WEST virginia legislature
2017 regular session
ENROLLED
for
By Delegates
Westfall, White, Hamrick, Hartman and Frich
[
AN ACT to amend
and reenact §33-26-2,
§33-26-3, §33-26-4, §33-26-5, §33-26-8, §33-26-9, §33-26-10, §33-26-11, §33-26-12, §33-26-13, §33-26-14 and §33-26-18 of the Code of West
Virginia, 1931, as amended, all relating to West Virginia Insurance Guaranty Association Act; modifying the purpose, scope and construction of act; adding and
amending definitions; clarifying and adding powers, duties and rights of
association; limiting amount payable for covered claims for deliberate
intention, including workers’ compensation claims; limiting amount for covered
claim for return of unearned premium; limiting amount association must pay for
the obligation of the insolvent insurer; setting time limits for filing claims;
specifying when obligation of insurer to defend an insured ceases; subject to
limitations, giving association rights, duties and obligations of the insolvent
insurer; allowing association to determine order of claims payment; prohibiting
payment of dividends during period of deferment; hiring of legal counsel for
the defense of covered claims; notification of claimants; setting forth the
association’s right to review aid contest settlements, releases, compromises,
waivers and judgments; specifying when association is not bound by a
settlement, release, compromise or waiver; requiring association to establish
procedures for requesting financial information from insurers and claimants;
setting forth actions association may take where insured or claimant refuses to
provide requested financial information; allowing association to intervene as a
party as a matter of right before any court; requiring rules of association be
subject to legislative approval; requiring notice of claims be filed with the
association; setting forth the persons from whom the association may recover
all amounts paid by the association on behalf of that person; requiring
association and associations in other states be recognized as claimants in the
liquidation of an insolvent insurer; requiring person having a claim to exhaust
all coverage under the policy; setting forth what constitutes a claim relating
to exhaustion of coverage; requiring association be reimbursed for any deductible
claim if paid; requiring board of directors to make recommendations to
commissioner regarding solvency; allowing board of directors to compile reports
on insolvencies; and providing that reports and recommendations of board are
not subject to disclosure under the Freedom of Information Act.
Be it enacted by the
Legislature of West Virginia:
That §33-26-2, §33-26-3,
§33-26-4, §33-26-5, §33-26-8, §33-26-9, §33-26-10,
§33-26-11, §33-26-12, §33-26-13,
§33-26-14 and §33-26-18 of the Code of West Virginia, 1931, as
amended, be amended and reenacted, all to read as follows:
ARTICLE 26. WEST VIRGINIA GUARANTY ASSOCIATION ACT.
§33-26-2. Purpose.
The purpose of this article
is to provide a mechanism for the payment of covered claims under certain
insurance policies to avoid excessive delay in payment and to the extent
provided in this article, minimize financial loss to claimants or policyholders
because of the insolvency of an insurer, and to permit and to provide an
association to assess the cost of such this protection among insurers.
§33-26-3. Scope.
This article applies to all
kinds of direct insurance, but is not applicable to the following:
(1) Life, annuity, health
or disability insurance;
(2) Mortgage guaranty,
financial guaranty or other forms of insurance offering protection against
investment risks;
(3) Fidelity or surety
bonds, or any other bonding obligations;
(4) Credit insurance,
vendors’ single interest insurance or collateral protection insurance or any
similar insurance protecting the interests of a creditor arising out of a
creditor-debtor transaction;
(5) Insurance of warranties
or service contracts including insurance that provides for the repair,
replacement or service of goods or property, indemnification for repair,
replacement or service for the operational or structural failure of the goods
or property due to a defect in materials, workmanship or normal wear and tear,
or provides reimbursement for the liability incurred by the issuer of
agreements or service contracts that provide such benefits;
(6) Title insurance;
(7) Ocean marine insurance;
(8) Any transaction or combination of transactions between a
person, including affiliates of such person, and an insurer, including
affiliates of the insurer, which involves the transfer of investment or credit
risk unaccompanied by transfer of insurance risk; or
(9) Any insurance provided by or guaranteed by a government
entity or agency.
§33-26-4. Construction.
This article shall be
construed to effect the purpose under section two of this article which
constitutes an aid and guide to interpretation.
§33-26-5. Definitions.
As used in this article:
(1) “Account” means any one of the three accounts created by
section six of this article.
(2) “Affiliate” means a person who directly or indirectly,
through one or more intermediaries, controls, is controlled by or is under
common control with another person on December 31 of the year immediately
preceding the date the insurer becomes an insolvent insurer.
(3) “Affiliate of the insolvent insurer” means a person who
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with an insolvent insurer on December
31 of the year prior to the date the insurer becomes an insolvent insurer.
(4) “Association” means the West Virginia Insurance Guaranty
Association created under section six of
this article.
(5) “Association similar to the association” means any
guaranty association, security fund or other insolvency mechanism that affords
protection similar to that of the association. The term shall also include any property
and casualty insolvency mechanism that obtains assessments or other
contributions from insurers on a preinsolvency basis.
(6) “Claimant” means any
insured making a first party claim or any person instituting a liability claim,
provided that no person who is an affiliate of the insolvent insurer may be a
claimant.
(7) “Commissioner” means
the Insurance Commissioner of West Virginia.
(8) “Control” means the
possession, direct or indirect, of the power to direct or cause the direction
of the management and policies of a person, whether through the ownership of
voting securities, by contract other than a commercial contract for goods or
nonmanagement services, or otherwise, unless the power is the result of an
official position with or corporate office held by the person. Control shall be
presumed to exist if a person, directly or indirectly, owns, controls, holds
with the power to vote, or holds proxies representing, ten percent or more of
the voting securities of any other person. This presumption may be rebutted by
a showing that control does not exist in fact.
(9) (A)
“Covered claim” means an unpaid claim, including one for unearned premiums,
submitted by a claimant, which arises out of and is within the coverage and is
subject to the applicable limits of an insurance policy to which this article
applies issued by an insurer, if the insurer becomes an insolvent insurer after
the effective date of this article and:
(i) The claimant or insured
is a resident of this state at the time of the insured event: Provided, That for entities other than
an individual, the residence of a claimant, insured or policyholder is the
state in which its principal place of business is located at the time of the
insured event; or
(ii) The claim is a first
party claim for damage to property with a permanent location in this state.
(B) “Covered claim” does
not include:
(i) Any amount awarded as punitive or exemplary damages;
(ii) Any amount sought as a return of premium under any
retrospective rating plan;
(iii) Any amount due any reinsurer, insurer, insurance pool,
underwriting association, health maintenance organization, hospital plan
corporation, professional health service corporation or self-insurer as
subrogation recoveries, reinsurance recoveries, contribution, indemnification
or otherwise. No such claim for any amount due any reinsurer, insurer,
insurance pool, underwriting association, health maintenance organization,
hospital plan corporation or self-insurer may be asserted against a person
insured under a policy issued by an insolvent insurer other than to the extent
such claim exceeds the association obligation limitations set forth in section
eight of this article;
(iv) Any first party claim by an insured whose net worth
exceeds $25 million on December 31 of the year next preceding the date the
insurer becomes an insolvent insurer: Provided,
That an insured’s net worth on that date shall be considered to include the
aggregate net worth of the insured and all of its subsidiaries and affiliates
as calculated on a consolidated basis: Provided, however, That this exclusion does not apply to any claim for
benefits under a workers’ compensation insurance policy required by chapter
twenty-three of this code;
(v) Any third party claim relating to a policy of an
insured whose net worth exceeds $25 million on December 31 of the year next
preceding the date the insurer becomes an insolvent insurer: Provided, That an insured’s net worth on
that date shall be considered to include the aggregate net worth of the insured
and all of its subsidiaries and affiliates as calculated on a consolidated
basis: Provided, however, That this exclusion does not apply to:
(I) Third party claims
against the insured where the insured has applied for or consented to the
appointment of a receiver, trustee or liquidator for all or a substantial part
of its assets, filed a voluntary petition in bankruptcy, filed a petition or an
answer seeking a reorganization or arrangement with creditors or to take
advantage of any insolvency law, or if an order, judgment or decree is entered
by a court of competent jurisdiction, on the application of a creditor,
adjudicating the insured bankrupt or insolvent or approving a petition seeking
reorganization of the insured or of all or substantial part of its assets; or
(II) Any claim for benefits under a workers’ compensation
insurance policy required by chapter twenty-three of this code;
(vi) Any claim that would otherwise be a covered claim but
is an obligation to, or on behalf of a, person who has a net worth greater than
that allowed by the insurance guaranty association law of the state of
residence of the claimant at the time specified by that law and which
association has denied coverage to that claimant on that basis: Provided, That this exclusion does not
apply to any claim for benefits under a workers’ compensation insurance policy
required by chapter twenty-three of this code;
(vii) Any first party claims by an insured which is an
affiliate of the insolvent insurer;
(viii) Any fee or other amount relating to goods or services
sought by, or on behalf of, any attorney or other provider of goods or services
retained by the insolvent insurer or an insured prior to the date it was
determined to be insolvent;
(ix) Any fee or other amount sought by, or on behalf of, any
attorney or other provider of goods or services retained by any insured or
claimant in connection with the assertion or prosecution of any claim, covered
or otherwise, against the association; or
(x) Any claims for interest.
(10) “Insolvent insurer”
means an insurer licensed to transact insurance in this state, either at the
time the policy was issued or when the insured event occurred, and against whom
a final order of liquidation has been entered with a finding of insolvency by a
court of competent jurisdiction in the insurer’s state of domicile.
(11) "Member insurer"
means any person who: writes any kind of insurance to which this article
applies under section three of this article, including farmers’ mutual fire
insurance companies and the exchange of reciprocal or interinsurance contracts;
and is licensed to transact insurance in this state. An insurer shall cease to be a member insurer
effective on the day following the termination or expiration of its license to
transact the kinds of insurance to which this article applies, however the
insurer shall remain liable as a member insurer for any and all obligations,
including obligations for assessments levied prior to the termination or
expiration of the insurer’s license and assessments levied after the
termination or expiration, which relate to any insurer which became an
insolvent insurer prior to the termination or expiration of the insurer’s
license.
(12) “Net direct written
premiums” means direct gross premiums written in this state on insurance
policies to which this article applies, less return premiums on the policies
and dividends paid or credited to policyholders on such direct business. "Net
direct written premiums"
does not include premiums on contracts between insurers or reinsurers.
(13) “Person” means any
individual or legal entity, including governmental entities.
(14) “Receiver” means
receiver, liquidator, rehabilitator or conservator as the context may require.
(15) “Self-insurer” means a person that covers
its liability through a qualified individual or group self-insurance program or
any other formal program created for the specific purpose of covering
liabilities typically covered by insurance.
§33-26-8. Powers and
duties of the association.
(a) The association shall:
(1)
Be obligated to pay covered claims existing prior to the final order of
liquidation, that arise within thirty days after the final order of liquidation
or before the policy expiration date if the expiration date is less than thirty
days after the final order of liquidation, or that arise before the insured
replaces the policy or causes its cancellation, if the insured does so within
thirty days of the final order of liquidation. This obligation shall be
satisfied by paying to the claimant an amount as follows:
(A)
The full amount of a covered claim for benefits under a workers’ compensation
insurance policy: Provided, That any
covered claim for deliberate intention, including any action pursuant to
section two, article four, chapter twenty-three of this code, may not exceed
$300,000 per claim.
(B)
An amount not exceeding $10,000 per policy for a covered claim for the return
of unearned premium.
(C)
An amount not exceeding $300,000 per claim for all other covered claims: Provided, That for purposes of this
limitation, all claims of any kind whatsoever arising out of, or related to,
bodily injury or death to any one person constitutes a single claim, regardless
of the number of claims made, or the number of claimants.
In no event may the association be obligated to pay a
claimant an amount in excess of the obligation of the insolvent insurer under
the policy or coverage from which the claim arises. Notwithstanding any other
provisions of this article, a covered claim may not include a claim filed with
the association after the earlier of: (i) Twenty-five months after the date of
the final order of liquidation; or (ii) the final date set by the court for the
filing of claims against the liquidator or receiver of an insolvent insurer.
Any
obligation of the association to defend an insured on a covered claim shall
cease upon the association’s: (i) Payment, either by settlement releasing the
insured or on a judgment, of an amount equal to the lesser of the association’s
covered claim obligation limit or the applicable policy limit; or (ii) tender
of such amount.
(2)
Be considered the insurer only to the extent of its obligation on the covered
claims and to that extent, subject to the limitations provided in this article,
have all rights, duties and obligations of the insolvent insurer as if the
insurer had not become insolvent, including, but not limited to, the right to
pursue and retain salvage and subrogation recoverable on paid covered claim
obligations. The association may not be considered the insolvent insurer for
any purpose relating to the issue of whether the association is amenable to the
personal jurisdiction of the courts of any state.
(3)
Allocate claims paid and expenses incurred among the three accounts separately,
and assess member insurers separately for each account amounts necessary to pay
the obligations of the association under subdivision (1) of this subsection
subsequent to an insolvency, the expenses of handling covered claims subsequent
to an insolvency, the cost of preparing any reports specified in section
thirteen of this article and other expenses authorized by this article. The
assessments of each member insurer shall be in the proportion that the net
direct written premiums of the member insurer for the calendar year prior to
the assessment on the kinds of insurance in the account bears to the net direct
written premiums of all member insurers for the preceding calendar year
prior to the assessment on the kinds of insurance in the account: Provided,
That farmers mutual insurance companies that do not issue workers’ compensation
insurance policies may not be assessed to pay for the obligations of the
association payable from the workers’ compensation insurance account. Each
member insurer shall be notified of the assessment not later than thirty days
before it is due. No member insurer may be assessed in any one year on any
account an amount greater than two percent of that member insurer’s net direct
written premiums for the calendar year preceding the assessment on the kinds of
insurance in the account. If the maximum assessment, together with the other
assets of the association in any account, does not provide in any one year in
any account an amount sufficient to make all necessary payments from that
account, the funds available shall be prorated and the unpaid portion shall be
paid as soon after that as funds become available. The association shall pay
claims in any order that it deems reasonable, including the payment of claims
as they are received from the claimant or in groups or categories of claims.
The association may exempt or defer, in whole or in part, the assessment of any
member insurer, if the assessment would cause the member insurer’s financial
statement to reflect the amounts of capital or surplus less than the minimum
amounts required for a certificate of authority by any jurisdiction in which
the member insurer is authorized to transact insurance: Provided, however, That
during the period of deferment, no dividends may be paid to shareholders or
policyholders. Deferred assessments shall be paid when the payment does not
reduce capital or surplus below required minimums. The payments shall be
refunded to those companies receiving larger assessments by virtue of the
deferment, or at the election of any such company, credited against future
assessments.
(4) Investigate claims brought against the association
and adjust, compromise, settle, and pay covered claims to the extent of the
association’s obligation and deny all other claims. The association may appoint
and direct legal counsel retained under liability insurance policies for the
defense of covered claims.
(5)
Notify claimants in this state as determined necessary by the commissioner and
upon the commissioner’s request, to the extent records are available to the
association.
(6)
(A) Have the right to review and contest as set forth in this subsection
settlements, releases, compromises, waivers and judgments to which the
insolvent insurer or its insureds were parties prior to the entry of the final
order of liquidation. In an action to enforce settlements, releases and
judgments to which the insolvent insurer or its insureds were parties prior to
the entry of the final order of liquidation, the association may assert the
following defenses, in addition to the defenses available to the insurer:
(i)
The association is not bound by a settlement, release, compromise or waiver
executed by an insured or the insurer, or any judgment entered against an
insured or the insurer by consent or through a failure to exhaust all appeals,
if the settlement, release, compromise, waiver or judgment was:
(I)
Executed or entered within one hundred twenty days prior to the entry of a
final order of liquidation and the insured or the insurer did not use
reasonable care in entering into the settlement, release, compromise, waiver or
judgment, or did not pursue all reasonable appeals of an adverse judgment; or
(II)
Executed by or taken against an insured or the insurer based on default, fraud,
collusion or the insurer’s failure to defend.
(ii)
If a court of competent jurisdiction finds that the association is not bound by
a settlement, release, compromise, waiver or judgment for the reasons described
in subparagraph (i), paragraph (A), subdivision (6) of this subsection, the
settlement, release, compromise, waiver or judgment shall be set aside and the
association may defend any covered claim on the merits. The settlement, release,
compromise, waiver or judgment may not be considered as evidence of liability
or damages in connection with any claim brought against the association or any
other party under this article.
(iii)
The association may assert any statutory defenses or other defenses or rights
of offset against any settlement, release, compromise or waiver executed by an
insured or the insurer, or any judgment taken against the insured or the
insurer.
(B)
As to any covered claims arising from a judgment under any decision, verdict or
finding based on the default of the insolvent insurer or its failure to defend,
the association, either on its own behalf or on behalf of an insured may apply
to have the judgment, order, decision, verdict or finding set aside by the same
court or administrator that entered the judgment, order, decision, verdict or
finding and may defend the claim on the merits.
(7)
Handle claims through its employees or through one or more insurers or other
persons designated as servicing facilities. Designation of a servicing facility
is subject to the approval of the commissioner, but the designation may be
declined by a member insurer.
(8)
Reimburse each servicing facility for obligations of the association paid by
the facility and for expenses incurred by the facility while handling claims on
behalf of the association and shall pay the other expenses of the association
authorized by this article.
(9)
Establish procedures for requesting financial information from insureds and
claimants on a confidential basis for purposes of applying sections of this
article concerning the net worth of first and third-party claimants, subject to
that information being shared with any other association similar to the
association and the liquidator for the insolvent company on the same
confidential basis. If the insured or claimant refuses to provide the requested
financial information and an auditor’s certification of the same where
requested and available, the association may consider the net worth of the
insured or claimant to be in excess of $25 million at the relevant time.
(b)
The association may:
(1) Employ or retain persons that are necessary to
handle claims and perform other duties of the association.
(2) Borrow funds necessary to effect the purposes of
this article in accord with the plan of operation.
(3)
Sue or be sued, and the power to sue includes the power and right to intervene
as a party as a matter of right before any court in this state that has
jurisdiction over an insolvent insurer as defined by this article.
(4)
Negotiate and become a party to contracts that are necessary to carry out the
purpose of this article.
(5)
Perform other acts that are necessary or proper to effectuate the purpose of
this article.
(6)
Refund to the member insurers in proportion to the contribution of each member
insurer to an account that amount by which the assets of the account exceed the
liabilities, if, at the end of any calendar year, the board of directors finds
that the assets of the association in any account exceed the liabilities of
that account as estimated by the board of directors for the coming year.
§33-26-9. Plan of
operation.
(a)
The association shall:
(1)
Submit to the commissioner a plan of operation and any amendments thereto
necessary or suitable to assure the fair, reasonable and equitable
administration of the association. The plan of operation and any amendments
thereto become effective upon approval in writing by the commissioner.
(2)
If the association fails to submit a suitable plan of operation within ninety
days following the effective date of this article or if at any time thereafter
the association fails to submit suitable amendments to the plan, the
commissioner shall, after notice and hearing, adopt rules for legislative
approval as are necessary or advisable to effectuate the provisions of this
article. The rules shall continue in force until modified by the commissioner
or superseded by a plan submitted by the association and approved by the
commissioner. All such rules shall be proposed in accordance with chapter
twenty-nine-a of this code.
(b)
All member insurers shall comply with the plan of operation.
(c)
The plan of operation shall:
(1)
Establish the procedures whereby all the powers and duties of the association
under section eight of this article will be performed.
(2)
Establish procedures for handling assets of the association.
(3)
Establish the amount and method of reimbursing members of the board of
directors under section seven of this article.
(4)
Establish procedures by which claims may be filed with the association and
establish acceptable forms of proof of covered claims.
(5)
Establish regular places and times for meetings of the board of directors.
(6)
Establish procedures for records to be kept of all financial transactions of
the association, its agents and the board of directors.
(7)
Provide that any member insurer aggrieved by a final action or decision of the
association may appeal to the commissioner within thirty days after the action
or decision.
(8)
Establish the procedures whereby selections for the board of directors will be
submitted to the commissioner.
(9)
Contain additional provisions necessary or proper for the execution of the
powers and duties of the association.
(d)
The plan of operation may provide that any or all powers and duties of the
association, except those under subdivision (3), subsection (a), and
subdivision (2), subsection (b), section eight of this article 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 or
more states. Such a corporation, association or organization shall be
reimbursed as a servicing facility would be reimbursed and shall be paid for
its performance of any other functions of the association. A delegation under
this subsection shall may 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 article.
§33-26-10. Duties and
powers of the commissioner.
(a)
The commissioner shall:
(1)
Notify the association of the existence of an insolvent insurer not later than
three business days after he or she receives notice of the determination of the
insolvency.
(2)
Upon request of the board of directors, provide the association a statement of
the net direct written premiums of each member insurer.
(b)
The commissioner may:
(1)
Require that the association notify the insureds of the insolvent insurer and
any other interested parties of the determination of insolvency and of their
rights under this article. Such The notification shall be by mail at
their last known address, where available, but if sufficient information for
notification by mail is not available, notice by publication in a newspaper of
general circulation is sufficient.
(2) 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 fine on any member
insurer which fails to pay an assessment when due. The fine may not exceed five
percent of the unpaid assessment per month, except that no fine may be less
than $100 per month.
(3) Revoke the designation of any servicing facility if
he or she finds that claims are being handled unsatisfactorily.
(c)
Any final order of the commissioner under this article is subject to judicial
review as provided by section fourteen, article two of this chapter.
§33-26-11. Effect of
paid claims.
(a) Any person recovering under this article
is considered to have assigned his the person’s rights under the policy
to the association to the extent of his the person’s recovery from the
association. Every insured or claimant seeking the protection of this article
shall cooperate with the association to the same extent as that person would
have been required to cooperate with the insolvent insurer. The association has
no cause of action against the insured of the insolvent insurer for any sums it
has paid out except such causes of action as the insolvent insurer would have
had if the sums had been paid by the insolvent insurer and except as provided
in subsection (b) of this section. In the case of an insolvent insurer
operating on a plan whereby insurance policies with assessment liability have
been issued to insureds, payments of claims by the association may not operate
to reduce the liability of the insureds to the receiver, liquidator or
statutory successor for unpaid assessments.
(b)
The association may recover from the following persons all amounts paid by the
association on behalf of the person, whether for indemnity or defense or
otherwise:
(1)
Any insured whose net worth on December 31 of the year immediately preceding
the date the insurer becomes an insolvent insurer exceeds $25 million: Provided, That an insured’s net worth on
such date shall be considered to include the aggregate net worth of the insured
and all of its subsidiaries and affiliates as calculated on a consolidated
basis: Provided, however, That this provision may not apply to any claim for
benefits under a workers’ compensation insurance policy required by chapter
twenty-three of this code; and
(2)
Any person who is an affiliate of the insolvent insurer.
(c)
The association and any association similar to the association in another state
shall be recognized as claimants in the liquidation of an insolvent insurer for
any amounts paid by them on covered claims obligations as determined under this
article or similar laws in other states and shall receive dividends and any
other distributions at the priority set forth in section nineteen-a, article
ten of this chapter. The receiver, liquidator or statutory successor of an
insolvent insurer shall be bound by determinations of covered claim eligibility
under this article and by settlements of claims made by the association or a
similar organization in another state. The court having jurisdiction shall
grant such claims priority equal to that to which the claimant would have been
entitled, in the absence of this article, against the assets of the insolvent
insurer. The expenses of the association or similar organization in handling
claims shall be accorded the same priority as the receiver’s expenses.
(d)
The association shall periodically file with the receiver or the liquidator of
the insolvent insurer statements of the covered claims paid by the association
and estimates of anticipated claims against the association which shall
preserve the rights of the association against the assets of the insolvent
insurer.
§33-26-12. Exhaustion of
other coverage; deductible reimbursement.
(a)
Any person having a claim under an insurance policy, whether or not it is a
policy issued by a member insurer, and the claim under such other policy arises
from the same facts, injury, or loss that gave rise to the covered claim
against the association, shall first exhaust all coverage provided by any such
policy. Any amount payable on a covered claim under this article shall be
reduced by the full applicable limits stated in such other insurance policy and
the association shall receive a full credit for such stated limits or, where
there are no applicable stated limits, the claim shall be reduced by the total
recovery. Notwithstanding the foregoing, no person may be required to exhaust
any right under the policy of an insolvent insurer.
(1)
A claim under a policy providing liability coverage to a person who may be
jointly and severally liable with or a joint tortfeasor with the person covered
under the policy of the insolvent insurer that gives rise to the covered claim
is considered to be a claim arising from the same facts, injury or loss that
gave rise to the covered claim against the association.
(2)
A claim under an insurance policy shall also include, for purposes of this
section:
(A)
A claim against a health maintenance organization, a hospital plan corporation
or a professional health service corporation; and
(B)
Any amount payable by or on behalf of a self-insurer.
(3)
To the extent that the association’s obligation is reduced by the application
of this section, the liability of the person insured by the insolvent insurer’s
policy for the claim shall be reduced in the same amount.
(b)
Any person having a claim which may be recovered under more than one Insurance
Guaranty Association or its equivalent shall seek recovery first from the
association of the place of residence of the insured except that if it is a
first party claim for damage to property with a permanent location, he or she
shall seek recovery first from the association of the location of the property,
and if it is a workers’ compensation claim, the person shall seek recovery
first from the association of the residence of the claimant. Any recovery under
this article shall be reduced by the amount of the recovery from any other
insurance guaranty association or its equivalent.
(c) To the extent the
association pays any deductible claim for which the insurer would have been
entitled to reimbursement from the insured, the association is entitled to the
full amount of the reimbursement and available collateral as provided under
this subsection to the extent necessary to reimburse the association.
Reimbursements paid to the association pursuant to this subsection may not be
treated as distributions or as early access payments. To the extent that the
association pays a deductible claim that is not reimbursed either from
collateral or by insured payments, or incurred expenses in connection with
large deductible policies that are not reimbursed under this subsection, the
association has an exclusive cause of action against the insured, including the
right to enforce against the insured the rights of the insurer with respect to
any obligation of the insured to reimburse the insurer for deductibles or pay
claims within a deductible. Further, the fund is vested with a first lien in
any collateral provided by the insured to the insolvent insurer to secure the
insured’s performance, to the extent of claims paid by the association, which
lien can be perfected by notice to the liquidator. Nothing in this subsection
limits any rights of the association that may otherwise exist under applicable
law to obtain reimbursement from insureds for claims payments made by the
association under policies of the insurer or for the association’s related
expenses.
§33-26-13. Prevention of
insolvencies.
To aid in the detection and
prevention of insurer insolvencies:
(1)
The board of directors may, upon majority vote, make recommendations to the
commissioner on matters generally related to improving or enhancing regulation
for solvency.
(2)
At the conclusion of any domestic insurer insolvency in which the association
was obligated to pay covered claims, the board of directors may, upon majority
vote, prepare a report on the history and causes of the insolvency, based on
the information available to the association and submit the report to the
commissioner.
(3)
Reports and recommendations provided under this section may not be considered
public documents subject to disclosure under chapter twenty-nine-b of this code.
§33-26-14. Examination
of association; financial report.
The
association shall be subject to examination and regulation by the commissioner.
The board of directors shall submit, not later than April 30 of each year, a
financial report for the preceding calendar year, in a form approved by the
commissioner.
§33-26-18. Stay of
proceedings; reopening of default judgments.
(a)
All proceedings in which the insolvent insurer is a party or obligated to
defend a party in any court in this state shall, subject to waiver by the
association in specific cases involving covered claims, be stayed for six
months and such additional time as may be determined by the court from the date
the insolvency is determined to permit proper defense by the association of all
pending causes of action.
(b)
The liquidator, receiver or statutory successor of an insolvent insurer covered
by this article shall permit access by the association, or its authorized representative
to such of the insolvent insurer’s records that are necessary for the
association in carrying out its functions under this article with regard to
covered claims. In addition, the liquidator, receiver or statutory successor
shall provide the association or its representative with copies of such records
upon the request by the association and at the expense of the association.
(c) As to any covered claims arising from a judgment under any order, decision, verdict or finding based on the default of the insolvent insurer or its wrongful failure to defend an insured, the association either on its own behalf or on behalf of such insured may apply to have such judgment, order, decision, verdict or finding set aside by the same court or administrator that made such judgment, order, decision, verdict or finding and shall be permitted to defend against such claim on the merits.