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304.42-090 Assessments -- Classification -- Certificate of contribution -Payment under protest.
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(2)
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For the purpose of providing the funds necessary to carry out the powers and
duties of the association, the board of directors shall assess the member
insurers, separately for each account, at such time and for such amounts as
the board finds necessary. Assessments shall be due not less than thirty (30)
days after prior written notice to the member insurers and shall accrue interest
at eight percent (8%) per annum on and after the due date.
There shall be two (2) classes of assessments:
(a) Class A assessments shall be made for the purpose of meeting
administrative and legal costs and other expenses. Class A assessments
may be authorized and called whether or not related to a particular
impaired or insolvent insurer;
(b) Class B assessments shall be authorized and called to the extent
necessary to carry out the powers and duties of the association under
KRS 304.42-080 with regard to an impaired or insolvent insurer.
(a) The amount of any Class A assessment shall be determined by the board
and may be authorized and called on a pro rata or non-pro rata basis. If
pro rata, the board may provide that it be credited against future Class B
assessments. The total of all non-pro rata assessments shall not exceed
one hundred fifty dollars ($150) per member insurer in any one (1)
calendar year. The amount of any Class B assessment shall be allocated
for assessment purposes among the accounts pursuant to an allocation
formula which may be based on the premiums or reserves of the impaired
or insolvent insurer or any other standard deemed by the board in its sole
discretion as being fair and reasonable under the circumstances.
(b) Class B assessments against member insurers for each account shall be
in the proportion that the premiums received on business in this state by
each assessed member insurer on policies or contracts covered by each
account for the three (3) most recent calendar years for which information
is available preceding the year in which the insurer became insolvent, or
in the case of assessment with respect to an impaired insurer, the three
(3) most recent calendar years for which information is available
preceding the year in which the insurer became impaired, bears to such
premiums received on business in this state for such calendar years by all
assessed member insurers.
(c) Assessments for funds to meet the requirements of the association with
respect to an impaired or insolvent insurer shall not be made until
necessary to implement the purposes of this subtitle. Classification of
assessments under subsection (2) of this section and computation of
assessments under this subsection shall be made with a reasonable
degree of accuracy, recognizing that exact determinations may not
always be possible. The association shall notify each member insurer of
its anticipated pro rata share of an authorized assessment not yet called
within one hundred eighty (180) days after the assessment is authorized.
The association may abate or defer, in whole or in part, the assessment of a
member insurer if, in the opinion of the board, payment of the assessment
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would endanger the ability of the member insurer to fulfill its contractual
obligations. In the event an assessment against a member insurer is abated, or
deferred in whole or in part, the amount by which such assessment is abated
or deferred may be assessed against the other member insurers in a manner
consistent with the basis for assessments set forth in this section. Once the
conditions that caused a deferral have been removed or rectified, the member
shall pay all assessments that were deferred under a repayment plan approved
by the association.
(a) Subject to the provisions of paragraph (b) of this subsection, the total of
all assessments authorized by the association with respect to a member
insurer for each account shall not in any one (1) calendar year exceed
two percent (2%) of the insurer's average annual premiums received in
this state on the policies and contracts covered by the account during the
three (3) calendar years preceding the year in which the insurer became
an impaired or insolvent insurer. If the maximum assessment, together
with the other assets of the association in any other account, does not
provide in any one (1) year in any other account an amount sufficient to
carry out the responsibilities of the association, the necessary additional
funds shall be assessed as soon thereafter as permitted by this subtitle.
(b) If two (2) or more assessments are authorized in one (1) calendar year
with respect to insurers that become impaired or insolvent in different
calendar years, the average annual premiums for purposes of the
aggregate assessment percentage limitation referenced in paragraph (a)
of this subsection shall be equal and limited to the higher of the three (3)
year average annual premiums for the applicable account as calculated
under this section.
(c) The board may provide in the plan of operation a method of allocating
funds among claims, whether relating to one (1) or more impaired or
insolvent insurers, when the maximum assessment will be insufficient to
cover anticipated claims.
The board may, by an equitable method as established in the plan of
operation, refund to member insurers, in proportion to the contribution of each
insurer to that account, the amount by which the assets of the account exceed
the amount the board finds is necessary to carry out during the coming year
the obligations of the association with regard to that account, including assets
accruing from assignment, subrogation, net realized gains and income from
investments. A reasonable amount may be retained in any account to provide
funds for the continuing expenses of the association and for future losses
claims.
It shall be proper for any member insurer, in determining its premium rates and
policy owner dividends as to any kind of insurance within the scope of this
subtitle, to consider the amount reasonably necessary to meet its assessment
obligations under this subtitle.
The association shall issue to each insurer paying an assessment under this
subtitle, other than a Class A assessment, a certificate of contribution, in a form
prescribed by the commissioner, for the amount of the assessment so paid. All
outstanding certificates shall be of equal dignity and priority without reference
to amounts or dates of issue. A certificate of contribution may be shown by the
insurer in its financial statement as an asset in such form and for such amount,
if any, and period of time as the commissioner may approve.
(9) (a) A member insurer that wishes to protest all or part of an assessment shall
pay when due the full amount of the assessment as set forth in the notice
provided by the association. The payment shall be available to meet
association obligations during the pendency of the protest or any
subsequent appeal. Payment shall be accompanied by a statement in
writing that the payment is made under protest and setting forth a brief
statement of the grounds for the protest.
(b) Within sixty (60) days following the payment of an assessment under
protest by a member insurer, the association shall notify the member
insurer in writing of its determination with respect to the protest unless the
association notifies the member insurer that additional time is required to
resolve the issues raised by the protest.
(c) Within thirty (30) days after a final decision has been made, the
association shall notify the protesting member insurer in writing of that
final decision. Within sixty (60) days of receipt of notice of the final
decision, the protesting member insurer may appeal the final action to the
commissioner, in accordance with KRS 304.42-110(3).
(d) In the alternative to rendering a final decision with respect to a protest
based on a question regarding the assessment base, the association may
refer protests to the commissioner for a final decision, with or without a
recommendation from the association.
(e) If the protest or appeal on the assessment is upheld, the amount paid in
error or excess shall be returned to the member company. Interest on a
refund due a protesting member shall be paid at the rate actually earned
by the association.
(10) The association may request information of member insurers in order to aid in
the exercise of its power under this section and member insurers shall promptly
comply with a request.
Effective:July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1563, effective July 15, 2010. -Amended 1998 Ky. Acts ch. 537, sec. 6, effective July 15, 1998. -- Amended
1988 Ky. Acts ch. 282, sec. 4, effective July 15, 1988. -- Amended 1986 Ky.
Acts ch. 437, sec. 32, effective July 15, 1986. -- Created 1978 Ky. Acts ch. 282,
sec. 9, effective June 17, 1978.
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