, if any; the failure of the
insurer to promptly comply with a demand shall not excuse the
association from the performance
of its powers and duties under this chapter;.
(3) In any
liquidation or rehabilitation proceeding involving a domestic insurer, be
appointed as the liquidator or rehabilitator.
(b) The commissioner
may suspend or revoke, after notice and hearing, the certificate of
authority to transact insurance in this state of any member insurer
which fails to pay an
assessment when due or fails to comply with the plan of
operation. As an alternative the
commissioner may levy a forfeiture on any member insurer which
fails to pay an assessment
when due. The forfeiture shall not exceed five percent
(5%) of the unpaid assessment per month,
but no forfeiture shall be less than one hundred dollars
($100) per month.
(c) A final action of
the board of directors or the association may be appealed to the
commissioner by any member insurer if the appeal is taken within
sixty (60) days of its receipt of
notice of the final action being appealed. A final action or
order of the commissioner shall be
subject to judicial review.
(d) The liquidator, rehabilitator, or conservator of any impaired or
insolvent insurer may
notify all interested persons of the effect of this chapter.
27-34.3-14. Miscellaneous provisions. -- (a) This
chapter shall not be construed to
reduce the liability for unpaid assessments of the insureds of an impaired or insolvent insurer
operating under a plan with assessment liability; provided,
however, this chapter shall not be
construed to reduce the liability for unpaid assessments of the
insureds of an impaired or
insolvent insurer operating under a plan with assessment
liability prior to January 1, 1996.
(b) Records shall be
kept of all meetings of the board of directors to discuss the activities
of the association in carrying out its powers and duties
under section 27-34.3-8. The records of
the association with respect to an impaired or insolvent
insurer shall not be disclosed prior to the
termination of a liquidation, rehabilitation or conservation
proceeding involving the impaired or
insolvent insurer, upon the termination of the impairment or
insolvency of the insurer, or upon the
order of a court of competent jurisdiction. Nothing in this
subsection shall limit the duty of the
association to render a report of its activities under section
27-34.3-15.
(c) For the purpose of
carrying out its obligations under this chapter, the association shall
be deemed to be a creditor of the impaired or insolvent
insurer to the extent of assets attributable
to covered policies reduced by any amounts to which the
association is entitled as subrogee
pursuant to section 27-34.3-8(k). Assets of the impaired or
insolvent insurer attributable to
covered policies shall be used to continue all covered
policies and pay all contractual obligations
of the impaired or insolvent insurer as required by this
chapter. Assets attributable to covered
policies, as used in this subsection, are that proportion of
the assets which the reserves that should
have been established for covered policies bear to the
reserves that should have been established
for all policies of insurance written by the impaired or
insolvent insurer.
(d) As a creditor of
the impaired or insolvent insurer as established in subsection (c) of
this section and consistent with section 27-14.3-38, the association
and other similar associations
shall be entitled to receive a disbursement of assets out
of the marshalled assets, from time to time
as the assets become available to reimburse it, as a
credit against contractual obligations under
this chapter. If the liquidator has not, within one
hundred twenty (120) days of a final
determination of insolvency of an insurer by the receivership
court, made an application to the
court for the approval of a proposal to disperse assets out
of marshalled assets to guaranty
associations having obligations because of the insolvency, then
the association shall be entitled to
make application to the receivership court for approval of
its own proposal to disburse these
assets.
(e) (1) Prior to the termination of any liquidation, rehabilitation
or conservation
proceeding, the court may take into consideration the
contributions of the respective parties,
including the association, the shareholders, and policy owners
of the insolvent insurer, and any
other party with a bona fide interest, in making an
equitable distribution of the ownership rights
of the insolvent insurer. In that determination,
consideration shall be given to the welfare of the
policy owners of the continuing or successor insurer.
(2) No distribution to
stockholders, if any, of an impaired or insolvent insurer shall be
made until and unless the total amount of valid claims of
the association with interest on the
claims for funds expended in carrying out its powers and
duties under section 27-34.3-8 with
respect to the insurer have been fully recovered by the
association.
(f) (1) If an order for liquidation or rehabilitation of an insurer
domiciled in this state has
been entered, the receiver appointed under the order shall
have a right to recover on behalf of the
insurer, from any affiliate that controlled it, the amount of
distributions, other than stock
dividends paid by the insurer on its capital stock, made at any
time during the five (5) years
preceding the petition for liquidation or rehabilitation
subject to the limitations of subdivisions (2)
-- (4) of this subsection.
(2) No distribution
shall be recoverable if the insurer shows that when paid the
distribution was lawful and reasonable, and that the insurer did
not know and could not
reasonably have known that the distribution might adversely
affect the ability of the insurer to
fulfill its contractual obligations.
(3) Any person who was
an affiliate that controlled the insurer at the time the
distributions were paid shall be liable up to the amount of
distributions received. Any person who
was an affiliate who controlled the insurer at the time
the distributions were declared, shall be
liable up to the amount of distributions which would have
been received if they had been paid
immediately. If two (2) or more persons are liable with respect
to the same distributions, they
shall be jointly and severally liable.
(4) The maximum amount
recoverable under this subsection shall be the amount needed
in excess of all other available assets of the insolvent
insurer to pay the contractual obligations of
the insolvent insurer.
(5) If any person
liable under subdivision (3) of this subsection is insolvent, all its
affiliates that controlled it at the time the distribution was
paid, shall be jointly and severally
liable for any resulting deficiency in the amount recovered
from the insolvent affiliate.
27-34.3-18.
Stay of proceedings -- Reopening default judgments. --
All proceedings in
which the insolvent insurer is a party in any court in this
state shall be stayed sixty (60) one
hundred eighty (180)
days from the date an order of liquidation, rehabilitation or conservation is
final to permit proper legal action by the association on
any matters germane to its powers or
duties. As to judgment under any decision, order, verdict or
finding based on default the
association may apply to have the judgment set aside by the same
court that made the judgment
and shall be permitted to defend against the suit on the
merits.
SECTION 2. This act shall take effect with respect to
impairments and insolvencies
occurring on or after January 1, 2010.
=======
LC01674/SUB A
=======