Section 27-44-8 Powers and duties of association.
Section 27-44-8
Powers and duties of association.
In addition to the powers and duties enumerated in other sections of this chapter:
(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 commissioner:
a. Guarantee or reinsure, or cause to be guaranteed, assumed, or reinsured, any or all of the covered policies of the impaired insurers;
b. Provide such moneys, pledges, notes, guarantees, or other means as are 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.
(2) If a domestic insurer is an insolvent insurer, the association shall, subject to the approval of the commissioner:
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; and
c. Provide such moneys, pledges, notes, guarantees, or other means as are reasonably necessary to discharge such duties.
(3) If a foreign or alien insurer is an insolvent insurer, the association shall, subject to the approval of the commissioner:
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 subdivision shall not apply where the commissioner 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 chapter for residents of this state.
(4)a. In carrying out its duties under subdivisions (2) and (3), permanent policy liens, or contract liens may be imposed in connection with any guarantee, assumption or reinsurance agreement, if the court:
1. Finds 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 render the imposition of policy or contract liens, to be in the public interest; and
2. Approves the specific policy liens or contract liens to be used.
b. Before being obligated under subdivisions (2) and (3) 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 subdivisions (2) and (3) of this section, the commissioner shall have the powers and duties of the association under this chapter with respect to insolvent insurers.
(6) 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.
(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 chapter. 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 chapter 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 chapter 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 chapter 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 subdivision shall have the same priority against the assets of the insolvent insurer as that possessed by the person entitled to receive benefits under this chapter.
(9) The contractual obligations of the insolvent insurer for which the association becomes or may become liable shall be as great as but no greater than the contractual obligations of the insolvent insurer would have been in the absence of an insolvency unless such obligations are reduced as permitted by subdivision (4) but the aggregate liability of the association shall not exceed $100,000.00 in cash values, or $300,000.00 for all benefits, including cash values, with respect to any one life.
(10) The association may:
a. Enter into such contracts as are necessary or proper to carry out the provisions and purposes of this chapter;
b. Sue or be sued, including taking any legal actions necessary or proper for recovery of any unpaid assessments under Section 27-44-9;
c. Borrow money to effect the purposes of this chapter. 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 chapter;
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 purpose of this chapter, and to the extent approved by the commissioner, 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.
(Acts 1982, No. 82-561, p. 922, §8.)