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2005 Idaho Code - 41-4308 — POWERS AND DUTIES OF THE ASSOCIATION
TITLE 41 INSURANCE CHAPTER 43 IDAHO LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION ACT 41-4308. POWERS AND DUTIES OF THE ASSOCIATION. In addition to the powers and duties enumerated in other sections of this act: (1) If a domestic insurer is an impaired insurer, the association may, subject to any conditions imposed by the association, other than those which impair the contractual obligations of the impaired insurer, and approved by the impaired insurer and the director: (a) Guarantee or reinsure, or cause to be guaranteed, assumed, or reinsured, any or all of the covered policies of residents of the impaired insurers; (b) Provide such moneys, pledges, notes, guarantees, or other means as are proper to effectuate and assure payment of the contractual obligations to residents of the impaired insurer pending action under paragraph (a) of this subsection; (c) Loan money to the impaired insurer. (d) This chapter shall provide coverage for the policies and contracts specified in subsection (1) of this section, for persons who are not residents, but only under the following conditions: (i) The insurers which issued such policies or contracts are domiciled in this state; (ii) The director has determined that by statute, similar protection is not available for such nonresidents as that provided in this chapter for residents of this state; and (iii) The policy or contract establishing or creating the obligation is not a managed care plan. (2) If a domestic insurer is an insolvent insurer, the association shall, subject to the approval of the director: (a) Guarantee, assume, or reinsure, or cause to be guaranteed, assumed, or reinsured the covered policies of residents of the insolvent insurer; (b) Assume payment of the contractual obligations to residents of the insolvent insurer; and, (c) Provide such moneys, pledges, notes, guarantees, or other means as are reasonably necessary to discharge such duties. (d) This chapter shall provide coverage for the policies and contracts specified in subsection (2) of this section, for persons who are not residents, but only under the following conditions: (i) The insurers which issued such policies or contracts are domiciled in this state; (ii) The director has determined that by statute, similar protection is not available for such nonresidents as that provided by this chapter for residents of this state; and (iii) The policy or contract establishing or creating the obligation is not a managed care plan. (3) If a foreign or alien insurer is an insolvent insurer, the association shall, subject to the approval of the director: (a) Guarantee, assume, or reinsure, or cause to be guaranteed, assumed, or reinsured the covered policies of residents; (b) Assure payment of the contractual obligations of the insolvent insurer to residents; and (c) Provide such moneys, pledges, notes, guarantees, or other means as are reasonably necessary to discharge such duties. Provided, however, that this subsection shall not apply where the director has determined that the foreign or alien insurer's domiciliary jurisdiction or state of entry provides, by statute, protection substantially similar to that provided by this act for residents of this state. (4) (a) In carrying out its duties under subsections (2) and (3) of this section, permanent policy liens, or contract liens may be imposed in connection with any guarantee, assumption or reinsurance agreement, if the court: (i) Finds that the amounts which can be assessed under this act are less than the amounts needed to assure full and prompt performance of the insolvent insurer's contractual obligations, or that the economic or financial conditions as they affect member insurers are sufficiently adverse to render the imposition of policy or contract liens, to be in the public interest; and (ii) Approves the specific policy liens or contract liens to be used. (b) Before being obligated under subsections (2) and (3) of this section, the association may request that there be imposed temporary moratoriums or liens on payments of cash values and policy loans in addition to any contractual provisions for deferral of cash or policy loan values and such temporary moratoriums and liens may be imposed if they are approved by the court. (5) If the association fails to act within a reasonable period of time as provided in subsections (2) and (3) of this section, the director shall have the powers and duties of the association under this act with respect to insolvent insurers. (6) The association may render assistance and advice to the director upon his request, concerning rehabilitation, payment of claims, continuance of coverage, or the performance of other contractual obligations of any impaired or insolvent insurer. (7) The association shall have standing to appear before any court in this state with jurisdiction over an impaired or insolvent insurer concerning which the association is or may become obligated under this act. Such standing shall extend to all matters germane to the powers and duties of the association, including, but not limited to, proposals for reinsuring or guaranteeing the covered policies of the impaired or insolvent insurer and the determination of the covered policies and contractual obligations. (8) (a) Any person receiving benefits under this act shall be deemed to have assigned the rights under the covered policy to the association to the extent of the benefits received because of this act whether the benefits are payments of contractual obligations or continuation of coverage. The association may require an assignment to it of such rights by any payee, policy or contract owner, beneficiary, insured or annuitant as a condition precedent to the receipt of any rights or benefits conferred by this act upon such person. The association shall be subrogated to these rights against the assets of any insolvent insurer. (b) The subrogation rights of the association under this subsection shall have the same priority against the assets of the insolvent insurer as that possessed by the person entitled to receive benefits under this act. (9) The contractual obligations of the insolvent insurer for which the association becomes or may become liable shall be the lesser of: (a) The contractual obligations for which the insolvent insurer would have been liable in the absence of an insolvency; or (b) Unless such obligations are reduced as permitted by subsection (4) of this section, the aggregate liability of the association shall not exceed the following per policy: (i) One hundred thousand dollars ($100,000) in net cash surrender in net cash withdrawal values for life insurance, or three hundred thousand dollars ($300,000) in life insurance death benefits; (ii) Three hundred thousand dollars ($300,000) in disability insurance claims or benefit payments, or one hundred thousand dollars ($100,000) in net cash surrender and net cash withdrawal values for disability benefits; (iii) Three hundred thousand dollars ($300,000) of annuity benefit payments for annuities for which periodic annuity benefits, for a period of not less than the annuitant's lifetime or for a period certain of not less than ten (10) years, have begun to be paid on or before the date of the impairment or insolvency, or one hundred thousand dollars ($100,000) in annuity net cash surrender or net cash withdrawal values; or (iv) Where no coverage limit has been specified for a covered policy or benefit, the coverage limit shall be three hundred thousand dollars ($300,000). (c) In no event shall the association be liable to expend more than three hundred thousand dollars ($300,000) in the aggregate for all benefits, including cash values, with respect to any one (1) life. (10) The association may: (a) Enter into such contracts as are necessary or proper to carry out the provisions and purposes of this act; (b) Sue or be sued, including taking any legal actions necessary or proper for recovery of any unpaid assessments under section 41-4309, Idaho Code; (c) Borrow money to effect the purposes of this act. Any notes or other evidence of indebtedness of the association not in default shall be legal investments for domestic insurers and may be carried as admitted assets; (d) Employ or retain such persons as are necessary to handle the financial transactions of the association and to perform such other functions as become necessary or proper under this act; (e) Negotiate and contract with any liquidator, rehabilitator, conservator, or ancillary receiver to carry out the powers and duties of the association; (f) Take such legal action as may be necessary to avoid payment of improper claims; (g) Exercise, for the purposes of this act and to the extent approved by the director, the powers of a domestic life or health insurer, but in no case may the association issue insurance policies or annuity contracts other than those issued to perform the contractual obligations of the impaired or insolvent insurer.
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