Bill Text: IN SB0431 | 2013 | Regular Session | Enrolled
Bill Title: Property and casualty guaranty association.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2013-05-13 - Public Law 52 [SB0431 Detail]
Download: Indiana-2013-SB0431-Enrolled.html
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AN ACT to amend the Indiana Code concerning insurance.
(b) The amendments made to sections 4, 5, 6, 7, 8, 11, and 11.5 of this chapter during the 2013 regular session of the general assembly do not apply to the following:
(1) A member insurer that has been placed under an order of rehabilitation or liquidation before July 1, 2013.
(2) The association's obligations under this chapter with respect to a covered claim filed by a claimant or member insurer that has a coverage date before July 1, 2013.
The law of this chapter that applies to a member insurer described in subdivision (1) or to the association's obligations described in subdivision (2) is the law of this chapter as in effect before July 1, 2013, as if the amendments made to sections 4, 5, 6, 7, 8, 11, and 11.5 of this chapter during the 2013 regular session of the general assembly had not been made.
(1) The term "account" means any one (1) of the three (3) accounts created by section 5 of this chapter.
(2) The term "association" means the Indiana Insurance Guaranty Association created by section 5 of this chapter.
(3) The term "commissioner" means the commissioner of insurance of this state.
(4) The term "covered claim" means an unpaid claim which arises out of and is within the coverage and not in excess of the applicable limits of an insurance policy to which this chapter applies issued by an insurer, if the insurer becomes an insolvent insurer after the effective date (January 1, 1972) of this chapter and (a) the claimant or insured is a resident of this state at the time of the insured event or (b) the property from which the claim arises is permanently located in this state. "Covered claim" shall be limited as provided in section 7 of this chapter, and shall not include the following:
of claims against the liquidator or receiver of an insolvent
insurer. For the purpose of filing a claim under this clause,
notice of a claim to the liquidator of the insolvent insurer
is considered to be notice to the association or the agent of
the association and a list of claims must be periodically
submitted to the association (or another state's association
that is similar to the association) by the liquidator.
(4) any claim by a person whose net worth at the time an
insured event occurred was more than five million dollars
($5,000,000); nor
(D) A claim that is excluded under section 11.5 of this
chapter due to the high net worth of an insured.
(5) A claim against a person insured by an insolvent insurer if
the person's net worth at the time an insured event occurred
was more than fifty million dollars ($50,000,000); nor
(6) (E) Any claim by a person who directly or indirectly
controls, is controlled, or is under common control with an
insolvent insurer on December 31 of the year before the order
of liquidation.
All covered claims filed in the liquidation proceedings shall be
referred immediately to the association by the liquidator for
processing as provided in this chapter.
(5) The term "high net worth insured" means the following:
(A) For purposes of section 11.5(a) of this chapter, an
insured that has a net worth (including the aggregate net
worth of the insured and all subsidiaries and affiliates of
the insured, calculated on a consolidated basis) that
exceeds twenty-five million dollars ($25,000,000) on
December 31 of the year immediately preceding the year
in which the insurer becomes an insolvent insurer.
(B) For purposes of section 11.5(b) of this chapter, an
insured that has a net worth (including the aggregate net
worth of the insured and all subsidiaries and affiliates of
the insured, calculated on a consolidated basis) that
exceeds fifty million dollars ($50,000,000) on December 31
of the year immediately preceding the year in which the
insurer becomes an insolvent insurer.
(5) (6) The term "insolvent insurer" means (a) a member insurer
holding a valid certificate of authority to transact insurance in this
state either at the time the policy was issued or when the insured
event occurred and (b) against whom a final order of liquidation,
with a finding of insolvency, to which there is no further right of
appeal, has been entered by a court of competent jurisdiction in
the company's state of domicile. "Insolvent insurer" shall not be
construed to mean an insurer with respect to which an order,
decree, judgment or finding of insolvency whether preliminary or
temporary in nature or order to rehabilitation or conservation has
been issued by any court of competent jurisdiction prior to
January 1, 1972 or which is adjudicated to have been insolvent
prior to that date.
(6) (7) The term "member insurer" means any person who is
licensed or holds a certificate of authority under IC 27-1-6-18 or
IC 27-1-17-1 to transact in Indiana any kind of insurance for
which coverage is provided under section 3 of this chapter,
including the exchange of reciprocal or inter-insurance contracts.
The term includes any insurer whose license or certificate of
authority to transact such insurance in Indiana may have been
suspended, revoked, not renewed, or voluntarily surrendered. A
"member insurer" does not include farm mutual insurance
companies organized and operating pursuant to IC 27-5.1 other
than a company to which IC 27-5.1-2-6 applies.
(7) (8) The term "net direct written premiums" means direct gross
premiums written in this state on insurance policies to which this
chapter applies, less return premiums thereon and dividends paid
or credited to policyholders on such direct business. "Net direct
premiums written" does not include premiums on contracts
between insurers or reinsurers.
(8) (9) The term "person" means an individual, an aggregation
of individuals, a corporation, limited liability company, a
partnership, reciprocal or inter-insurance exchange, association,
or voluntary organization. or another entity.
(1) The worker's compensation insurance account.
(2) The automobile insurance account.
(3) The account for all other insurance to which this chapter applies.
(b) Not more than one (1) member insurer in a group of insurers under the same management or ownership shall serve as a director at the same time.
(c) Directors shall serve such terms as shall be established in the plan of operation.
(d) Vacancies on the board shall be filled for the remaining period of the term in the same manner as the initial selection.
(e) If no directors are selected by March 1, 1972, the commissioner may appoint the initial members of the board of directors.
(f) In approving selections to the board, the commissioner shall consider among other things whether all member insurers are fairly represented.
(g) Directors may be reimbursed from the assets of the association for expenses incurred by them as members of the board of directors.
(A) The full amount of a covered claim for benefits under worker's compensation insurance.
(B) With respect to a claim for the return of unearned premium,
(i) eighty percent (80%) of the paid but unearned premium; or
(ii) six hundred fifty dollars ($650) multiplied by the number of months or partial months remaining in the policy term, not to exceed twelve (12) months.
(C) An amount not to exceed three hundred thousand dollars ($300,000) per covered claim. For purposes of this clause, all claims of any kind that arise out of or are related to the bodily injury to or death of one (1) person constitute a single claim, regardless of the number of claims made or the number of claimants.
The association is not, in any event, obligated to pay a claimant any amount in excess of the obligation of the insolvent insurer under the policy or coverage from which the claim arises.
association shall be obligated shall not exceed the claimant's
reasonable expenses incurred for necessary medical, surgical,
x-ray, and dental services, including prosthetic devices and
necessary ambulance, hospital, professional nursing, and funeral
services, and any amounts actually lost by reason of the claimant's
inability to work and earn wages or salary or their equivalent that
would otherwise have been earned in the normal course of such
injured claimant's employment, to which may be added at the
discretion of the association a sum not to exceed one thousand
dollars ($1,000) for all other costs and expenses incurred by the
claimant prior to the insolvency. In the case of a claim for
wrongful death, the foregoing obligation of the association shall,
in addition to the limits set forth above, be subject to the
limitations provided by the wrongful death statutes of the state.
Such amounts which are legally payable because of the death of
a claimant shall be paid to the claimant's estate, to the claimant's
father or mother or guardian, to the surviving spouse or children,
or to the next of kin as set out in IC 34-23-1 and IC 34-23-2.
The amount for which the association shall be obligated may also
include payments in fact made to others, not members of
claimant's household, which were reasonably incurred to obtain
from such other persons ordinary and necessary services for the
production of income in lieu of those services the claimant would
have performed for himself the claimant had he the claimant not
been injured.
In the case of claims arising from bodily injury, sickness, or
disease, including those in which death results, under IC 22-3 or
similar state or federal laws providing benefits for occupational
injury or disease, the association is obligated only to the extent
provided under IC 22-3.
(2) A third party having a covered claim against any insured of an
insolvent member insurer may file such claim in the liquidation
proceeding under IC 27-9-3 if such insolvent member insurer is
a domestic insurer and pursuant to the applicable provisions of
law of the state of domicile if such insolvent member insurer is
not a domestic insurer. The liquidator shall immediately refer said
claim to the association to process as provided in this chapter
unless the claimant shall within thirty (30) days from the date of
filing said claim in the liquidation proceeding, file with the
commissioner as liquidator a written demand that said claim be
processed in liquidation proceedings as a claim not covered by
this chapter.
member insurer, if the assessment would cause the member
insurer's financial statement to reflect 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. However, during the period of
deferment no dividends shall be paid to shareholders or
policyholders by a company whose assessment has been deferred.
A deferred assessment shall be paid when such payment will not
reduce capital or surplus below required minimums. Such
payments shall be refunded to those companies whose
assessments were increased as the result of such deferment, or at
the option of any such company, shall be credited to future
assessments against such company.
(iv) (4) Investigate, adjust, compromise, settle, and pay covered
claims to the extent of the association's obligation and deny all
other claims and may review settlements, releases, and judgments
to which the insolvent insurer or its insured were parties to
determine the extent to which such settlements, releases, and
judgments may be properly contested, and as appropriate to
contest them.
(v) (5) Notify such persons as the commissioner directs under
IC 27-6-8-9(b)(i).
(vi) (6) Handle claims through its employees or through one (1)
or more insurers or other persons designated as servicing
facilities. Designation of a servicing facility is subject to the
approval of the commissioner, but such designation may be
declined by a member insurer.
(vii) (7) 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
chapter. Any unreimbursed obligation of the association to a
member insurer designated a servicing facility shall constitute an
admitted asset of such member insurer.
(viii) (8) Be entitled to and permitted to examine all claims, files,
and records of an insolvent insurer at such times and to such
extent as necessary or appropriate to obtain information regarding
covered claims individually and in the aggregate, and to establish
such procedures as appropriate to obtain prompt notice of all
covered claims and information pertaining thereto during the
course of liquidation.
(b) The association may do the following:
(c) The following apply with respect to an action involving the association:
(1) Except for an action by the receiver, an action related to or arising out of this chapter against the association must be brought in an Indiana court.
(2) Indiana courts have exclusive jurisdiction over all actions against the association related to or arising out of this chapter.
(3) The exclusive venue for an action by or against the association is in the Marion County Circuit Court, Marion County, Indiana. However, the association may waive this venue for a particular action.
thereto necessary or suitable to assure the fair, reasonable, and
equitable administration of the association. The plan of operation and
amendments thereto shall become effective upon approval in writing
by the commissioner.
(ii) If the association fails to submit a suitable plan of operation by
March 31, 1972, or if at any time thereafter the association fails to
submit suitable amendments to the plan, the commissioner shall, after
notice and hearing, adopt and promulgate reasonable rules as are
necessary or advisable to effectuate the provisions of this chapter. Such
rules shall continue in force until modified by the commissioner or
superseded by a 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:
(i) Establish the procedures whereby all the powers and duties of
the association under section 7 of this chapter will be performed.
(ii) Establish procedures for handling assets of the association.
(iii) Establish the amount and method of reimbursing members of
the board of directors under section 6 of this chapter.
(iv) Establish procedures by which claims may be filed with the
association by the liquidator and establish acceptable forms of
proof of covered claims. Notice of claims to the receiver or
liquidator of the insolvent insurer shall be deemed notice to the
association or its agent and a list of these claims shall be
periodically submitted to the association or similar organization
in another state by the receiver or liquidator.
(v) Establish regular places and times for meetings of the board
of directors.
(vi) Establish procedures for records to be kept of financial
transactions of the association, its agents, and the board of
directors.
(vii) Provide that any member insurer aggrieved by any final
action or decision of the association may appeal to the
commissioner within thirty (30) days after the action or decision.
(viii) Establish the procedures whereby selections for the board of
directors will be submitted to the commissioner.
(ix) 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 section 7(a)(iii) 7(a)(3)
and 7(b)(iii) 7(b)(3) of this chapter, 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. 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 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.
(1) coverage under an insured health plan, a health maintenance organization, a hospital plan corporation, a professional health service corporation, or a disability insurance policy; and
(2) any amount payable by or on behalf of a self-insurer.
However, the term does not include coverage under a life insurance policy.
(c) The requirement to exhaust coverage provided by any other insurance policy under subsection (b):
(1) applies regardless of whether the other insurance policy is written by a member insurer; and
(2) does not apply to a right under a:
(A) policy written by an insolvent insurer; or
(B) life insurance policy.
association of the location of the property, and if it is a worker's
compensation claim, the person shall seek recovery first from the
association of the residence of the claimant. Any recovery under this
chapter shall be reduced by the amount of recovery from any other
insurance guaranty association or its equivalent.
(b) The association has the right to recover from a high net worth insured described in section 4(5)(B) of this chapter all amounts paid by the association to or on behalf of the high net worth insured, regardless of whether the amounts were paid for indemnity, defense, or otherwise.
(c) The association is not obligated to pay a claim that:
(1) would otherwise be a covered claim;
(2) is an obligation to or on behalf of a person who has a net worth greater than the net worth allowed by the insurance guaranty association law of the state of residence of the claimant at the time specified by the applicable law of the state of residence of the claimant; and
(3) has been denied by the association of the state of residence of the claimant on the basis described in subdivision (2).
(d) The association shall establish reasonable procedures, subject to the approval of the commissioner, for requesting financial information from insureds:
(1) on a confidential basis; and
(2) in the application of this section.
(e) The procedures established under subsection (d) must provide for sharing of the financial information obtained from insureds with:
(1) any other association that is similar to the association; and
(2) the liquidator for an insolvent insurer;
on the same confidential basis.
(f) If an insured refuses to provide financial information that is:
(1) requested under the procedures established under subsection (d); and
(2) available;
the association may, until the time that the financial information is provided to the association, consider the insured to be a high net worth insured for purposes of subsections (a) and (b).
(g) In an action contesting the applicability of this section to an insured that refuses to provide financial information under the procedures established under subsection (d), the insured bears the burden of proof concerning the insured's net worth at the relevant time. If the insured fails to prove that the insured's net worth at the relevant time was less than the applicable amount set forth in section 4(5)(A) or 4(5)(B) of this chapter, the court shall award to the association the association's full costs, expenses, and reasonable attorney's fees incurred in contesting the claim.
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