US Laws, Codes, Statutes & Cases

                                  TITLE  41
                                  INSURANCE
                                  CHAPTER 36
                        INSURANCE GUARANTY ASSOCIATION
    41-3608.  OBLIGATIONS AND POWERS OF ASSOCIATION. (1) The association
shall:
    (a)  Be obligated to pay covered claims existing prior to the order of
    liquidation arising within thirty (30) days after the order of
    liquidation, or before the policy expiration date if less than thirty (30)
    days after the order of liquidation, or before the insured replaces the
    policy or causes its cancellation, if he does so within thirty (30) days
    of the order of liquidation. Such obligation shall be satisfied by paying
    to the claimant an amount as follows:
         (i)   The full amount of a covered claim for benefits under a
         worker's compensation insurance coverage;
         (ii)  An amount not exceeding ten thousand dollars ($10,000) per
         policy for covered claim for the return of unearned premium;
         (iii) An amount not exceeding three hundred thousand dollars
         ($300,000) per claim for all other covered claims.
    (b)  In no event shall 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 provision of this chapter, a covered claim
    shall not include any claim filed with the association after the earlier
    of: (i) eighteen (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 association or a liquidator for protection
    afforded under the insured policy for incurred-but-not-reported losses.
    Any obligation of the association to defend an insured shall cease upon
    the association's payment 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.
    (c)  Be deemed the insurer to the extent of its obligation on the covered
    claims and to such extent 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.
    (d)  Assess member insurers separately for amounts necessary to pay the
    obligations of the association under paragraph (a) of this subsection
    subsequent to an insolvency, the expenses of handling covered claims
    subsequent to an insolvency and other expenses authorized by this chapter.
    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
    preceding the assessment on the kinds of insurance covered by the account
    bears to the net direct written premiums of all member insurers for the
    calendar year preceding the assessment on the kinds of insurance covered
    by the account. Each member insurer shall be notified of the assessment
    not later than thirty (30) days before it is due. No member insurer may be
    assessed in any one (1) year an amount greater than one percent (1%) of
    that member insurer's net direct written premiums for the calendar year
    preceding the assessment. If the maximum assessment, together with the
    other assets of the association in the account, does not provide in any
    one (1) year an amount sufficient to make all necessary payments, the
    funds available shall be prorated and the unpaid portion shall be paid as
    soon thereafter as funds become available. The association shall pay
    claims in any order which it deems reasonable, including the payment of
    claims as such are received from the claimants 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 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 shall be paid to shareholders or policyholders. Deferred
    assessments shall be paid when such payment will not reduce capital or
    surplus below required minimums. Such payments shall be refunded to those
    companies receiving larger assessments by virtue of such deferment, or at
    the election of any such company, credited against future assessments.
    Each member insurer may set off against any assessment, authorized
    payments made on covered claims and expenses incurred in the payment of
    such claims by the member insurer if they are chargeable to the account.
    (e)  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 and may review
    settlements, releases and judgments to which the insolvent insurer or its
    insureds were parties to determine the extent to which such settlements,
    releases and judgments may be properly contested. The association shall
    have the right to appoint or substitute and to direct legal counsel
    retained under liability insurance policies for the defense of covered
    claims.
    (f)  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 director, but
    such designation may be declined by a member insurer.
    (g)  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.
    (2)  The association may:
    (a)  Employ or retain such persons as are necessary to handle claims and
    perform other duties of the association.
    (b)  Borrow funds necessary to effect the purposes of this chapter in
    accord with the plan of operation.
    (c)  Sue or be sued, and such power to sue includes the power and right to
    intervene as a party before any court that has jurisdiction over the
    insolvent insurer as defined by this chapter.
    (d)  Negotiate and become a party to such contracts as are necessary to
    carry out the purpose of this chapter.
    (e)  Perform such other acts as are necessary or proper to effectuate the
    purpose of this chapter.
    (f)  Refund to the member insurers in proportion to the contribution of
    each member insurer that amount which, in the opinion of the board of
    directors, will not be needed for the purposes of this chapter within two
    (2) years from the date the association receives the refund from the
    receivership.