376.724. Impaired insurers, association's options, duties--insolvent insurers, association's options, duties--alternative policies, requirements.
Impaired insurers, association's options, duties--insolvent insurers,association's options, duties--alternative policies, requirements.
376.724. 1. If a member insurer is an impaired domesticinsurer, the association may, in its discretion, and subject toany conditions imposed by the association that do not impair thecontractual obligations of the impaired insurer, that areapproved by the director, and that are, except in cases of courtordered conservation or rehabilitation, also approved by theimpaired insurer:
(1) Guarantee, assume or reinsure, or cause to beguaranteed, assumed, or reinsured, any or all of the policies orcontracts of the impaired insurer;
(2) Provide such moneys, pledges, notes, guarantees, orother means as are proper to effectuate subdivision (1) of thissubsection and assure payment of the contractual obligations ofthe impaired insurer pending action under subdivision (1) ofthis subsection; or
(3) Loan money to the impaired insurer.
2. If a member insurer is an impaired insurer, whetherdomestic, foreign or alien and the insurer is not paying claimsin a timely fashion, then subject to the preconditions specifiedin subsection 3 of this section, the association shall, in itsdiscretion, either:
(1) Take any of the actions specified in subsection 1 ofthis section, subject to the conditions therein; or
(2) Provide substitute benefits in lieu of the contractualobligations of the impaired insurer solely for: health claims;periodic annuity benefit payments; death benefits; supplementalbenefits; and cash withdrawals for policy or contract owners whopetition therefor under claims of emergency or hardship inaccordance with standards proposed by the association andapproved by the director.
3. The association shall be subject to the requirements ofsubsection 2 of this section only if:
(1) The laws of the impaired insurer's state of domicileprovide that until all payments of or on account of the impairedinsurer's contractual obligations by all guaranty associations,along with all expenses thereof and interest on all suchpayments and expenses, shall have been repaid to the guarantyassociations or a plan of repayment by the impaired insurershall have been approved by the guaranty associations:
(a) The delinquency proceedings shall not be dismissed;
(b) Neither the impaired insurer nor its assets shall bereturned to the control of its shareholders or privatemanagement; and
(c) It shall not be permitted to solicit or accept newbusiness or have any suspended or revoked license restored; and
(2) (a) If the impaired insurer is a domestic insurer, ithas been placed under an order of rehabilitation by a court ofcompetent jurisdiction in this state; or
(b) If the impaired insurer is a foreign or alien insurer:
a. It has been prohibited from soliciting or accepting newbusiness in this state;
b. Its certificate of authority has been suspended orrevoked in this state; and
c. A petition for rehabilitation or liquidation has beenfiled in a court of competent jurisdiction in its state ofdomicile by the commissioner of that state.
4. (1) If a member insurer is an insolvent insurer, theassociation shall, in its discretion, either:
(a) Guarantee, assume or reinsure, or cause to beguaranteed, assumed or reinsured, the policies or contracts ofthe insolvent insurer; or
(b) Assure payment of the contractual obligations of theinsolvent insurer; and
(c) Provide such moneys, pledges, guarantees, or othermeans as are reasonably necessary to discharge such duties; or
(2) With respect only to life and health policies, providebenefits and coverages in accordance with subsection 5 of thissection.
5. When proceeding under subsection 2 or 4 of this section,the association shall, with respect to only life and healthinsurance policies:
(1) Assure payment of benefits for premiums identical tothe premiums and benefits, except for terms of conversion andrenewability, that would have been payable under the policies ofthe insolvent insurer, for claims incurred:
(a) With respect to group policies, not later than theearlier of the next renewal date under such policies orcontracts or forty-five days, but in no event less than thirtydays, after the date on which the association becomes obligatedwith respect to such policies;
(b) With respect to individual policies, not later than theearlier of the next renewal date, if any, under such policies orone year, but in no event less than thirty days, from the dateon which the association becomes obligated with respect to suchpolicies;
(2) Make diligent efforts to provide all known insureds orgroup policyholders with respect to group policies thirty daysnotice of the termination of the benefits provided; and
(3) With respect to individual policies, make available toeach known insured, or owner if other than the insured, and withrespect to an individual formerly insured under a group policywho is not eligible for replacement group coverage, makeavailable substitute coverage on an individual basis inaccordance with the provisions of subsection 6 of this section,if the insureds had a right under law or the terminated policyto convert coverage to individual coverage or to continue anindividual policy in force until a specified age or for aspecified time, during which the insurer had no rightunilaterally to make changes in any provision of the policy orhad a right only to make changes in premium by class.
6. (1) In providing the substitute coverage required undersubdivision (3) of subsection 5 of this section, the associationmay offer either to reissue the terminated coverage or to issuean alternative policy.
(2) Alternative or reissued policies shall be offeredwithout requiring evidence of insurability, and shall notprovide for any waiting period or exclusion that would not haveapplied under the terminated policy.
(3) The association may reinsure any alternative orreissued policy.
7. (1) Alternative policies adopted by the associationshall be subject to the approval of the director. Theassociation may adopt alternative policies of various types forfuture issuance without regard to any particular impairment orinsolvency.
(2) Alternative policies shall contain at least the minimumstatutory provisions required in this state and provide benefitsthat shall not be unreasonable in relation to the premiumcharged. The association shall set the premium in accordancewith a table of rates which it shall adopt. The premium shallreflect the amount of insurance to be provided and the age andclass of risk of each insured, but shall not reflect any changesin the health of the insured after the original policy was lastunderwritten.
(3) Any alternative policy issued by the association shallprovide coverage of a type similar to that of the policy issuedby the impaired or insolvent insurer, as determined by theassociation.
(L. 1988 S.B. 430 § 7)