304.36-050 Definitions for subtitle.
As used in this subtitle, unless the context otherwise requires: <br>(1) "Affiliate" means a person who directly or indirectly, through one (1) or more
intermediaries, controls, is controlled by, or is under common control with an <br>insolvent insurer on December 31 of the year immediately preceding the date that <br>the insurer becomes an insolvent insurer;
(2) "Association" means the Kentucky Insurance Guaranty Association created under
KRS 304.36-060;
(3) "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 <br>may be a claimant;
(4) "Commissioner" means the commissioner of the Department of Insurance of
Kentucky;
(5) "Control" means the possession, direct or indirect, of power to direct or cause the
direction of the management and policies of a person, whether through the <br>ownership of voting securities, by contract other than a loan contract or a <br>commercial contract for goods or nonmanagement services, or otherwise, unless the <br>power is the result of an official position with or corporate office held by the <br>person. Control shall be presumed to exist if any person, directly or indirectly, <br>owns, controls, holds with the power to vote, or holds proxies representing ten <br>percent (10%) or more of any other person. This presumption may be rebutted by a <br>showing that control does not exist in fact;
(6) (a) "Covered claim" means an unpaid claim, including one for unearned
premiums, submitted by a claimant, which arises out of and is within the <br>coverage and is subject to the applicable limits of an insurance policy to which <br>this subtitle applies issued by an insurer, if the insurer becomes an insolvent <br>insurer after June 16, 1972, and: <br>1.
The claimant or insured is a resident of this state at the time of the <br>insured event, provided that for entities other than an individual, the <br>residence of a claimant, insured, or policyholder is the state in which its <br>principal place of business is located at the time of the insured event; or
2.
The claim is a first-party claim for damage to property with a permanent <br>location in this state.
(b) "Covered claim" shall not include the following:
1.
Any amount due any reinsurer, insurer, insurance pool, or underwriting <br>association, as subrogation recoveries or otherwise;
2.
Any amount sought as a return of premium under any retrospective <br>rating plan or dividends plan;
3.
Legal expenses for policyholders who were not Kentucky residents on <br>the date of the insured event;
4.
Legal expenses for policyholders who were Kentucky residents at the <br>time of the insured event if the legal expenses exceed the association's <br>statutory cap;
5.
Any first-party claim by an insured whose net worth exceeds twenty-five <br>million dollars ($25,000,000) on December 31 of the year prior to the <br>year in which the insurer becomes an insolvent insurer, provided that an <br>insurer's net worth on that date shall be deemed to include the aggregate <br>net worth of the insured and all of its subsidiaries as calculated on a <br>consolidated basis;
6.
Any first-party claim by an insured that is an affiliate of an insolvent <br>insurer; or
7.
Any amount awarded as punitive or exemplary damages;
(7) "Insolvent insurer" means:
(a) An insurer licensed to transact insurance in this state either at the time the
policy was issued or when the insured event occurred;
(b) Against whom a final order of liquidation, with a finding of insolvency, has
been entered by a court of competent jurisdiction in the company's state of <br>domicile after June 16, 1972; and
(c) With respect to which no order, decree, or finding relating to the solvency of
the insurer, whether preliminary or temporary in nature or otherwise has been <br>issued by a court of competent jurisdiction or by any insurance commissioner, <br>insurance office, or department or similar official or body before June 16, <br>1972, or which was in fact insolvent before June 16, 1972, and the de facto <br>insolvency was known by the chief insurance regulatory official of the state of <br>its domicile;
(8) "Member insurer" means:
(a) Any person who writes any kind of insurance to which this subtitle applies
under KRS 304.36-030, including the exchange of reciprocal or inter-<br>insurance contracts; and
(b) Any person who is licensed to transact insurance in this state. For purposes of
determining a withdrawing member's assessment liability, an insurer shall <br>cease to be a member insurer effective on the day following the termination or <br>expiration of his or her license to transact the kinds of insurance to which this <br>subtitle applies. However, the insurer shall remain liable as a member insurer <br>for any and all obligations, including obligations for assessments levied prior <br>to the termination or expiration of the insurer's license and assessments levied <br>after the termination or expiration, that relate to any insurer that became an <br>insolvent insurer prior to the termination or expiration of the insurer's license;
(9) "Net direct written premiums" means direct gross premiums written, or in the case
of an insurer organized under KRS Chapter 299, assessments, membership fees, and <br>policy fees levied and collected in this state, less returns thereon and dividends paid <br>or credited to policyholders on such direct business. "Net direct written premiums" <br>does not include premiums on contracts between insurers or reinsurers;
(10) "Ocean marine insurance" includes any form of insurance, regardless of name, label,
or marketing designation of the insurance policy, that insures against maritime <br>perils or risks and other related perils or risks, that are usually insured against by <br>traditional marine insurance such as hull and machinery, marine builders risk, and <br>marine protection and indemnity. These perils and risks insured against include <br>without limitation loss, damage, or expense or legal liability of the insured for loss, <br>damage, or expense arising out of or incident to ownership, operation, chartering, <br>maintenance, use, repair, or construction of any vessel, craft, or instrumentality in <br>use in ocean or inland waterways, including liability of the insured for personal <br>injury, illness, or death or for loss or damage to the property of the insured or <br>another person. "Ocean marine insurance" includes that coverage written in <br>accordance with the following: <br>(a) The Jones Act (46 U.S.C. sec. 688); <br>(b) The Longshore and Harbor Workers' Compensation Act D (33 U.S.C. secs.
901 et seq.); or
(c) Any other similar federal statutory enactment, or any endorsement or policy
affording protection and indemnity coverage; and
(11) "Insured event," in an occurrence policy and claims-made policy, means the act that
gave rise to the claim.
Effective: July 15, 2010 <br>History: Amended 2010 Ky. Acts ch. 24, sec. 1464, effective July 15, 2010. --
Amended 1998 Ky. Acts ch. 99, sec. 4, effective July 15, 1998. -- Amended 1982 <br>Ky. Acts ch. 209, sec. 3, effective July 15, 1982. -- Created 1972 Ky. Acts ch. 137, <br>sec. 5, effective June 16, 1972.
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