2006 Code of Virginia § 38.2-1708 - Detection and prevention of insolvencies

38.2-1708. Detection and prevention of insolvencies.

A. To aid in the detection and prevention of insurer insolvencies, theCommission shall have the duty to:

1. Notify the insurance departments of all of the other states within thirtydays of taking any of the following actions against a member insurer:

a. Revocation of license;

b. Suspension of license;

c. Making any formal order that requires the insurer to (i) restrict itspremium writing, (ii) obtain additional contributions to surplus, (iii)withdraw from the Commonwealth, (iv) reinsure all or any part of itsbusiness, or (v) increase its capital, surplus, or any other account for thesecurity of policyholders or creditors.

2. Report to the board of directors when (i) any actions set forth insubdivision 1 of this subsection have been taken or (ii) a report has beenreceived from any other insurance department indicating that an action hasbeen taken in another state. The report to the board of directors shallcontain (i) all significant details of the action taken or (ii) the reportfrom the other insurance department.

3. Report to the board of directors when it has reasonable cause to believethat an insurer may be insolvent or in a financial condition hazardous to thepolicyholders or the public. The report may be based on a member insurer'sfinancial examination, whether completed or in progress.

B. The Commission may seek the advice and recommendations of the board ofdirectors concerning any matter affecting its duties and responsibilitiesregarding the financial condition of member insurers and insurers seekingadmission to transact the business of insurance in this Commonwealth.

C. The board of directors may, upon majority vote, make reports andrecommendations to the Commission upon any matter germane to the solvency,liquidation, rehabilitation or conservation of any member insurer or to thesolvency of any insurer seeking to transact the business of insurance in thisCommonwealth. These reports and recommendations shall not be consideredpublic documents.

D. The board of directors shall have the duty, upon majority vote, to notifythe Commission of any information indicating that a member insurer may beinsolvent or in a financial condition hazardous to the policyholders or thepublic.

E. The board of directors, upon majority vote, may request that theCommission order an examination of any member insurer that the board, in goodfaith, believes may be in a financial condition hazardous to thepolicyholders or the public. Within thirty days of the receipt of therequest, the Commission shall begin the examination. The examination may beconducted as the National Association of Insurance Commissioners examinationor may be conducted by persons the Commission designates. The cost of theexamination shall be paid by the Association, and the examination reportshall be treated like other examination reports. In no event shall theexamination report be released to the board of directors prior to its releaseto the public, but this shall not preclude the Commission from complying withsubsection A of this section. The Commission shall notify the board ofdirectors when the examination is completed. The request for an examinationshall be kept on file by the Commission but it shall not be open to publicinspection prior to the release of the examination report to the public.

F. The board of directors may, upon majority vote, make recommendations tothe Commission for the detection and prevention of insurer insolvencies.

G. The board of directors shall, at the conclusion of any insurer insolvencyin which the Association was obligated to pay covered claims, prepare areport to the Commission containing all information it has in its possessionrelating to the history and causes of the insolvency.

H. The board shall cooperate with the board of directors of guarantyassociations in other states in preparing a report on the history and causesfor a member's insolvency, and may adopt by reference any report prepared byother associations.

(1976, c. 330, 38.1-482.26; 1986, c. 562.)