2009 Iowa Code
Title 13 - Commerce
Subtitle 1 - Insurance and Related Regulation
CHAPTER 508C - IOWA LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION
508C.8 - POWERS AND DUTIES OF THE ASSOCIATION.

        508C.8  POWERS AND DUTIES OF THE ASSOCIATION.
         1.  If a domestic, foreign, or alien insurer is an impaired
      insurer, the association, subject to conditions imposed by the
      association and approved by the impaired insurer and the
      commissioner, may:
         a.  Guarantee, assume, reinsure, or cause to be guaranteed,
      assumed, or reinsured, any or all of the covered policies of the
      impaired insurer.
         b.  Provide moneys, pledges, notes, guarantees, or other means
      as proper to effectuate paragraph "a" and assure payment of the
      contractual obligations of the impaired insurer pending action under
      paragraph "a".
         c.  Loan money to the impaired insurer and guarantee
      borrowings by the impaired insurer, provided the association has
      concluded, based on reasonable assumptions, that there is a
      likelihood of repayment of the loan and a probability that unless a
      loan is made the association would incur substantial liabilities
      under subsection 2.
         1A.  If a domestic, foreign, or alien insurer is an insolvent
      insurer, subject to the approval of the commissioner, the association
      shall:
         a.  Guarantee, assume, or reinsure, or cause to be guaranteed,
      assumed, or reinsured the covered policies of the insolvent insurer.

         b.  Assure payment of the contractual obligations of the
      insolvent insurer.
         c.  Provide moneys, pledges, notes, guarantees, or other means
      as reasonably necessary to discharge the duties described in this
      subsection.
         2. a.  If a domestic, foreign, or alien insurer is an impaired
      insurer and the insurer is not paying claims timely, then, subject to
      the approval of the commissioner and to the preconditions specified
      in this subsection, the association may do either or both of the
      following:
         (1)  Take any of the actions specified in subsection 1, subject to
      the conditions in that subsection.
         (2)  Provide substitute benefits in lieu of the contractual
      obligations of the impaired insurer solely for health claims,
      periodic annuity benefits, death benefits, supplemental benefits, and
      cash withdrawals for policy or contract owners who petition for the
      benefits under claims of emergency or hardship in accordance with
      standards proposed by the association and approved by the
      commissioner.
         b.  The association is subject to this subsection only if all
      of the following conditions are met:
         (1)  The laws of the state of domicile provide that until all
      payments of or on account of the impaired insurer's contractual
      obligations by all guaranty associations, along with all interest on
      the payments and expenses have been repaid to the guaranty
      associations or a plan of repayment by the impaired insurer has been
      approved by the guaranty associations all of the following apply:
         (a)  The delinquency proceeding shall not be dismissed.
         (b)  Neither the impaired insurer nor its assets shall be returned
      to the control of its shareholders or private management.
         (c)  The impaired insurer shall not be permitted to solicit or
      accept new business or have any suspended or revoked license
      restored.
         (2)  If the impaired insurer is a domestic insurer it has been
      placed under an order of rehabilitation by a court of competent
      jurisdiction in this state; or, if the impaired insurer is a foreign
      or alien insurer it has been prohibited from soliciting or accepting
      new business in this state, its certificate of authority has been
      suspended or revoked in this state, and a petition for rehabilitation
      or liquidation has been filed in a court of competent jurisdiction in
      its state or nation of domicile by the commissioner of that state or
      similar authority in an alien nation.
         3. a.  In carrying out its duties under subsection 2,
      permanent policy liens or contract liens may be imposed in connection
      with a guarantee, assumption, or reinsurance agreement, if the court
      does both of the following:
         (1)  Finds either that the amounts which can be assessed under
      this chapter 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 the public
      interest to justify the imposition of policy or contract liens.
         (2)  Approves the specific policy liens or contract liens to be
      used.
         b.  Before being obligated under subsection 2, the association
      may request the imposition of a temporary moratorium, not exceeding
      three years, or liens on payments of cash values, termination values,
      and policy loans in addition to any contractual provisions for
      deferral of cash values, termination values, or policy loans.  The
      temporary moratoriums and liens may be imposed by the court as a
      condition of the association's liability with respect to the
      insolvent insurer.
         c.  The obligations of the association under subsection 2
      regarding a covered policy shall be reduced to the extent that the
      person entitled to the obligations has received payment of all or any
      part of the contractual benefits payable under the covered policy
      from any other source.
         d.  The association may offer modifications to the owners of
      policies or contracts or classes of policies or contracts issued by
      the insolvent insurer, if the association finds that under the
      policies or contracts the benefits provided, provisions pertaining to
      renewal, or the premiums charged or which may be charged are not
      reasonable.  If the owner of a policy or contract to be modified
      fails or refuses to accept the modification as approved by the court,
      the association may terminate the policy or contract as of a date not
      less than one hundred eighty days after the modification is sent to
      the owner.  The association shall have no liability under the policy
      or contract for any claim incurred or continuing beyond the
      termination date.  However, this paragraph does not apply to interest
      adjustments made pursuant to section 508C.3, subsection 3, paragraph
      "a".
         4.  If the association fails to act within a reasonable period of
      time as provided in subsection 2, the commissioner shall have the
      powers and duties of the association under this chapter with respect
      to insolvent insurers.
         5.  Upon request the association may give assistance and advice to
      the commissioner concerning the rehabilitation, payment of claims,
      continuance of coverage, or the performance of other contractual
      obligations of an impaired or insolvent insurer.
         6.  The association has 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 chapter.  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.
         7. a.  A person receiving benefits under this chapter is
      deemed to have assigned the rights under the covered policy to the
      association to the extent of the benefits received under this
      chapter, whether the benefits are payments of contractual obligations
      or a continuation of coverage.  The association may require an
      assignment to the association of the rights by a payee, policyholder
      or contract owner, beneficiary, insured, or annuitant as a condition
      precedent to the receipt of any rights or benefits conferred by this
      chapter upon the person.  The association shall be subrogated to
      these rights against the assets of the insolvent insurer.
         b.  The subrogation rights of the association under this
      subsection have the same priority against the assets of the insolvent
      insurer as that possessed by the person entitled to receive benefits
      under this chapter.
         c.  In addition to the rights pursuant to subsection 3,
      paragraphs "a" and "b", the association shall have all common
      law rights of subrogation and any other equitable or legal remedy
      which would have been available to the insolvent insurer or holder of
      a policy or contract.
         8. a.  The benefits that the association may become obligated
      to cover shall in no event exceed the lesser of either of the
      following:
         (1)  The contractual obligations for which the insurer is liable
      or would have been liable if it were not an impaired or insolvent
      insurer.
         (2)  Any of the following:
         (a)  With respect to one life, regardless of the number of
      policies or contracts:
         (i)  Three hundred thousand dollars in life insurance death
      benefits, but not more than one hundred thousand dollars in net cash
      surrender and net cash withdrawal values for life insurance, or three
      hundred fifty thousand dollars in the aggregate.
         (ii)  Three hundred thousand dollars for health insurance benefits
      including any net cash surrender and net cash withdrawal values.
         (iii)  Two hundred fifty thousand dollars in the present value of
      annuity benefits, including net cash surrender and net cash
      withdrawal values.
         (b) (i)  With respect to each individual benefit plan established
      under section 401, 403(b), or 457 of the United States Internal
      Revenue Code, or each unallocated annuity contract account, excluding
      a plan established under section 401, 403(b), or 457 of the United
      States Internal Revenue Code, not more than two hundred fifty
      thousand dollars in the aggregate, in present value annuity benefits,
      including net cash surrender and net cash withdrawal values for the
      beneficiaries of the deceased individual.
         (ii)  However, the association shall not in any event be obligated
      to cover more than an aggregate of three hundred fifty thousand
      dollars in benefits with respect to any one life under subparagraph
      division (a) and this subparagraph division (b), or more than five
      million dollars in benefits to one owner of multiple nongroup
      policies of life insurance regardless of whether the policy owner is
      an individual, firm, corporation, or other person, and whether the
      persons insured are officers, managers, employees, or other persons,
      and regardless of the number of policies and contracts held by the
      owner.
         (c)  With respect to a plan sponsor whose plan owns, directly or
      in trust, one or more unallocated annuity contracts not included
      under subparagraph division (b), not more than five million dollars
      in benefits, regardless of the number of contracts held by the plan
      sponsor.  However, where one or more such unallocated annuity
      contracts are covered contracts under this chapter and are owned by a
      trust or other entity for the benefit of two or more plan sponsors,
      the association shall provide coverage if the largest interest in the
      trust or entity owning the contract is held by a plan sponsor whose
      principal place of business is in the state but in no event shall the
      association be obligated to cover more than five million dollars in
      benefits in the aggregate with respect to all such unallocated
      contracts.
         b.  The limitations on the association's obligation to cover
      benefits that are set forth under this subsection do not take into
      account the association's subrogation and assignment rights or the
      extent to which such benefits could be provided out of the assets of
      the impaired or insolvent insurer that are attributable to covered
      policies.  The association's obligations under this chapter may be
      met by the use of assets attributable to covered policies or
      reimbursed to the association pursuant to the association's
      subrogation and assignment rights.
         9.  The association has no obligation to issue a group conversion
      policy of any nature to a person or to continue a group coverage in
      force for more than sixty days following the date the member insurer
      was adjudicated to be insolvent.
         10.  The association may do any of the following:
         a.  Enter into contracts as necessary or proper to carry out
      this chapter.
         b.  Sue or be sued, including taking any legal actions
      necessary or proper for recovery of any unpaid assessments under
      section 508C.9.
         c.  Borrow money to effect the purposes of this chapter.  Any
      notes or other evidence of indebtedness of the association held by
      domestic insurers and not in default qualify as investments eligible
      for deposit under section 511.8, subsection 16.
         d.  Employ or retain persons as necessary to handle the
      financial transactions of the association, and to perform other
      functions as necessary or proper under this chapter.
         e.  Negotiate and contract with a liquidator, rehabilitator,
      conservator, or ancillary receiver to carry out the powers and duties
      of the association.
         f.  Take legal action as necessary to avoid payment of
      improper claims.
         g.  For the purposes of this chapter and to the extent
      approved by the commissioner, exercise the powers of a domestic life
      or health insurer.  However, the association shall not issue
      insurance policies or annuity contracts other than those issued to
      perform the contractual obligations of the impaired or insolvent
      insurer.
         h.  Join an organization of one or more other state
      associations of similar purposes to further the purposes and
      administer the powers and duties of the association.  

         87 Acts, ch 223, § 8; 88 Acts, ch 1135, § 9; 90 Acts, ch 1234, §
      21, 22; 91 Acts, ch 26, § 37; 92 Acts, ch 1162, § 8; 2008 Acts, ch
      1123, §16, 17; 2009 Acts, ch 41, §157, 158
         Referred to in § 508C.9, 508C.10, 508C.13