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IC 27-8-8-1
Repealed
(Repealed by P.L.193-2006, SEC.32.)
IC 27-8-8-1.5
Repealed
(Repealed by P.L.193-2006, SEC.32.)
IC 27-8-8-2
Definitions
Sec. 2. (a) The definitions in this section apply throughout this
chapter.
(b) "Account" means one (1) of the two (2) accounts created
under section 3 of this chapter.
(c) "Annuity contract", except as provided in section 2.3(e) of this
chapter, includes:
(1) a guaranteed investment contract;
(2) a deposit administration contract;
(3) a structured settlement annuity;
(4) an annuity issued to or in connection with a government
lottery; and
(5) an immediate or a deferred annuity contract.
(d) "Assessment base year" means, for an impaired insurer or
insolvent insurer, the most recent calendar year for which required
premium information is available preceding the calendar year during
which the impaired insurer's or insolvent insurer's coverage date
occurs.
(e) "Association", except when the context otherwise requires,
means the Indiana life and health insurance guaranty association
created by section 3 of this chapter.
(f) "Benefit plan" means a specific plan, fund, or program that is
established or maintained by an employer or an employee
organization, or both, that:
or any other mandatory state pooling plan or arrangement.
(5) An assessment company or another person that operates on
an assessment plan (as defined in IC 27-1-2-3(y)).
(6) An interinsurance or reciprocal exchange authorized by
IC 27-6-6.
(7) A prepaid limited service health maintenance organization
or a limited service health maintenance organization under
IC 27-13-34.
(8) A farm mutual insurance company under IC 27-5.1.
(9) A person operating as a Lloyds under IC 27-7-1.
(10) The political subdivision risk management fund established
by IC 27-1-29-10 and the political subdivision catastrophic
liability fund established by IC 27-1-29.1-7.
(11) The small employer health reinsurance board established
by IC 27-8-15.5-5.
(12) A person similar to any person described in subdivisions
(1) through (11).
(r) "Moody's Corporate Bond Yield Average" means:
(1) the monthly average of the composite yield on seasoned
corporate bonds as published by Moody's Investors Service,
Inc.; or
(2) if the monthly average described in subdivision (1) is no
longer published, an alternative publication of interest rates or
yields determined appropriate by the association.
(s) "Multiple employer welfare arrangement" has the meaning set
forth in IC 27-1-34-1.
(t) "Owner" means the person:
(1) identified as the legal owner of a policy or contract
according to the terms of the policy or contract; or
(2) otherwise vested with legal title to a policy or contract
through a valid assignment completed in accordance with the
terms of the policy or contract and properly recorded as the
owner on the books of the insurer.
The term does not include a person with a mere beneficial interest in
a policy or contract.
(u) "Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a governmental entity, a
voluntary organization, a trust, a trustee, or another business entity
or organization.
(v) "Plan sponsor" refers to only one (1) of the following with
respect to a benefit plan:
(1) The employer, in the case of a benefit plan established or
maintained by a single employer.
(2) The holding company or controlling affiliate, in the case of
a benefit plan established or maintained by affiliated companies
comprising a consolidated corporation.
(3) The employee organization, in the case of a benefit plan
established or maintained by an employee organization.
(4) In a case of a benefit plan established or maintained:
(A) by two (2) or more employers;
considered to be the principal place of business of the employer or
employee organization that has the largest investment in the benefit
plan in question on the coverage date.
(y) "Receivership court" refers to the court in an insolvent
insurer's or impaired insurer's state that has jurisdiction over the
conservation, rehabilitation, or liquidation of the insolvent insurer or
impaired insurer.
(z) "Resident" means a person that resides or has the person's
principal place of business in Indiana on the applicable coverage
date.
(aa) "State" includes a state, the District of Columbia, Puerto
Rico, and a United States possession, territory, or protectorate.
(bb) "Structured settlement annuity" means an annuity purchased
to fund periodic payments for a plaintiff or other claimant in payment
for or with respect to personal injury suffered by the plaintiff or other
claimant.
(cc) "Supplemental contract" means a written agreement entered
into for the distribution of proceeds under a life, health, or annuity
policy or contract.
(dd) "Unallocated annuity contract" means an annuity contract or
group annuity certificate:
(1) the owner of which is not a natural person; and
(2) that does not identify at least one (1) specific natural person
as an annuitant;
except to the extent of any annuity benefits guaranteed to a natural
person by an insurer under the contract or certificate. For purposes
of this chapter, an unallocated annuity contract shall not be
considered a group policy or group contract.
As added by Acts 1978, P.L.129, SEC.3. Amended by P.L.8-1993,
SEC.431; P.L.251-1995, SEC.20; P.L.129-2003, SEC.13;
P.L.193-2006, SEC.9.
IC 27-8-8-2.1
Policy and contract descriptions; plan sponsor
Sec. 2.1. (a) For purposes of this chapter:
(1) a policy or contract issued on a blanket basis is a group
policy or group contract;
(2) each individual insured under a policy or contract issued on
a blanket basis is a certificate holder under the policy or
contract; and
(3) a policy or contract issued on a franchise plan to members
of a qualified group is a nongroup policy or nongroup contract.
(b) For purposes of this chapter, a benefit plan may have only one
(1) plan sponsor.
As added by P.L.193-2006, SEC.10.
IC 27-8-8-2.3
Coverage provided; exclusions; limitations
Sec. 2.3. (a) Except as otherwise excluded or limited by this
chapter, this chapter provides coverage for policies and contracts
specified in subsection (d) as follows:
(1) To a person, other than a certificate holder under a group
policy or a group contract, that, regardless of where the person
resides, is the beneficiary, nonowner assignee, or payee of a
person covered under subdivision (2).
(2) To a person that is a certificate holder under a group policy
or group contract, and to a person that is the owner of a
nongroup policy or nongroup contract that is not an unallocated
annuity contract or a structured settlement annuity, and that:
(A) is a resident; or
(B) is not a resident if all the following conditions are
satisfied:
(i) The member insurer that issued the policy or contract
is domiciled in Indiana.
(ii) The state in which the person resides has an
association similar to the association.
(iii) The nonresident is not eligible for coverage by the
other association referred to in item (ii) solely because the
member insurer was not licensed in the state of residence
at the time specified in the guaranty association law of the
state of residence.
(3) For an unallocated annuity contract, subdivisions (1) and (2)
do not apply, and this chapter provides coverage to the
following:
(A) A person that is the owner of the unallocated annuity
contract, if the contract was issued to or in connection with
a benefit plan whose plan sponsor is a resident or, if the plan
sponsor is not a resident, if all the following conditions are
satisfied:
(i) The member insurer that issued the unallocated annuity
contract is domiciled in Indiana.
(ii) The state in which the plan sponsor resides has an
association similar to the association.
(iii) The other association referred to in item (ii) does not
provide coverage of the unallocated annuity contract
solely because the member insurer was not licensed in the
state of residence at the time specified in the guaranty
association law of the state of residence.
(B) A person that is the owner of an unallocated annuity
contract issued to or in connection with a government
lottery, if the owner is a resident or, if the owner is not a
resident, if all the following conditions are satisfied:
(i) The member insurer that issued the unallocated annuity
contract is domiciled in Indiana.
(ii) The state in which the owner resides has an association
similar to the association.
(iii) The other association referred to in item (ii) does not
provide coverage of the unallocated annuity contract
solely because the member insurer was not licensed in the
state of residence at the time specified in the guaranty
association law of the state of residence.
(4) For a structured settlement annuity, subdivisions (1) and (2)
do not apply, and this chapter provides coverage to a person that
is a payee under the structured settlement annuity (or
beneficiary of a payee if the payee is deceased), if the payee:
(A) is a resident, regardless of where the contract owner
resides; or
(B) is not a resident if all the following conditions are
satisfied:
(i) The member insurer that issued the structured
settlement annuity is domiciled in Indiana.
(ii) The state in which the payee resides has an association
similar to the association.
(iii) Neither the payee nor the beneficiary of the payee (if
the payee is deceased) is eligible for coverage by the other
association referred to in item (ii) solely because the
member insurer was not licensed in the state of residence
at the time specified in the guaranty association law of the
state of residence.
(b) This chapter does not provide coverage to a person that is:
(1) a payee or beneficiary of a contract owner that is a resident,
if the payee or beneficiary is afforded any coverage by the
association of another state; or
(2) otherwise covered under subsection(a)(3), if any coverage
is provided to the person by the association of another state.
(c) To avoid duplicate coverage, if a person that would otherwise
receive coverage under this chapter is provided coverage under the
laws of another state, the person is not eligible for coverage under
this chapter. In determining the application of this subsection when
a person may be covered by the association of more than one (1)
state as an owner, a payee, a beneficiary, or an assignee, this chapter
must be construed in conjunction with the laws of the other state to
result in coverage by only one (1) association.
(d) Except as otherwise excluded or limited by this chapter, this
chapter provides coverage to the persons specified in subsection (a)
for:
(1) direct nongroup life, health, or annuity policies and
contracts and supplemental contracts to direct nongroup life,
health, or annuity policies and contracts;
(2) certificates under direct group life, health, and annuity
policies and contracts; and
(3) unallocated annuity contracts;
issued by member insurers.
(e) This chapter does not provide coverage for or with respect to
the following:
(1) A part of a certificate, policy, or contract:
(A) not guaranteed by the insurer; or
(B) under which the risk is borne by the payee, certificate
holder, or the policy or contract owner.
(2) A reinsurance policy or contract, unless and to the extent
that assumption certificates have been issued under the
reinsurance policy or contract.
(3) A part of a certificate, policy, or contract to the extent that
the certificate's, policy's, or contract's interest rate, crediting
rate, or similar factor employed in calculating returns or
changes in values, whether expressly stated in the certificate,
policy, or contract or determined by use of an index or other
external referent stated in the certificate, policy, or contract,
either:
(A) when averaged over a period of four (4) years
immediately before the applicable coverage date, exceeds
the rate of interest determined by subtracting two (2)
percentage points from Moody's Corporate Bond Yield
Average averaged for the same four (4) year period or for a
lesser period if the certificate, policy, or contract was issued
less than four (4) years before the applicable coverage date;
or
(B) in effect under the certificate, policy, or contract on and
after the applicable coverage date, exceeds the rate of
interest determined by subtracting three (3) percentage
points from Moody's Corporate Bond Yield Average as most
recently available on the applicable coverage date.
(4) The obligations of a plan or program of an employer, an
association, or another person to provide life, health, or annuity
benefits to the employer's, association's, or other person's
employees, members, or others, including obligations arising
under and benefits payable by the employer, association, or
other person under a multiple employer welfare arrangement.
(5) A minimum premium group insurance plan.
(6) A stop-loss or excess loss insurance policy or contract
providing for the indemnification of or payment to a policy
owner, a contract owner, a plan, or another person obligated to
pay life, health, or annuity benefits or to provide services in
connection with a benefit plan or another plan, fund, or program
for the provision of employee welfare or pension benefits.
(7) An administrative services only contract.
(8) A part of a certificate, policy, or contract to the extent that
the certificate, policy, or contract provides for:
(A) dividends or experience rating credits;
(B) voting rights; or
(C) payment of fees or allowances to a person, including the
certificate holder or policy or contract owner, in connection
with service with respect to or administration of the
certificate, policy, or contract.
(9) A certificate, policy, or contract issued in Indiana by a
member insurer when the member insurer did not have a
certificate of authority to issue the certificate, policy, or
contract in Indiana.
(10) An unallocated annuity contract issued to or in connection
with a benefit plan protected by the federal Pension Benefit
Guaranty Corporation, regardless of whether the federal
Pension Benefit Guaranty Corporation has yet been required to
make payments with respect to the benefit plan.
(11) An unallocated annuity contract or part of an unallocated
annuity contract that is not issued to or in connection with a
benefit plan or a government lottery.
(12) A certificate, policy, or contract or part of a certificate,
policy, or contract with respect to which the Class B
assessments contemplated by section 6 of this chapter may not
be made or collected under federal or state law.
(13) An obligation or claim that does not arise under the express
written terms of the policy or contract issued by the member
insurer to the contract owner or policy owner, including any of
the following obligations and claims:
(A) Obligations and claims based on marketing materials.
(B) Obligations and claims based on side letters, riders, or
other documents issued by the member insurer without
meeting applicable policy form filing or approval
requirements.
(C) Obligations and claims based on actual or alleged
misrepresentations.
(D) Obligations and claims that are extracontractual claims.
(E) Obligations and claims for penalties or consequential,
incidental, punitive, or exemplary damages.
(14) An obligation to provide a book value accounting guaranty
for defined contribution benefit plan participants by reference
to a portfolio of assets that is owned by the:
(A) benefit plan; or
(B) benefit plan's trustee;
that is not an affiliate of the member insurer.
(15) A part of a certificate, policy, or contract to the extent the:
(A) certificate, policy, or contract provides for the
certificate's, policy's, or contract's interest rate, crediting
rate, or similar factor employed in calculating returns or
changes in values, to be determined by use of an index or
other external referent stated in the certificate, policy, or
contract; and
(B) returns or changes in value have not been credited to the
certificate, policy, or contract, or as to which the certificate
holder's or policy or contract owner's rights are subject to
forfeiture, as of the applicable coverage date.
If a certificate's, policy's, or contract's returns or changes in
values are credited to the certificate, policy, or contract less
frequently than annually, for purposes of determining the
returns and values that have been credited and are not subject
to forfeiture under this subdivision, the returns and changes in
value determined by using the procedures defined in the
certificate, policy, or contract must be considered credited as if
the contractual date of crediting returns or changes in values
were the applicable coverage date, and those credited returns or
changes in value are not subject to forfeiture under this
subdivision, but will be subject to any other applicable
limitations under this chapter.
(16) A funding agreement.
(17) An annuity not subject to regulation as described in
IC 27-1-12.4.
(f) The benefits that the association is obligated to cover do not
exceed the lesser of the following:
(1) The contractual obligations for which the member insurer is
liable or would have been liable if the member insurer were not
an impaired insurer or insolvent insurer.
(2) The applicable limitations as follows:
(A) With respect to certificates, policies, and contracts not
subject to clause (B), (C), (E), or (F), with respect to one (1)
life, regardless of the number of policies or contracts, the
following limitations:
(i) Three hundred thousand dollars ($300,000) in life
insurance death benefits, but not more than one hundred
thousand dollars ($100,000) in net cash surrender and net
cash withdrawal values.
(ii) Three hundred thousand dollars ($300,000) in health
insurance benefits, but not more than one hundred
thousand dollars ($100,000) in net cash surrender and net
cash withdrawal values.
(iii) One hundred thousand dollars ($100,000) in the
present value of annuity benefits, including net cash
surrender and net cash withdrawal values.
(B) With respect to unallocated annuity contracts issued to
or in connection with a governmental benefit plan
established under Section 401, 403(b), or 457 of the United
States Internal Revenue Code, one hundred thousand dollars
($100,000) in the present value of annuity benefits,
including net cash surrender and net cash withdrawal values,
per participant.
(C) With respect to structured settlement annuities, one
hundred thousand dollars ($100,000) in the present value of
annuity benefits, including net cash surrender and net cash
withdrawal values, per payee.
(D) In addition to the foregoing limitations, the association
is not obligated to cover more than:
(i) an aggregate of three hundred thousand dollars
($300,000) in benefits with respect to any one (1) person
under clauses (A), (B), and (C); or
(ii) with respect to one (1) owner of multiple nongroup
policies of life insurance, whether the policy owner is an
individual, a firm, a corporation, or another person, and
whether the persons insured are officers, managers,
employees, or other persons, five million dollars
($5,000,000) in benefits, including net cash surrender and
net cash withdrawal values, regardless of the number of
policies and contracts held by the owner.
(E) With respect to unallocated annuity contracts issued to
or in connection with a government lottery, five million
dollars ($5,000,000) in benefits per contract owner,
regardless of the number of contracts held by the contract
owner.
(F) With respect to unallocated annuity contracts:
(i) issued to or in connection with a benefit plan; and
(ii) not subject to clause (B);
five million dollars ($5,000,000) in benefits per plan
sponsor, regardless of the number of unallocated annuity
contracts entitled to coverage under this chapter.
(g) The limitations set forth in subsection (f) are limitations on the
benefits for which the association is obligated before taking into
account the:
(1) association's subrogation and assignment rights; or
(2) extent to which the benefits could be provided out of the
assets of the impaired insurer or insolvent insurer attributable
to covered policies.
The costs of discharging the association's obligations under this
chapter may be met by the use of assets attributable to covered
policies or reimbursed to the association under the association's
subrogation and assignment rights.
(h) In discharging the association's obligations to provide
coverage under this chapter, the association is not required to:
(1) guarantee, assume, reinsure, or perform;
(2) cause to be guaranteed, assumed, reinsured, or performed;
or
(3) otherwise assure the discharge of;
the obligations of the insolvent insurer or impaired insurer under a
covered policy that do not materially affect the economic values or
economic benefits of the covered policy.
As added by P.L.193-2006, SEC.11.
IC 27-8-8-3
Creation of association; membership; accounts; supervision
Sec. 3. (a) There is created a nonprofit legal entity referred to as
the Indiana Life and Health Insurance Guaranty Association. A
member insurer shall be and remain a member of the association as
a condition of the member insurer's authority to transact insurance in
Indiana. The association shall perform its functions under the plan of
operation established and approved under section 7 of this chapter.
The association shall exercise its powers through a board of directors
established under section 4 of this chapter. For purposes of
administration and assessment the association shall maintain the
following two (2) accounts:
(1) The health insurance account.
(2) The life insurance and annuity account, which includes the
following subaccounts:
(A) The life insurance subaccount.
IC 27-8-8-4
Board of directors
Sec. 4. (a) The board of directors of the association shall consist
of not less than five (5) nor more than nine (9) member insurers
serving terms established in the plan of operation. The members of
the board shall be selected by member insurers subject to the
approval of the commissioner.
(b) Vacancies on the board shall be filled for the remaining period
of the term by a majority vote of the remaining board members,
subject to the approval of the commissioner.
(c) To select the initial board and initially organize the
association, the commissioner shall give notice to all member
insurers of the time and place of the organizational meeting. At the
organizational meeting, each member insurer is entitled to one (1)
vote in person or by proxy. If the board is not selected within sixty
(60) days after notice of the organizational meeting, the
commissioner may appoint the initial members of the board.
(d) In approving selections to the board, the commissioner shall
consider whether all member insurers are fairly represented.
(e) Members of the board may be reimbursed from the assets of
the association for expenses incurred by the members as members of
the board. The association shall not otherwise compensate members
of the board for the members' services on the board.
As added by Acts 1978, P.L.129, SEC.3. Amended by P.L.193-2006,
SEC.13.
IC 27-8-8-5
Impaired insurers; insolvent insurers; liens; association powers
and duties
Sec. 5. (a) If a member insurer is an impaired insurer, the
association may, in the association's sole discretion and subject to
any conditions imposed by the association that do not impair the
contractual obligations of the impaired insurer and that are approved
by the commissioner:
(1) guarantee, assume, reinsure, or perform, or cause to be
guaranteed, assumed, reinsured, or performed, the contractual
obligations of any of the covered policies of the impaired
insurer or otherwise assure the discharge of the contractual
obligations of the covered policies of the impaired insurer; and
(2) provide money, pledges, loans, notes, guarantees, or use
other means as determined by the association in the
association's sole discretion to be necessary or appropriate to
effectuate subdivision (1).
(b) An obligation undertaken by the association under subsection
(a) with respect to a covered policy of an impaired insurer ceases on
the date the covered policy is replaced by the policy owner, insured,
or association.
(c) If a member insurer is an insolvent insurer, the association
shall, in the association's sole discretion, do one (1) of the following
for each covered policy:
(1) Guarantee, assume, reinsure, or perform, or cause to be
guaranteed, assumed, reinsured, or performed, the contractual
obligations of the covered policy or otherwise assure the
discharge of the contractual obligations of the covered policy.
(2) Terminate existing benefits and coverage and provide
benefits and coverages in accordance with the following
provisions:
(A) For premiums identical to the premiums that would have
been payable under the covered policy, assure payment of
benefits arising under the contractual obligations, except for
terms of conversion and nonrenewability, for:
(i) with respect to a group covered policy, claims incurred
not later than the earlier of the next renewal date under the
covered policy or forty-five (45) days, but not less than
thirty (30) days, after the coverage date for the insolvent
insurer; and
(ii) with respect to a nongroup covered policy, claims
incurred not later than the earlier of the next renewal date
under the covered policy or one (1) year, but in no event
less than thirty (30) days, after the coverage date for the
insolvent insurer.
(B) Make diligent efforts to provide each:
(i) known insured or annuitant, for a nongroup covered
policy; and
(ii) owner, for a group covered policy;
at least thirty (30) days notice of the termination of the
benefits provided.
(C) Make available substitute coverage, on an individual
basis, to each:
(i) owner of a nongroup covered policy if the owner had a
right to continue the nongroup covered policy in force
until a specified age or for a specified period, during
which time the insurer had no unilateral right to make
changes in the nongroup covered policy's provisions or
had only a unilateral right to make changes in premiums
only by class; and
(ii) insured or annuitant under a group covered policy if
the insured or annuitant is not eligible for any replacement
group coverage and had a right, before termination of the
group covered policy, to convert to individual coverage.
(D) In making available any substitute coverage under clause
(C), the association may offer to reissue the terminated
coverage or to issue an alternative policy or contract. If made
available under clause (C), alternative or reissued policies
and contracts must be offered without requiring evidence of
insurability and must not impose any waiting period or
coverage exclusion, other than a waiting period or coverage
exclusion provided for in this chapter, that would not have
applied under the terminated covered policy. The association
may cause any alternative or reissued policy or contract to be
assumed or reinsured.
(E) Use of alternative policies and contracts by the
association is subject to the approval of the domiciliary
insurance regulatory authority and the receivership court.
The association may adopt alternative policies and contracts
of various types for future issuance without regard to any
particular impairment or insolvency. Alternative policies and
contracts must contain at least the minimum statutory
provisions required in Indiana and provide benefits that are
reasonable in relation to the premium charged. The
association shall set the premium in accordance with a table
of rates adopted by the association. The premium must:
(i) reflect the amount of insurance to be provided and the
age and class of risk of each insured; and
(ii) not reflect changes in the health of the insured after the
terminated covered policy was last underwritten.
Subject to coverage exceptions, exclusions, and limitations
provided for in this chapter, an alternative policy or contract
issued by the association must provide coverage similar, in
material respects, to the coverage under the terminated
covered policy as determined by the association.
(F) If the association elects to reissue terminated coverage at
a premium rate different from the premium rate charged
under the terminated covered policy, the association shall set
the premium in accordance with a table of rates adopted by
the association. The premium:
(i) must reflect the amount of insurance to be provided and
the age and class of risk of each insured; and
(ii) is subject to approval of the domiciliary insurance
regulatory authority and the receivership court.
(G) The association's obligations with respect to coverage
under a covered policy of an insolvent insurer or under a
reissued or alternative policy or contract ceases on the date
the coverage or covered policy is replaced by another similar
policy by the policy owner, insured, or association.
liquidator or rehabilitator and approved by the receivership court.
(i) A deposit in Indiana, held by law or required by the
commissioner for the benefit of creditors, including policy owners,
that is not turned over to the domiciliary receiver before or promptly
after the coverage date for an impaired insurer or insolvent insurer
under IC 27-9-4-3 must be promptly paid to the association. The
association:
(1) may retain a part of an amount paid to the association under
this subsection equal to the percentage determined by dividing
the aggregate amount of policy owners' claims related to the
impairment or insolvency for which the association provides
statutory benefits by the aggregate amount of all policy owners'
claims in Indiana related to the impairment or insolvency; and
(2) shall remit to the domiciliary receiver the difference
between the amount paid to the association and the amount
retained by the association under this subsection.
An amount retained by the association under this subsection must be
treated as a distribution of estate assets under IC 27-9-3-32 or similar
provision of the state of domicile of the impaired insurer or insolvent
insurer.
(j) If the association fails to act within a reasonable period of time
as provided in subsection (c) with respect to an insolvent insurer, the
commissioner has the powers and duties of the association under this
chapter with respect to the insolvent insurer.
(k) The association may, upon the commissioner's request, assist
and advise the commissioner concerning rehabilitation, payment of
claims, continuance of coverage, or the performance of other
contractual obligations of an impaired insurer or insolvent insurer.
(l) The association has standing and the right to appear or
intervene before a court or an agency in Indiana or elsewhere with
jurisdiction over an impaired insurer or insolvent insurer for which
the association is or may become obligated under this chapter or with
jurisdiction over a person or property against which the association
may have rights through subrogation or otherwise. Standing extends
to all matters germane to the rights, powers, and duties of the
association, including proposals for reinsuring, modifying, or
guaranteeing the policies or contracts of the impaired insurer or
insolvent insurer and the determination of the policies or contracts
and contractual obligations.
(m) A person receiving benefits under this chapter is considered
to have assigned:
(1) the person's rights under; and
(2) any cause of action against another person for losses arising
under, resulting from, or otherwise relating to;
the covered policy to the association to the extent of the benefits
received because of this chapter, whether the benefits are payments
of or on account of contractual obligations or continuation of
coverage or provision of substitute or alternative coverage. The
association may require an assignment to it of those rights and causes
of action by a payee, policy or contract owner, certificate holder,
beneficiary, insured, or annuitant as a condition precedent to the
receipt of any right or benefits conferred by this chapter on the
person.
(n) The subrogation rights of the association under subsections
(m) and (o) have the same priority against the assets of the impaired
insurer or insolvent insurer as those possessed by the person entitled
to receive benefits under this chapter.
(o) In addition to the rights conferred by subsections (m) and (n),
the association has all common law rights of subrogation and any
other equitable or legal remedy with respect to a covered policy that
would have been available to the:
(1) impaired insurer or insolvent insurer;
(2) owner, beneficiary, or payee of a policy or contract with
respect to the policy or contract, including, in the case of a
structured settlement annuity, rights of the owner, beneficiary,
or payee of the annuity, to the extent of benefits received under
this chapter, against a person:
(A) who is originally or by succession responsible for the
losses arising from the personal injury relating to the annuity
or payment for the annuity; and
(B) whose responsibility is not solely because of the person
serving as an assignee in respect of a qualified assignment
under Section 130 of the Internal Revenue Code; and
(3) certificate holder, or the beneficiary or payee of the
certificate holder, with respect to a certificate.
(p) If subsection (m), (n), or (o) is invalid or ineffective with
respect to a person or claim, the amount payable by the association
with respect to the related covered policies must be reduced by the
amount realized by another person with respect to the person or
claim that is attributable to the covered policies.
(q) If the association provides benefits with respect to a covered
policy and a person recovers amounts to which the association has
rights as described in subsection (m), (n), or (o), the person shall pay
to the association the part of the recovery attributable to the covered
policies.
(r) The association may do the following:
(1) Enter into contracts necessary or appropriate to carry out the
provisions and purposes of this chapter.
(2) Sue or, subject to section 14 of this chapter, be sued,
including taking legal actions necessary or appropriate to
recover unpaid assessments under section 6 of this chapter and
to resolve claims or potential claims against or on behalf of the
association.
(3) Borrow money to effect the purposes of this chapter and
issue notes or other evidences of indebtedness of the association
with respect to borrowings. Notes or other evidences of
indebtedness described in this subdivision that are not in default
are legal investments for domestic insurers and may be carried
as admitted assets.
(4) Employ or retain persons necessary or appropriate to handle
the financial transactions of the association and to perform
other functions necessary or appropriate under this chapter.
(5) Take legal action necessary or appropriate to avoid or
recover payment of improper claims.
(6) Exercise, for the purposes of this chapter and to the extent
approved by the commissioner, the powers of a domestic life or
health insurer. However, in no case may the association issue
insurance policies or annuity contracts other than those issued
to perform the association's obligations under this chapter.
(7) Request information from a person seeking coverage from
the association to aid the association in determining and
discharging the association's obligations under this chapter with
respect to the person. The person shall promptly comply with
the request.
(8) Settle claims and potential claims by or against the
association.
(9) Exercise all rights, privileges, and powers granted to the
association by any other laws of Indiana or another jurisdiction.
(10) Take other necessary or appropriate action to discharge the
association's duties and obligations under this chapter or to
exercise the association's rights and powers under this chapter.
(s) The association may belong to one (1) or more organizations
of one (1) or more other state associations of similar purpose to
further the purpose and administer the powers and duties of the
association.
(t) The association has discretion and may exercise reasonable
business judgment to determine the means by which the association
is to discharge, in an economical and efficient manner, the
association's obligations under this chapter.
(u) In discharging the association's obligations and exercising the
association's rights and powers under subsections (a) and (c), the
association may, subject to approval of the receivership court,
provide substitute coverage for a covered policy that provides for the
covered policy's interest rate, crediting rate, or similar factor
employed in calculating returns or changes in value to be determined
by use of an index or other external referent stated in the covered
policy by issuing an alternative policy or contract in accordance with
the following provisions:
(1) Instead of the index or other external referent stated in the
covered policy, the alternative policy or contract may provide
for:
(A) a fixed interest rate;
(B) payment of dividends with minimum guarantees; or
(C) a different method for calculating returns or changes in
value.
(2) A:
(A) requirement for evidence of insurability; or
(B) waiting period or an exclusion, other than a waiting
period or an exclusion provided for in this chapter;
that would not have applied under the covered policy may not
be imposed.
(3) The alternative policy or contract must provide coverage
similar, in material respects, to the coverage under the covered
policy, after taking into account the exceptions, exclusions, and
limitations provided for in this chapter, as determined by the
association.
As added by Acts 1978, P.L.129, SEC.3. Amended by P.L.166-1986,
SEC.1; P.L.130-1994, SEC.44; P.L.116-1994, SEC.62;
P.L.251-1995, SEC.21; P.L.193-2006, SEC.14.
IC 27-8-8-5.2
Association election to succeed to rights and duties of impaired or
insolvent insurer; reinsurance
Sec. 5.2. (a) At any time within one (1) year after the coverage
date for an impaired insurer or insolvent insurer, the association may
elect, subject to subdivisions (1) through (4), to succeed to the rights
and obligations of the impaired insurer or insolvent insurer that
accrue on or after the coverage date and that relate to covered
policies under one (1) or more indemnity reinsurance agreements
entered into by the impaired insurer or insolvent insurer as a ceding
insurer. However, the association may not exercise an election with
respect to a reinsurance agreement if the receiver, rehabilitator, or
liquidator of the impaired insurer or insolvent insurer has previously
and expressly disaffirmed the reinsurance agreement. The election by
the association must be effected by a notice to the receiver,
rehabilitator, or liquidator and to the affected reinsurers specifying
the reinsurance agreement concerning which the association has
made the foregoing election. If the association makes an election, the
following apply with respect to the agreements selected by the
association:
(1) The association is responsible for:
(A) all unpaid premiums due under the agreements for
periods before and after the coverage date; and
(B) the performance of all other obligations of the impaired
insurer or insolvent insurer to be performed after the
coverage date;
that relate to covered policies. The association may charge
covered policies that are only partially covered by the
association, through reasonable allocation methods, the costs
for reinsurance in excess of the obligations of the association.
(2) The association is entitled to any amount payable by the
reinsurer under the selected agreements:
(A) with respect to losses or events that occur during periods
after the coverage date; and
(B) that relate to covered policies.
Of the amount received from the reinsurer, the association is
obliged to pay to the beneficiary under the covered policy on
account of which the amount was paid a portion of the amount
equal to the excess of the amount received by the association
over benefits paid by the association on account of the covered
policy less the retention of the impaired insurer or insolvent
insurer applicable to the loss or event.
(3) Within thirty (30) days after the association's election, the
association and each indemnity reinsurer shall calculate the net
balance due to or from the association under each reinsurance
agreement as of the date of the association's election, giving full
credit to all items paid by the:
(A) impaired insurer or insolvent insurer, or the impaired
insurer's or insolvent insurer's receiver, rehabilitator, or
liquidator; or
(B) indemnity reinsurer;
during the period between the coverage date and the date of the
association's election. Either the association or indemnity
reinsurer shall pay the net balance due the other not more than
five (5) days after the completion of the calculation. If the
receiver, rehabilitator, or liquidator has received any amount
due the association under subdivision (2), the receiver,
rehabilitator, or liquidator shall remit the amount to the
association as promptly as practicable.
(4) If the association, within sixty (60) days of the election,
pays the premiums due for periods before and after the coverage
date that relate to covered policies, the reinsurer is not entitled
to:
(A) terminate the reinsurance agreements insofar as the
agreements relate to covered policies; or
(B) set off any unpaid premium due for periods before the
coverage date against amounts due the association.
(b) If the association transfers any of the association's obligations
to another insurer, and if the association and the other insurer agree,
the other insurer succeeds to the rights and obligations of the
association under subsection (a) with respect to the transferred
obligations effective as of the date agreed upon by the association
and the other insurer and regardless of whether the association has
made the election referred to in subsection (a), except that the:
(1) indemnity reinsurance agreements automatically terminate
for new reinsurance unless the indemnity reinsurer and the other
insurer agree to the contrary; and
(2) obligations of the association described in subsection (a)(2)
no longer apply on and after the date the indemnity reinsurance
agreement is transferred to the third party insurer.
This subsection does not apply if the association has previously
notified the receiver, rehabilitator, or liquidator and the affected
reinsurer in writing that the association will not exercise the election
referred to in subsection (a).
(c) Subsections (a) and (b) supersede any other law or affected
reinsurance agreement that provides for or requires payment of
reinsurance proceeds, on account of losses or events that occur after
the coverage date, to the receiver, liquidator, or rehabilitator of the
impaired insurer or insolvent insurer. The receiver, rehabilitator, or
liquidator remains entitled to amounts payable by the reinsurer under
the reinsurance agreement with respect to losses or events that occur
before the coverage date, subject to applicable setoff provisions.
(d) Except as provided in subsections (a), (b), and (c), this chapter
does not alter or modify the terms and conditions of indemnity
reinsurance agreements of the insolvent insurer.
(e) This chapter does not:
(1) abrogate or limit the rights of a reinsurer to claim that the
reinsurer is entitled to rescind a reinsurance agreement; or
(2) give a policy owner or beneficiary an independent cause of
action against an indemnity reinsurer that is not otherwise set
forth in the indemnity reinsurance agreement.
As added by P.L.193-2006, SEC.15.
IC 27-8-8-5.4
Association obligations to person entitled to coverage
Sec. 5.4. If the association has arranged or offered to discharge
the association's obligations under this chapter with respect to
contractual obligations owed to a person entitled to coverage under
this chapter:
(1) the person, and any other person claiming by, through, or
under the person, is not entitled to benefits from the association
in addition to or other than benefits arranged or offered by the
association; and
(2) the association is relieved of further obligation with respect
to the contractual obligations if the person rejects, declines, or
otherwise fails to accept the association's arrangement or offer.
As added by P.L.193-2006, SEC.16.
IC 27-8-8-5.5
Venue; appeal bond
Sec. 5.5. (a) Venue in a suit against the association is in Marion
County.
(b) The association is not required to give an appeal bond in an
appeal that relates to a cause of action arising under or with respect
to this chapter.
As added by P.L.193-2006, SEC.17.
IC 27-8-8-6
Assessments
Sec. 6. (a) For the purpose of providing funds necessary to carry
out the powers and duties of the association and necessary to pay
administrative costs and expenses incurred by the commissioner in
supervising the association and discharging the commissioner's
obligations under this chapter, the board shall assess the member
insurers, separately for each account, at a time and for amounts as the
board finds necessary. Assessments are due not less than thirty (30)
days after prior written notice to the member insurers and accrue
interest at six percent (6%) per annum on and after the due date.
(b) There are two (2) classes of assessments as follows:
(1) Class A assessments are assessments that are authorized and
called by the board 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 insurer or insolvent insurer.
(2) Class B assessments are assessments that are authorized and
called by the board to the extent necessary to carry out the
powers and duties of the association under this chapter with
regard to an impaired insurer or insolvent insurer.
(c) The amount of a Class A assessment must 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 the assessment be
credited against future Class B assessments. The total of all non-pro
rata assessments must not exceed one hundred fifty dollars ($150)
per member insurer in any one (1) calendar year.
(d) The amount of a Class B assessment must be allocated for
assessment purposes among the accounts under an allocation formula
that may be based on the premiums or reserves of the impaired
insurer or insolvent insurer or another standard considered by the
board in the board's sole discretion as fair and reasonable under the
circumstances.
(e) Class B assessments against member insurers for each account
and subaccount with respect to an impaired insurer or insolvent
insurer must be allocated among the assessed member insurers in the
proportion that the premiums received in Indiana by each assessed
member insurer on policies and contracts covered by the account or
subaccount during the assessment base year for the impaired insurer
or insolvent insurer bears to premiums received in Indiana by all
assessed members on policies and contracts covered by the same
account or subaccount during the same assessment base year.
(f) Assessments for funds to meet the requirements of the
association with respect to an impaired insurer or insolvent insurer
must not be authorized or called until necessary to implement the
purposes of this chapter. Classification of assessments under
subsection (b) and computation of assessments under subsections (c),
(d), and (e) must be made with a reasonable degree of accuracy,
recognizing that exact determinations are not always possible. The
association shall notify each member insurer of the member insurer's
anticipated share of an assessment that has been authorized but not
yet called not more than one hundred eighty (180) days after the
assessment is authorized.
(g) 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 would endanger the ability of the member
insurer to fulfill its policy and contract obligations. In the event an
assessment against a member insurer is abated or deferred in whole
or in part, the amount by which the 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 insurer shall pay assessments that were
deferred under a repayment plan approved by the association.
(h) Subject to subsection (i), the total of all assessments
authorized by the association in one (1) calendar year against a
member insurer for a given subaccount of the life insurance and
annuity account or for the health insurance account with respect to
any single assessment base year must not exceed two percent (2%)
of the member insurer's premiums received in Indiana on the policies
and contracts covered by the subaccount or account during the
applicable assessment base year.
(i) If two (2) or more assessments are authorized in one (1)
calendar year with respect to impaired insurers or insolvent insurers
having different assessment base years, the annual premium used for
purposes of determining the aggregate assessment percentage
limitation referenced in subsection (h) must be equal to the higher of
the annual premiums for the applicable subaccount or account as
calculated under this section.
(j) If the maximum assessment, together with other assets of the
association in an account, does not provide in one (1) year in the
account an amount sufficient to carry out the responsibilities of the
association, additional funds must be assessed as soon as permitted
by this chapter.
(k) The board may provide in the plan of operation a method of or
procedure for allocating funds among claims relating to one (1) or
more impaired insurers or insolvent insurers when the maximum
assessment is insufficient to cover anticipated claims.
(l) If the maximum assessment for a subaccount of the life
insurance and annuity account in one (1) year does not provide an
amount sufficient to carry out the responsibilities of the association,
the board shall, under subsection (e), access the other subaccounts of
the life insurance and annuity account for the necessary additional
amount, subject to the maximum stated in subsections (h) and (i).
(m) The board may, by an equitable method or procedure as
established in the plan of operation, refund to member insurers, in
proportion to the contribution of each member insurer to the account,
the amount by which the assets of the account exceed the amount the
board determines is necessary to carry out the obligations of the
association with regard to the account, including assets accruing
from assignment, subrogation, net realized gains, and income from
investments. A reasonable amount may be retained in an account to
provide funds for the continuing expenses of the association and for
the future discharge of the association's obligations.
(n) It is proper for a member insurer, in determining its premium
rates and policyowner dividends as to any type of insurance within
the scope of this chapter, to consider the amount reasonably
necessary to meet its assessment obligations under this chapter.
(o) The association shall issue to each member insurer paying an
assessment under this chapter, other than a Class A assessment, a
certificate of contribution, in a form prescribed by the commissioner,
for the amount of the assessment paid. All outstanding certificates
are of equal dignity and priority without reference to amounts or
dates of issue. A certificate of contribution may be shown by the
member insurer in its financial statement as an asset in the form and
for the amount and period of time as the commissioner may approve.
As added by Acts 1978, P.L.129, SEC.3. Amended by P.L.16-1984,
SEC.17; P.L.166-1986, SEC.2; P.L.130-1994, SEC.45;
P.L.116-1994, SEC.63; P.L.193-2006, SEC.18.
IC 27-8-8-6.2
Member protesting assessment
Sec. 6.2. (a) A member insurer that wishes to protest all or part of
an assessment made under section 6 of this chapter shall pay when
due the full amount of the assessment as set forth in the notice
provided by the association. The payment is available to meet
association obligations during the pendency of the protest or a
subsequent appeal. Payment must be accompanied by a statement in
writing that the payment is made under protest and set forth a brief
statement of the grounds for the protest.
(b) Not more than sixty (60) days after the payment of an
assessment under protest by a member insurer, the association shall
notify the member insurer in writing of the association's
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) Not more than sixty (60) days after receipt of notice of the
association's determination with respect to a protest, the protesting
member insurer may appeal the determination to the commissioner.
(d) Instead of making a determination with respect to a protest
based on a question regarding the assessment base, the association
may refer the protest to the commissioner for a determination, with
or without a recommendation from the association.
(e) If a protest of an assessment is upheld, the amount paid by the
protesting member insurer in error or excess must be returned to the
member insurer. Interest on a refund due to a protesting member
insurer must be paid at the rate actually earned by the association.
As added by P.L.193-2006, SEC.19.
IC 27-8-8-6.5
Association requests for information
Sec. 6.5. (a) The association may request information from a
member insurer to aid in the exercise of the association's power
under sections 6 and 6.2 of this chapter.
(b) A member insurer that receives a request under subsection (a)
shall promptly comply with the request.
As added by P.L.193-2006, SEC.20.
IC 27-8-8-7
Association plan of operation
Sec. 7. (a) The association shall submit to the commissioner a
plan of operation and any amendments to the plan of operation that
are necessary or appropriate to assure the fair, reasonable, and
equitable administration of the association. The plan of operation and
an amendment to the plan of operation are effective:
(1) if the plan or amendment is not disapproved by the
commissioner within thirty (30) days after being submitted to
the commissioner; or
(2) upon the commissioner's written approval, if sooner than the
time set in subdivision (1).
(b) If the association fails to submit a suitable plan of operation
within one hundred eighty (180) days from September 1, 1978, or if
at any other time the association fails to submit suitable amendments
to the plan, the commissioner shall adopt rules under IC 4-22-2
necessary to effectuate the provisions of this chapter. The rules
continue in force until modified by the commissioner or superseded
by a plan submitted by the association and approved by the
commissioner.
(c) A member insurer shall comply with the plan of operation.
(d) The plan of operation must, in addition to requirements stated
elsewhere in this chapter establish:
(1) procedures for handling the assets of the association;
(2) the amount and method of reimbursing members of the
board under section 4 of this chapter;
(3) regular places and times for meetings, including, if desired
by the association, telephone conference calls, of the board;
(4) procedures for records to be kept of all financial
transactions of the association, its agents, and the board;
(5) procedures whereby selections for the board will be made
and submitted to the commissioner; and
(6) any additional procedures for assessments under sections 6
and 6.2 of this chapter.
The plan of operation may contain additional provisions necessary
or appropriate for the execution of the powers and duties of the
association.
(e) The plan of operation may provide that any or all powers and
duties of the association, except those under sections 5(r)(3), 6, 6.2,
and 6.5 of this chapter, may be delegated to a corporation,
association, or other organization that performs or will perform
functions similar to those of the association, or its equivalent, in two
(2) or more states. The corporation, association, or organization must
be reimbursed for payments made on behalf of the association and
must be paid for its performance of any function of the association.
A delegation under this subsection takes effect only with the
approval of both the board and the commissioner and may be made
only to a corporation, association, or organization that extends
protection that is not substantially less favorable and effective than
that provided by this chapter.
(f) To the extent and in the manner specified in the plan of
operation, the board may create one (1) or more committees, each of
which may exercise the authority of the board to the extent specified
in the plan of operation or by the board.
As added by Acts 1978, P.L.129, SEC.3. Amended by P.L.193-2006,
SEC.21.
IC 27-8-8-8
Powers and duties of commissioner; appeals to commissioner;
notice of effect of chapter
Sec. 8. (a) The commissioner shall do the following:
(1) Upon request of the board, provide the association with a
statement of the premiums in Indiana and other appropriate
states for each member insurer.
(2) When an impairment is declared and the amount of the
impairment is determined, serve a demand on the impaired
insurer to make good the impairment within a reasonable time.
Notice to the impaired insurer shall constitute notice to its
shareholders. The failure of the insurer to promptly comply
with the demand shall not excuse the association from the
performance of its powers and duties under this chapter.
(3) In any liquidation or rehabilitation proceeding involving a
domestic insurer, be appointed as the liquidator or rehabilitator.
(b) The commissioner may suspend or revoke, after notice and
hearing, the certificate of authority to transact insurance in Indiana
of a member insurer that fails to pay an assessment when due or fails
to comply with the plan of operation. As an alternative, the
commissioner may levy a forfeiture on a member insurer that fails to
pay an assessment when due. A forfeiture shall not exceed five
percent (5%) of the unpaid assessment per month, but no forfeiture
shall be less than one hundred dollars ($100) per month.
(c) A final action of the association or the board may be appealed
to the commissioner by a member insurer if the appeal is taken
within sixty (60) days of the member insurer's receipt of notice of the
final action being appealed. A final action or order of the
commissioner is subject to judicial review in a court with jurisdiction
in accordance with the Indiana law that applies to the actions or
orders of the commissioner.
(d) The liquidator, rehabilitator, or conservator of an impaired
insurer or insolvent insurer may notify all interested persons of the
effect of this chapter.
As added by Acts 1978, P.L.129, SEC.3. Amended by P.L.193-2006,
SEC.22.
IC 27-8-8-9
Detection and prevention of insurer insolvencies or impairments;
actions of board of directors
Sec. 9. (a) To aid in the detection and prevention of insurer
insolvencies or impairments, the commissioner shall do the
following:
(1) Notify the insurance regulatory authorities of all the other
states not more than thirty (30) days after the date an action
taken by the commissioner occurs when the commissioner takes
any of the following actions against a member insurer:
(A) Revokes the member insurer's certificate of authority.
IC 27-8-8-10
Records of board meetings; disclosure of records; association
status as creditor; application of impaired or insolvent insurer's
assets
Sec. 10. (a) Records must be kept of all meetings of the board to
discuss the activities of the association in carrying out its powers and
duties under sections 5, 5.2, and 5.4 of this chapter. Records of the
association with respect to an impaired insurer or insolvent insurer
must not be disclosed except:
(1) after the termination of the liquidation, rehabilitation, or
conservation proceeding involving the impaired insurer or
insolvent insurer; or
(2) upon the order of a court with jurisdiction if the order is
made before the time described in subdivision (1).
This subsection does not limit the duty of the association to submit
a report of its activities under section 12 of this chapter.
(b) For the purpose of carrying out its obligations under this
chapter, the association is a creditor of the impaired insurer or
insolvent insurer to the extent of assets attributable to covered
policies reduced by any amounts that the association has received,
from a person other than the impaired insurer or insolvent insurer, as
subrogee under section 5(m), 5(o), and 5(q) of this chapter. Assets of
the impaired insurer or insolvent insurer attributable to covered
policies shall be used to continue all covered policies and pay all
contractual obligations of the impaired insurer or insolvent insurer
as required by this chapter. "Assets attributable to covered policies",
as used in this subsection, is that proportion of the assets that the
reserves that should have been established for such policies bear to
the reserves that should have been established for all policies of
insurance written by the impaired insurer or insolvent insurer.
(c) As a creditor of an impaired insurer or insolvent insurer under
subsection (b) and consistent with IC 27-9-3-32, the association and
other similar associations are entitled to receive disbursements of
assets out of the marshaled assets, as the assets become available to
reimburse the association or another similar association, as a credit
against contractual obligations under this chapter. If the liquidator
has not, within one hundred twenty (120) days after a member
insurer becomes an insolvent insurer, made an application to the
court for the approval of a proposal to disburse assets out of
marshaled assets to guaranty associations having obligations because
of the insolvency, the association is entitled to make application to
the receivership court for approval of the association's own proposal
to disburse the assets.
(d) Before the termination of a liquidation, rehabilitation, or
conservation proceeding, the court may take into consideration the
contributions of the respective parties, including the association, the
shareholders and policy owners of the impaired insurer or insolvent
insurer, and any other party with a bona fide interest, in making an
equitable distribution of the ownership rights of the impaired insurer
or insolvent insurer. In making the determination, the court shall
consider the welfare of the policy owners of the continuing or
successor insurer.
(e) A distribution to stockholders of an impaired insurer or
insolvent insurer must not be made until the total amount of valid
claims of the association, with interest, for funds expended in
carrying out the association's powers and duties under sections 5, 5.2,
5.4, and 5.5 of this chapter with respect to the impaired insurer or
insolvent insurer, have been fully recovered by the association.
As added by Acts 1978, P.L.129, SEC.3. Amended by P.L.193-2006,
SEC.24.
IC 27-8-8-11
Distributions to affiliates; recovery
Sec. 11. (a) Subject to subsections (b) through (d), if an order for
liquidation or rehabilitation of an insurer domiciled in Indiana has
been entered, the receiver appointed under the order shall have a
right to recover on behalf of the insurer, from any affiliate that
controlled it, the amount of distributions, other than stock dividends
paid by the insurer on its capital stock, made at any time during the
five (5) years preceding the filing of the petition for liquidation or
rehabilitation.
(b) A distribution described in subsection (a) is not recoverable if
the insurer shows that when the distribution was paid the distribution
was lawful and reasonable, and that the insurer did not know and
could not reasonably have known that the distribution might
adversely affect the ability of the insurer to fulfill the insurer's policy
and contract obligations.
(c) A person who was an affiliate that controlled the insurer at the
time a distribution described in subsection (a) was paid is liable up
to the amount of distributions the person received. A person who was
an affiliate that controlled the insurer at the time the distributions
were declared shall be liable up to the amount of distributions that
would have been received if the distributions had been paid
immediately. If two (2) or more persons are liable with respect to the
same distributions, they are jointly and severally liable.
(d) The maximum amount recoverable under this section shall be
the amount needed in excess of all other available assets of the
insolvent insurer to pay the policy and contract obligations of the
insolvent insurer.
(e) If a person liable under subsection (c) is insolvent, the
affiliates that controlled the person at the time the distribution was
paid shall be jointly and severally liable for any resulting deficiency
in the amount recovered from the insolvent affiliate.
As added by Acts 1978, P.L.129, SEC.3. Amended by P.L.193-2006,
SEC.25.
IC 27-8-8-12
Examination and regulation of association; financial report
Sec. 12. (a) The association is subject to examination and
regulation by the commissioner. The association shall annually
submit to the commissioner, not later than one hundred twenty (120)
days after the end of the association's fiscal year, a financial report
in a form approved by the commissioner and a report of its activities
during the preceding fiscal year.
IC 27-8-8-13
Association tax and fee exemption
Sec. 13. The association is exempt from payment of all fees and
all taxes levied by Indiana or any of its political subdivisions, except
taxes levied on real property.
As added by Acts 1978, P.L.129, SEC.3.
IC 27-8-8-14
Liability for performance under chapter
Sec. 14. (a) A member insurer and the member insurer's agents
and employees, the association and the association's agents and
employees, members of the board and representatives of the
members of the board, and the commissioner and the commissioner's
representatives are not liable for and no cause of action of any nature
arises or may be brought against them for or in connection with an
action or omission by any of them in the exercise and performance
of their rights, powers, and duties under this chapter.
(b) Immunity under this section extends to:
(1) the participation in an organization of one (1) or more other
state associations of similar purpose; and
(2) an organization described in subdivision (1) and an agent or
employee of the organization.
As added by Acts 1978, P.L.129, SEC.3. Amended by P.L.193-2006,
SEC.27.
IC 27-8-8-15
Insolvent insurer proceedings; stay; setting aside judgment
Sec. 15. All proceedings in which an insolvent insurer is a party
in any court in Indiana shall be stayed for sixty (60) days from the
date an order of liquidation is entered to permit proper legal action
by the association on matters germane to its powers or duties. As to
judgment under any decision, order, verdict, or finding based on
default, the association may apply to have the judgment set aside by
the same court that made the judgment and is entitled to defend
against the suit on the merits.
As added by Acts 1978, P.L.129, SEC.3. Amended by P.L.193-2006,
SEC.28.
IC 27-8-8-16
Recoupment of assessments
Sec. 16. A member insurer may take as a credit against premium
taxes, adjusted gross income taxes, or any combination of them
imposed by the state upon the member insurer's revenue or income
not more than twenty percent (20%) of the amount of each
assessment described in section 6 of this chapter for each calendar
year following the year in which the assessment was paid until the
assessment has been offset by either credits against the taxes or
refunds from the association. If the member insurer ceases doing
business, all uncredited assessments may be credited against the
member insurer's premium taxes, adjusted gross income taxes, or a
combination of the premium taxes and adjusted gross income taxes
of the member insurer for the year the member insurer ceases doing
business.
As added by Acts 1978, P.L.129, SEC.3. Amended by Acts 1979,
P.L.255, SEC.2; Acts 1980, P.L.173, SEC.1; P.L.163-1986, SEC.2;
P.L.192-2002(ss), SEC.168; P.L.193-2006, SEC.29.
IC 27-8-8-17
Refunds from association
Sec. 17. (a) Sums acquired by refund under section 6(m) of this
chapter from the association by member insurers and offset against
taxes as provided by section 16 of this chapter shall be paid by the
member insurers to the state in the manner required by the tax
authorities.
(b) The association shall notify the commissioner when refunds
under section 6 of this chapter have been made.
As added by Acts 1978, P.L.129, SEC.3. Amended by P.L.193-2006,
SEC.30.
IC 27-8-8-18
Advertising referring to association; association summary
document
Sec. 18. (a) A person, including an insurer, insurance producer,
employee, agent, or affiliate of an insurer, shall not make, publish,
disseminate, circulate, or place before the public or cause, directly or
indirectly, to be made, published, disseminated, circulated, or placed
before the public, in any newspaper, magazine, or other publication,
or in the form of a notice, circular, pamphlet, letter, or poster, or over
any radio station or television station, or in any other way, an
advertisement, an announcement, or a statement, written or oral, that
uses the existence of the association for the purpose of the sale of,
solicitation of, or inducement to purchase any form of insurance
covered by this chapter. This section does not apply to the
association or any other entity that does not sell or solicit insurance.
(b) Not later than January 1, 2007, the association shall:
(1) prepare a summary document:
(A) describing the general purposes and current limitations
of this chapter; and
(B) complying with subsection (c); and
(2) submit the summary document to the commissioner for
approval.
Sixty (60) days after the date on which the commissioner approves
the summary document, a member insurer may not deliver a policy
or contract to a policy or contract owner unless the summary
document is delivered to the policy or contract owner at the time of
delivery of the policy or contract. The summary document must also
be available upon request by a policy owner. The distribution,
delivery, or contents or interpretation of the summary document does
not guarantee that the policy or contract or the owner of the policy or
contract is covered in the event of the impairment or insolvency of
a member insurer. The summary document must be revised by the
association as amendment to this chapter requires. Failure to receive
the summary document does not give a policy owner, a contract
owner, a certificate holder, or an insured greater rights than the rights
specified in this chapter.
(c) The summary document prepared under subsection (b) must
contain a clear and conspicuous disclaimer on the face of the
summary document. The commissioner shall approve the form and
content of the disclaimer. The disclaimer must, at a minimum,
convey all the following:
(1) State the name and address of the association and the
department of insurance.
(2) Prominently warn that:
(A) the association might not cover the policy or contract;
and
(B) even if coverage were currently provided, coverage is:
(i) subject to substantial limitations and exclusions;
(ii) generally conditioned on continued residence in
Indiana; and
(iii) subject to possible change as a result of future
amendments to this chapter and court decisions.
(3) State the types of policies for which the association
currently provides coverage.
(4) State that the member insurer and the member insurer's
agents are prohibited by law from using the existence of the
association for the purpose of selling, soliciting, or inducing
purchase of any form of insurance.
(5) State that the policy owner or contract owner should not rely
on coverage under this chapter when selecting an insurer.
(6) Explain:
(A) rights available following; and
(B) procedures for filing a complaint to allege;
a violation of any provision of this chapter.
(7) Provide other information as directed by the commissioner,
including sources for information that:
(A) is not proprietary; and
(B) is subject to disclosure under IC 5-14-3;
concerning the financial condition of an insurer.
(d) A member insurer shall retain evidence of compliance with
subsection (b) until the policy or contract for which the notice is
given is no longer in effect.
As added by Acts 1978, P.L.129, SEC.3. Amended by P.L.178-2003,
SEC.62; P.L.193-2006, SEC.31.