2015 Wyoming Code
TITLE 26 - INSURANCE CODE
CHAPTER 42 - WYOMING LIFE AND HEALTH INSURANCE - GUARANTY ASSOCIATION
SECTION 26-42-106. - Powers and duties of the association.

26-42-106. Powers and duties of the association.

(a) If a member insurer is an impaired insurer, the association may in its discretion and subject to any conditions imposed by the association that do not impair the contractual obligations of the impaired insurer, that are approved by the commissioner:

(i) Guarantee, assume or reinsure or cause to be guaranteed, assumed or reinsured any or all of the policies or contracts of the impaired insurer;

(ii) Provide monies, pledges, loans, notes, guarantees, or other means proper to effectuate this subsection and assure payment of the contractual obligations of the impaired insurer pending action taken as authorized by this subsection.

(iii) Repealed By Laws 2014, Ch. 21, 2.

(b) Repealed By Laws 2014, Ch. 16, 2.

(c) Repealed By Laws 2014, Ch. 16, 2.

(d) If a member insurer is an insolvent insurer, the association shall, in its discretion, do one (1) of the following:

(i) Guaranty, assume or reinsure or cause to be guaranteed, assumed or reinsured, the policies or contracts of the insolvent insurer and provide monies, pledges, guarantees or other means as reasonably necessary to discharge the duties;

(ii) Assure payment of the contractual obligations of the insolvent insurer and provide monies, pledges, guarantees or other means as reasonably necessary to discharge the duties; or

(iii) With respect to life and health insurance policies and annuities, provide benefits and coverages in accordance with subsection (e) of this section.

(e) With respect to life and health insurance policies and annuities and when proceeding under paragraph (d)(iii) of this section, the association:

(i) Shall assure payment of benefits for premiums identical to the premiums and benefits, except for terms of conversion and renewability, that would have been payable under the policies or contracts of the insolvent insurer for claims incurred:

(A) For group policies and contracts, not later than the earlier of the next renewal date under the policies or contracts or forty-five (45) days and not less than thirty (30) days after the date on which the association is obligated under the policies and contracts;

(B) For nongroup policies, contracts and annuities, not later than the earlier of the next renewal date, if any, under the policies or one (1) year and not less than thirty (30) days from the date on which the association is obligated under the policies and contracts.

(ii) Shall make diligent efforts to provide all known insureds or annuitants for nongroup policies and contracts, or group policyholders with respect to group policies and contracts, thirty (30) days notice of the termination of the benefits provided;

(iii) For nongroup life and health insurance policies and annuities covered by the association, shall make available to each known insured or annuitant, or owner if other than the insured or annuitant and with respect to an individual formerly insured or formerly an annuitant under a group policy who is not eligible for replacement group coverage, make available substitute coverage on an individual basis in accordance with the provisions of paragraph (iv) of this subsection, if the insureds or annuitants had a right under law or the terminated policy or annuity to convert coverage to individual coverage or to continue an individual policy or annuity in force until a specified age or for a specified time during which the insurer had no right unilaterally to make changes in any provisions of the policy or annuity or had a right only to make changes in premium by class;

(iv) In providing the substitute coverage required under paragraph (iii) of this subsection, may offer either to reissue the terminated coverage or to issue an alternative policy. Alternative or reissued policies shall be offered without requiring evidence of insurability and shall not provide for any waiting period or exclusion that would not have applied under the terminated policy. The association may reinsure any alternative or reissued policy;

(v) May adopt alternative policies of various types for future issuance without regard to any particular impairment or insolvency. The alternative policies:

(A) Are subject to the approval of the domiciliary insurance commissioner and the receivership court;

(B) Shall contain at least the minimum statutory provisions required in this state and provide benefits that are not unreasonable in relation to the premium charged;

(C) Shall have premiums set by the association in accordance with a table of rates which it adopts and which reflect the amount of insurance to be provided and the age and class of risk of each insured but do not reflect any changes in the health of the insured after the original policy was last underwritten;

(D) Shall provide coverage of a type similar to that of the policy issued by the impaired or insolvent insurer, as determined by the association.

(vi) If the association elects to reissue terminated coverage at a premium rate different from that charged under the terminated policy, shall set the premium in accordance with the amount of insurance provided and the age and class of risk, subject to approval of the commissioner or a court of competent jurisdiction; and

(vii) With respect to coverage under any policy of the impaired or insolvent insurer or under any reissued or alternative policy, shall have its obligations cease on the date coverage or the policy is replaced by another similar policy by the policyholder, the insured or the association.

(f) When proceeding under subsection (d) of this section with respect to any policy or contract carrying guaranteed minimum interest rates, the association shall assure the payment or crediting of a rate of interest consistent with W.S. 26-42-103(c)(iii).

(g) Nonpayment of premiums within thirty-one (31) days after the date required under the terms of any guaranteed, assumed, alternative or reissued policy or contract or substitute coverage shall terminate the association's obligations under the policy or coverage incurred pursuant to this act, except with respect to any claims incurred or any net cash surrender value which may be due in accordance with the provisions of this act.

(h) Premiums due for coverage after entry of an order of liquidation of an insolvent insurer belongs to and is payable at the direction of the association, and the association is liable for unearned premiums due to policy or contract owners arising after the entry of the order.

(j) The protection provided by this act shall not apply where any guaranty protection is provided to residents of this state by the laws of the domiciliary state or jurisdiction of the impaired or insolvent insurer other than this state.

(k) In carrying out its duties under subsection (d) of this section the association may, subject to approval by a court of competent jurisdiction:

(i) Impose permanent policy or contract liens in connection with any guarantee, assumption or reinsurance agreement, if the association finds that the amounts which may be assessed under this act are less than the amounts needed to assure full and prompt performance of the association's duties under this act or that the economic or financial conditions as they affect member insurers are sufficiently adverse that it is within the public interest to render the imposition of the permanent policy or contract liens;

(ii) Impose temporary moratoriums or liens on payments of cash values and policy loans or any other right to withdraw funds held in conjunction with policies or contracts in addition to any contractual provisions for deferral of cash or policy loan value. In addition, in the event of a temporary moratorium or moratorium charge imposed by the receivership court on payment of cash values or policy loans, or on any other right to withdraw funds held in conjunction with policies or contracts, out of the assets of the impaired or insolvent insurer, the association may defer the payment of cash values, policy loans or other rights by the association for the period of the moratorium or moratorium charge imposed by the receivership court, except for claims covered by the association to be paid in accordance with a hardship procedure established by the liquidator or rehabilitator and approved by the receivership court.

(m) A deposit in this state, held pursuant to law or required by the commissioner for the benefit of creditors, including policy owners, not turned over to the domiciliary liquidator upon the entry of a final order of liquidation or order approving a rehabilitation plan of an insurer domiciled in this state or in a reciprocal state shall be promptly paid to the association. The association shall be entitled to retain a portion of any amount so paid to it equal to the percentage determined by dividing the aggregate amount of policy owners claims related to that insolvency for which the association has provided statutory benefits by the aggregate amount of all policy owners' claims in this state related to that insolvency and shall remit to the domiciliary receiver the amount so paid to the association less the amount retained pursuant to this subsection. Any amount so paid to the association and retained by it shall be treated as a distribution of estate assets pursuant to applicable state receivership law dealing with early access disbursements.

(n) If the association fails to act within a reasonable period of time as provided in subsections (d) and (e) of this section, the commissioner shall have the powers and duties of the association under this act with respect to insolvent insurers.

(o) The association may render assistance and advice to the commissioner upon his request concerning rehabilitation, payment of claims, continuance of coverage or the performance of other contractual obligations of any impaired or insolvent insurer.

(p) The association shall have standing to appear before any court or agency in this state with jurisdiction over an impaired or insolvent insurer concerning which the association is or may become obligated under this act or with jurisdiction over any person or property against which the association may have rights through subrogation or otherwise. Standing shall extend to all matters germane to the powers and duties of the association, including but not limited to, proposals for reinsuring, modifying or guaranteeing the policies or contracts of the impaired or insolvent insurer and the determination of the policies or contracts and contractual obligations. The association shall also have the right to appear or intervene before a court or agency in any state with jurisdiction over an impaired or insolvent insurer if the association is or may become obligated or with jurisdiction over any person or property against whom the association may have rights through subrogation or otherwise.

(q) Any person receiving benefits under this act shall be deemed to have assigned the rights under and any causes of action against any person for losses arising under, resulting from or otherwise relating to the covered policy or contract to the association to the extent of the benefits received because of this act, whether the benefits are payments of or on account of contractual obligations, continuation of coverage or provision of substitute or alternative coverages. The association may require an assignment to it of the rights and cause of action by any payee, policy or contract owner, beneficiary, insured or annuitant as a condition precedent to the receipt of any right or benefits conferred by this act upon the person. The subrogation rights of the association under this subsection shall have the same priority against the assets of the impaired or insolvent insurer as that possessed by the person entitled to receive benefits under this act. In addition, the association shall have all common law rights of subrogation and any other equitable or legal remedy which would have been available to the impaired or insolvent insurer or owner, beneficiary or payee of a policy or contract with respect to the policy or contracts. If the provisions of this subsection are invalid or ineffective with respect to any person or claim for any reason, the amount payable by the association with respect to the related covered obligations shall be reduced by the amount realized by any other person with respect to the person or claim that is attributable to the policies or portion thereof covered by the association. If the association has provided benefits with respect to a covered obligation and a person recovers amounts as to which the association has rights as described in this subsection, the person shall pay to the association the portion of the recovery attributable to the policies or portion thereof covered by the association.

(r) The association may:

(i) Enter into contracts as necessary or proper to carry out the provisions and purposes of this act;

(ii) Sue or be sued including taking any legal actions necessary or proper to recover any unpaid assessments under W.S. 26-42-107 and to settle claims or potential claims against it;

(iii) Borrow money to effect the purposes of this act. Any notes or other evidence of indebtedness of the association not in default are legal investments for domestic insurers and may be carried as admitted assets;

(iv) 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 act;

(v) Take legal action as necessary or appropriate to avoid or recover payment of improper claims;

(vi) Exercise, for the purposes of this act and to the extent approved by the commissioner, the powers of a domestic life or health insurer. The association shall not issue insurance policies or annuity contracts other than those issued to perform its obligations under this act;

(vii) Organize itself as a corporation or in other legal form permitted by the laws of the state;

(viii) Request information from a person seeking coverage from the association in order to aid the association in determining its obligations under this act with respect to the person, and the person shall promptly comply with the request;

(ix) Take other necessary or appropriate action to discharge its duties and obligations under this act or to exercise its powers under this act.

(s) The association may join an organization of one (1) or more other state associations of similar purposes to further the purposes and administer the powers and duties of the association.

(t) With respect to covered policies for which the association becomes obligated after an entry of an order of liquidation or rehabilitation, the association may elect to succeed to the rights of the insolvent insurer arising after the date of the order of liquidation or rehabilitation under any contract of reinsurance to which the insolvent insurer was a party, to the extent that the contract provides coverage for losses occurring after the date of the order of liquidation or rehabilitation. As a condition to making this election, the association shall pay all unpaid premiums due under the contract for coverage relating to periods before and after the date of the order of liquidation or rehabilitation.

(u) The board of directors of the association shall have discretion and may exercise reasonable business judgment to determine the means by which the association is to provide the benefits of this act in an economical and efficient manner.

(w) Where the association has arranged or offered to provide the benefits of this act to a covered person under a plan or arrangement that fulfills the association's obligations under this act, the person shall not be entitled to benefits from the association in addition to or other than those provided under the plan or arrangement.

(y) The association shall not be required to give an appeal bond in an appeal that relates to a cause of action arising under this act.

(z) In carrying out its duties in connection with guaranteeing, assuming or reinsuring policies or contracts under subsection (a) or (d) of this section, the association may, subject to approval of the receivership court, issue substitute coverage for a policy or contract that provides an interest rate, crediting rate or similar factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value by issuing an alternative policy or contract in accordance with the following provisions:

(i) In lieu of the index or other external reference provided for in the original policy or contract, the alternative policy or contract provides for a fixed interest rate, payment of dividends with minimum guarantees or a different method for calculating interest or changes in value;

(ii) There is no requirement for evidence of insurability, waiting period or other exclusion that would not have applied under the replaced policy or contract; and

(iii) The alternative policy or contract is substantially similar to the replaced policy or contract in all other material terms.