Bill Text: GA HB1364 | 2009-2010 | Regular Session | Comm Sub
Bill Title: Insurance; Georgia Insurers Insolvency Pool liable in emergency; provide
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2010-06-04 - Effective Date [HB1364 Detail]
Download: Georgia-2009-HB1364-Comm_Sub.html
10 LC
37 1091S
The
Senate Insurance and Labor Committee offered the following substitute to HB
1364:
A
BILL TO BE ENTITLED
AN ACT
AN ACT
To
amend Title 33 of the Official Code of Georgia Annotated, relating to insurance,
so as to provide that the Georgia Insurers Insolvency Pool shall be liable to
claimants and electing insureds in emergency circumstances; to provide for
legislative intent; to provide for definitions; to provide for exceptions to
certain provisions relative to the liability of the pool and the filing of
claims with the pool; to provide for related matters; to provide an effective
date; to repeal conflicting laws; and for other purposes.
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION
1.
Title
33 of the Official Code of Georgia Annotated, relating to insurance, is amended
by revising subparagraph (G) of paragraph (4) of Code Section 33-36-3, relating
to definitions, as follows:
"(G)
A covered claim shall not include any
first
party
first-party
claim by an insured whose net worth exceeds $10 million on December 31 of the
year next preceding the date the insurer becomes an insolvent insurer; provided,
however, that an insured's net worth on such date shall be deemed to include the
aggregate net worth of the insured and all of its subsidiaries and affiliates as
calculated on a consolidated
basis; or
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, however, that an insured's net worth on
such date shall be deemed to include the aggregate net worth of the insured and
all of its subsidiaries and affiliates as calculated on a consolidated basis;
and further provided that this exclusion shall not apply to 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."
SECTION
2.
Said
title is further amended by revising Code Section 33-36-9, relating to coverage
afforded by insolvent insurers to become obligation of pool, as
follows:
"33-36-9.
In
the event an insurer is ordered to be liquidated, the coverage afforded by
property and casualty insurance policies issued by such insurer shall, with
respect to covered claims, become the obligation of the pool for a period of 30
days from the date of such determination or until policy expiration date if less
than said 30 days or until the policy has been replaced by the insurer within
said 30 days. The pool shall be deemed the insurer only to the extent of its
obligation on the covered claims and to such extent, subject to the limitations
provided in this chapter, shall 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 pool shall not be deemed the insolvent
insurer for any purpose relating to the issue of whether the pool is amenable to
the personal jurisdiction of the courts of any state. The pool is authorized to
investigate, adjust, compromise, and settle covered claims or to investigate,
handle, and deny noncovered claims. The pool shall have the authority, upon
approval of the Commissioner, to borrow funds necessary to effect the purposes
of this chapter. The pool shall have the authority to establish procedures for
requesting financial information from insureds on a confidential basis for
purposes of applying Code sections concerning their net worth, subject to such
information being shared with any other association similar to the pool and the
liquidator for the insolvent company on the same confidential basis. If the
insured refuses to provide the requested financial information and an auditor's
certification of the same where requested and available, the pool may deem the
net worth of the insured, in the instance of a
first
party
first-party
claim, to be in excess of $10 million at the relevant
time or, in
the event of a third party claim, to be in excess of $25 million at the relevant
time. In any lawsuit contesting the
applicability of subparagraph (G) of paragraph (4) of Code Section 33-36-3 or
subsection (d) of Code Section 33-36-14 where the insured has declined to
provide financial information under the procedure provided pursuant to this Code
section, the insured shall bear the burden of proof concerning its net worth at
the relevant time. If the insured fails to prove that its net worth at the
relevant time was less than the applicable amount, the court shall award the
pool its full costs, expenses, and reasonable attorney's fees in contesting the
claim."
SECTION
3.
Said
title is further amended by revising Code Section 33-36-11, relating to the
limitation for filing claims, claims filed after the final date set by court,
and default judgments, as follows:
"33-36-11.
(a)
Notwithstanding any other provisions of this chapter,
except as
provided for in Code Section 33-36-20, a
covered claim shall not include a claim filed with the pool after the earlier of
(i) 18 months after the date of the 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 and shall not include any claim filed with the pool or a
liquidator for protection afforded under the insured's policy for
incurred-but-not-reported
incurred but
not reported losses.
(b)
The pool may not be found in default. No default judgments may be entered
against the pool, the insolvent insurer, or the insured of the insolvent insurer
after the instigation of an insolvency proceeding prior to an order of
liquidation, nor during the pendency of insolvency proceedings, nor during a 120
day stay following an order of liquidation.
(c)
In no instance may a finding of default or the entry of a default judgment
against an insurer be applicable or enforceable against the pool or the insured
of the insolvent insurer."
SECTION
4.
Said
title is further amended by revising Code Section 33-36-14, relating to
exhaustion of rights by claimants against insolvent insurers prior to recovery,
recovery of payment to claimants in excess of amounts authorized, reduction of
liability of insured, and recovery of amounts paid on behalf of certain persons,
as follows:
"33-36-14.
(a)
Any
Except as
provided for in Code Section 33-36-20, any
person having a claim against a policy or an insured under a policy issued by an
insolvent insurer, which claim is a covered claim and is also a claim within the
coverage of any policy issued by a solvent insurer, shall be required to exhaust
first his or
her rights under such policy issued by the
solvent insurer. The policy of the solvent insurer shall be treated as primary
coverage and the policy of the insolvent insurer shall be treated as secondary
coverage and his or her rights to recover such claim under this chapter shall be
reduced by any amounts received from the solvent insurers.
(b)
Any amount paid a claimant in excess of the amount authorized by this chapter
may be recovered by an action brought by or on behalf of the pool.
(c)
To the extent that the pool's obligation is reduced by the application of this
Code section, the liability of the person insured by the insolvent insurer's
policy for the claim shall be reduced in the same amount.
(d)
The
Except as
provided for in Code Section 33-36-20, the
pool shall have the right to recover from
the
following persons
any person who
is an affiliate of the insolvent insurer
all amounts paid by the pool on behalf of such 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 deemed to include the
aggregate net worth of the insured and all of its subsidiaries and affiliates as
calculated on a consolidated basis; and
(2)
Any person who is an affiliate of the insolvent
insurer."
SECTION
5.
Said
title is further amended by adding a new Code section to read as
follows:
"33-36-20.
(a)
It is the policy of this state to protect insureds and their claimants from
liability as a result of the insolvency of insurers. In furtherance of this
policy, it is the intent of the legislature, notwithstanding any provision of
law to the contrary, that the Georgia Insurers Insolvency Pool shall be liable
to claimants and electing insureds in emergency circumstances.
(b)
As used in this Code section, the term:
(1)
'Electing insured' means any insured under a workers' compensation insurance
policy that is impacted by an emergency circumstance. Such term shall include
but not be limited to governmental insureds and other insureds under a workers'
compensation insurance policy impacted by an emergency circumstance whose net
worth exceeds $25 million as of December 31 of the year preceding the filing of
a claim.
(2)
'Emergency circumstance' means a circumstance in which an association or
industrial insured captive insurance company, including such a captive company
that subsequently was authorized to transact business pursuant to Chapter 3 of
this title, that is issuing, or which has issued, workers' compensation
insurance contracts and has been declared insolvent.
(3)
'Emergency claimant' means any third-party claimant, under a workers'
compensation insurance policy, who is impacted by an emergency circumstance and
whose employer has, by a court of competent jurisdiction, been declared bankrupt
or insolvent.
(c)
Any electing insured whose net worth is less than $25 million as of December 31
of the year preceding the filing of a claim may be shielded from liability by
the pool and have any workers' compensation claims filed against such electing
insured covered by the pool, provided said electing insured pays $20,000.00 per
claim to the insolvency pool prior to October 1, 2010. Any electing insured
whose net worth exceeds $25 million as of December 31 of the year preceding the
filing of a claim may be shielded from liability by the pool and have any
workers' compensation claims filed against such electing insured covered by the
pool, provided said electing insured pays $100,000.00 per claim to the
insolvency pool prior to October 1, 2010. Claims of all emergency claimants
shall be covered by the insolvency pool.
(d)
Claimants shall retain the right to pursue claims against any insured that is
not an electing
insured."
SECTION
6.
Said
title is further amended by revising Code Section 33-41-20.1, relating to the
membership of captive insurance companies in Georgia Insurers Insolvency Pool,
as follows:
"33-41-20.1.
(a)
On and
after January 1, 2008, every
Every
association and industrial insured captive insurance company
that
is
issuing, or
which has issued, workers' compensation
insurance contracts shall
become
be
a member of the Georgia Insurers Insolvency Pool under Chapter 36 of this title
as to workers' compensation only. Such captive insurance companies shall be
liable for assessments pursuant to Code Section 33-36-7 and for all other
obligations imposed pursuant to Chapter 36 of this title as to workers'
compensation only.
(b)
The Georgia
Insurers Insolvency Pool shall not be liable
for
For
any workers'
compensation insurance claims incurred by
any
association
and industrial insured captive insurance
company before January 1,
2008, the
Georgia Insurers Insolvency Pool shall be liable in accordance with Code Section
33-36-20."
SECTION
7.
This
Act shall become effective upon its approval by the Governor or upon its
becoming law without such approval.
SECTION
8.
All
laws and parts of laws in conflict with this Act are repealed.