MISSISSIPPI LEGISLATURE
2020 Regular Session
To: Insurance
By: Representative Ford (54th)
AN ACT TO AMEND SECTION 83-23-203, MISSISSIPPI CODE OF 1972, TO REVISE THE PURPOSE OF THE MISSISSIPPI LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION ACT; TO AMEND SECTION 83-23-205, MISSISSIPPI CODE OF 1972, TO REVISE THE COVERAGES PROVIDED UNDER THE ACT TO INCLUDE COVERAGE FOR HEALTH MAINTENANCE ORGANIZATION SUBSCRIBER CONTRACTS AND CERTIFICATES, AND TO CLARIFY CERTAIN COVERAGES; TO AMEND SECTION 83-23-209, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT THE DEFINITION OF "MEMBER INSURER" INCLUDES A HEALTH MAINTENANCE ORGANIZATION THAT HOLDS A CERTIFICATE OF AUTHORITY TO TRANSACT HEALTH MAINTENANCE ORGANIZATION BUSINESS; TO AMEND SECTION 83-23-211, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT HEALTH MAINTENANCE ORGANIZATIONS SHALL BE AND REMAIN MEMBER INSURERS AS A CONDITION OF THEIR AUTHORITY TO TRANSACT HEALTH MAINTENANCE ORGANIZATION BUSINESS IN MISSISSIPPI; TO AMEND SECTION 83-23-215, MISSISSIPPI CODE OF 1972, TO REVISE THE POWERS OF THE ASSOCIATION; TO AMEND SECTION 83-23-217, MISSISSIPPI CODE OF 1972, TO REMOVE THE MAXIMUM LIMITATION ON CLASS A ASSESSMENTS AND TO PROVIDE FOR THE ALLOCATION OF CLASS B ASSESSMENTS RELATED TO LONG-TERM CARE INSURANCE; TO AMEND SECTIONS 83-23-221, 83-23-223 AND 83-23-225, MISSISSIPPI CODE OF 1972, TO CONFORM TO PREVIOUS SECTIONS; TO AMEND SECTION 83-23-235, MISSISSIPPI CODE OF 1972, TO CLARIFY THE PROHIBITION AGAINST USING THE ASSOCIATION'S NAME IN ADVERTISING AND TO PROVIDE FOR DELIVERY OF A SUMMARY DOCUMENT DISCLOSURE BY HEALTH MAINTENANCE ORGANIZATIONS; TO CREATE NEW SECTION 83-23-239, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR THE APPLICABILITY OF THE AMENDMENTS MADE BY THIS ACT; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Section 83-23-203, Mississippi Code of 1972, is amended as follows:
83-23-203. (1) The purpose of this article is
to protect, subject to certain limitations, the persons specified in Section 83-23-205(1)
against failure in the performance of contractual obligations, under life * * *, health * * *, and annuity policies,
plans or contracts specified in Section 83-23-205(2), because of the
impairment or insolvency of the member insurer that issued the policies,
plans or contracts.
(2) To provide this protection, an association of member insurers is created to pay benefits and to continue coverages as limited herein, and members of the association are subject to assessment to provide funds to carry out the purpose of this article.
SECTION 2. Section 83-23-205, Mississippi Code of 1972, is amended as follows:
83-23-205. (1) This article shall provide coverage for the policies and contracts specified in subsection (2)(a) of this section:
(a) To persons who, regardless of where they reside (except for nonresident certificate holders under group policies or contracts), are the beneficiaries, assignees or payees, including health care providers rendering services covered under health insurance policies or certificates, of the persons covered under paragraph (b);
(b) To persons who are owners of or certificate holders or enrollees under the policies or contracts (other than unallocated annuity contracts and structured settlement annuities) and in each case who:
(i) Are residents; or
(ii) Are not residents, but only under all of the following conditions:
1. The member insurer that issued the policies or contracts is domiciled in this state;
2. The states in which the persons reside have associations similar to the association created by this article;
3. The persons are not eligible for coverage by an association in any other state due to the fact that the insurer or health maintenance organization was not licensed in the state at the time specified in the state's guaranty association law.
(c) For unallocated annuity contracts specified in subsection (2)(a) of this section, paragraphs (a) and (b) of this subsection shall not apply, and this article shall (except as provided in paragraphs (e) and (f) of this subsection) provide coverage to:
(i) Persons who are the owners of the unallocated annuity contracts if the contracts are issued to or in connection with a specific benefit plan whose plan sponsor has its principal place of business in this state; and
(ii) Persons who are owners of unallocated annuity contracts issued to or in connection with government lotteries if the owners are residents.
(d) For structured settlement annuities specified in subsection (2)(a) of this section, paragraphs (a) and (b) of this subsection shall not apply, and this article shall (except as provided in paragraphs (e) and (f) of this subsection) provide coverage to a person who is a payee under a structured settlement annuity (or beneficiary of a payee if the payee is deceased), if the payee:
(i) Is a resident, regardless of where the contract owner resides, or
(ii) Is not a resident, but only under both of the following conditions:
1. a. The contract owner of the structured settlement annuity is a resident, or
b. The contract owner of the structured settlement annuity is not a resident, but (A) the insurer that issued the structured settlement annuity is domiciled in this state; and (B) the state in which the contract owner resides has an association similar to the association created by this article; and
2. Neither the payee (or beneficiary) nor the contract owner is eligible for coverage by the association of the state in which the payee or contract owner resides.
(e) This article shall not provide coverage to:
(i) A person who
is a payee (or beneficiary) or a contract owner resident of this state, if the
payee (or beneficiary) is afforded any coverage by the association of another
state; * * *
(ii) A person
covered under paragraph (c) of this subsection, if any coverage is provided by
the association of another state to the person * * *; or
(iii) A person who acquires rights to receive payments through a structured settlement factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A), regardless of whether the transaction occurred before or after 26 U.S.C. 5891(c)(3)(A) became effective.
(f) This article is intended to provide coverage to a person who is a resident of this state and in special circumstances, to a nonresident. In order to avoid duplicate coverage, if a person who would otherwise receive coverage under this article is provided coverage under the laws of any other state, the person shall not be provided coverage under this article. In determining the application of the provisions of this paragraph, in situations where a person could be covered by the association of more than one (1) state, whether as an owner, payee, enrollee, beneficiary or assignee, this article shall be construed in conjunction with other state laws to result in coverage by only one (1) association.
(2) (a) This article shall
provide coverage to the persons specified in subsection (1) of this section for
policies or contracts of direct, nongroup life * * * insurance,
health insurance (which for the purposes of this article includes health
maintenance organization subscriber contracts and certificates), or annuities
and supplemental contracts to any of these, for certificates under direct group
policies and contracts, and for unallocated annuity contracts issued by member
insurers, except as limited by this article. Annuity contracts and
certificates under group annuity contracts include, but are not limited to,
guaranteed investment contracts, deposit administration contracts, unallocated
funding agreements, allocated funding agreements, structured settlement
annuities, annuities issued to or in connection with government lotteries and
any immediate or deferred annuity contracts.
(b) Except as otherwise provided in subsection (3) of this section, this article shall not provide coverage for:
(i) A portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy or contract owner;
(ii) A policy or contract of reinsurance, unless assumption certificates have been issued pursuant to the reinsurance policy or contract;
(iii) A portion of a policy or contract to the extent that the rate of interest on which it is based, or the 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:
1. Averaged over the period of four (4) years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this article, whichever is earlier, exceeds the rate of interest determined by subtracting two (2) percentage points from Moody's Corporate Bond Yield Average averaged for that same four-year period or for such lesser period if the policy or contract was issued less than four (4) years before the member insurer becomes an impaired or insolvent insurer under this article, whichever is earlier; and
2. On and after the date on which the member insurer becomes an impaired or insolvent insurer under this article, whichever is earlier, exceeds the rate of interest determined by subtracting three (3) percentage points from Moody's Corporate Bond Yield Average as most recently available;
(iv) A portion of a policy or contract issued to a plan or program of an employer, association or other person to provide life, health or annuity benefits to its employees, members or others to the extent that the plan or program is self-funded or uninsured, including, but not limited to, benefits payable by an employer, association or other person under:
1. A Multiple
Employer Welfare Arrangement as defined in 29 * * * U.S.C. Section 1002(40);
2. A minimum premium group insurance plan;
3. A stop-loss group insurance plan; or
4. An administrative services only contract;
(v) A portion of a policy or contract to the extent that it provides for:
1. Dividends or experience-rating credits;
2. Voting rights; or
3. Payment of any fees or allowances to any person, including the policy or contract owner, in connection with the service to or administration of the policy or contract;
(vi) A policy or contract issued in this state by a member insurer at a time when it was not licensed or did not have a certificate of authority to issue such policy or contract in this state;
(vii) An unallocated annuity contract issued to or in connection with a benefit plan protected under the federal Pension Benefit Guaranty Corporation, regardless of whether the federal Pension Benefit Guaranty Corporation has yet become liable to make any payments with respect to the benefit plan;
(viii) A portion of any unallocated annuity contract that is not issued to or in connection with a specific employee, union or association of natural persons benefit plan or a government lottery;
(ix) A portion of a policy or contract to the extent that the assessments required by Section 83-23-217 with respect to the policy or contract are preempted by federal or state law;
(x) An obligation that does not arise under the express written terms of the policy or contract issued by the member insurer to the enrollee, certificate holder, contract owner or policy owner, including without limitation:
1. Claims based on marketing materials;
2. Claims based on side letters, riders or other documents that were issued by the member insurer without meeting applicable policy or contract form filing or approval requirements;
3. Misrepresentations of or regarding policy or contract benefits;
4. Extra-contractual claims; or
5. A claim for penalties or consequential or incidental damages;
(xi) A contractual agreement that establishes the member insurer's obligations 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 benefit plan or its trustee, which in each case is not an affiliate of the member insurer;
(xii) A portion of a policy or contract to the extent it provides for interest or other changes in value to be determined by the use of an index or other external reference stated in the policy or contract, but which have not been credited to the policy or contract, or as to which the policy or contract owner's rights are subject to forfeiture, as of the date the member insurer becomes an impaired or insolvent insurer under this article, whichever is earlier. If a policy's or contract's interest or changes in value are credited less frequently than annually, then for purposes of determining the values that have been credited and are not subject to forfeiture under this paragraph, the interest or change in value determined by using the procedures defined in the policy or contract will be credited as if the contractual date of crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and will not be subject to forfeiture; and
(xiii) A policy or contract providing any hospital, medical, prescription drug or other health care benefits pursuant to Part C or Part D of Subchapter XVIII, Chapter 7 of Title 42 of the United States Code (commonly known as Medicare Part C & D), or Subchapter XIX, Chapter 7 of Title 42 of the United States Code (commonly known as Medicaid), or any regulations issued pursuant thereto.
(xiv) Structured settlement annuity benefits to which a payee (or beneficiary) has transferred his or her rights in a structured settlement factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A), regardless of whether the transaction occurred before or after 26 U.S.C. 5891(c)(3)(A) became effective.
(3) The exclusion from coverage referenced in subsection (4)(b)(iii) of this section shall not apply to any portion of a policy or contract, including a rider, that provides long-term care or any other health insurance benefits.
( * * *4) The benefits that the association
may become obligated to cover shall in no event exceed the lesser of:
(a) The contractual obligations for which the member insurer is liable or would have been liable if it were not an impaired or insolvent insurer; or
(b) (i) With respect to any one (1) life, regardless of the number of policies or contracts:
1. Three Hundred Thousand Dollars ($300,000.00) in life insurance death benefits, but not more than One Hundred Thousand Dollars ($100,000.00) in net cash surrender and net cash withdrawal values for life insurance;
2. * * * For health insurance benefits:
a. One
Hundred Thousand Dollars ($100,000.00) for coverages not defined as disability income
insurance or * * * health
benefit plans or long-term care insurance, including any net cash surrender
and net cash withdrawal values;
b. Three Hundred Thousand Dollars ($300,000.00) for disability income insurance and Three Hundred Thousand Dollars ($300,000.00) for long-term care insurance;
c. Five
Hundred Thousand Dollars ($500,000.00) for * * * health benefit plans; * * *
3. Two Hundred Fifty Thousand Dollars ($250,000.00) in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; or
(ii) With respect to each individual participating in a governmental retirement benefit plan established under Section 401, 403(b) or 457 of the United States Internal Revenue Code covered by an unallocated annuity contract or the beneficiaries of each such individual if deceased, in the aggregate, Two Hundred Fifty Thousand Dollars ($250,000.00) in present value annuity benefits, including net cash surrender and net cash withdrawal values;
(iii) With respect to each payee of a structured settlement annuity (or beneficiary or beneficiaries of the payee if deceased), Two Hundred Fifty Thousand Dollars ($250,000.00) in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any;
(iv) However, in
no event shall the association be obligated to cover more than (a) an aggregate
of Three Hundred Thousand Dollars ($300,000.00) in benefits with respect to any
one (1) life under paragraphs (b)(i), (b)(ii) and (b)(iii) of this subsection
except with respect to benefits for * * * health benefit plans under paragraph (b)(i)
of this subsection, in which case the aggregate liability of the association
shall not exceed Five Hundred Thousand Dollars ($500,000.00) with respect to
any one (1) individual, or (b) with respect to one (1) owner of multiple
nongroup policies of life insurance, whether the policy or contract
owner is an individual, firm, corporation or other person, and whether the
persons insured are officers, managers, employees or other persons, more than
Five Million Dollars ($5,000,000.00) in benefits, regardless of the number of
policies and contracts held by the owner;
(v) With respect to either (a) one (1) contract owner provided coverage under subsection (1)(c)(ii) of this section; or (b) one (1) plan sponsor whose plans own directly or in trust one or more unallocated annuity contracts not included in paragraph (b)(ii) of this subsection, Five Million Dollars ($5,000,000.00) in benefits, irrespective of the number of contracts with respect to the contract owner or plan sponsor. However, in the case where one or more unallocated annuity contracts are covered contracts under this article and are owned by a trust or other entity for the benefit of two (2) or more plan sponsors, coverage shall be afforded by the association if the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in this state and in no event shall the association be obligated to cover more than Five Million Dollars ($5,000,000.00) in benefits with respect to all these unallocated contracts;
(vi) The
limitations set forth in this subsection are limitations on the benefits for
which the association is obligated before taking into account either its
subrogation and assignment rights or the extent to which those benefits could
be provided out of the assets of the impaired or insolvent insurer attributable
to covered policies. The costs of the association's obligations under this
article may be met by the use of assets attributable to covered policies or
reimbursed to the association pursuant to its subrogation and assignment rights * * *;
(vii) For purposes of this article, benefits provided by a long-term care rider to a life insurance policy or annuity contract shall be considered the same type of benefits as the base life insurance policy or annuity contract to which it relates.
( * * *5) In performing its obligations to
provide coverage under Section 83-23-215, the association shall not be required
to guarantee, assume, reinsure, reissue or perform, or cause to be
guaranteed, assumed, reinsured, reissued or performed, the contractual
obligations of the insolvent or impaired insurer under a covered policy or
contract that do not materially affect the economic values or economic benefits
of the covered policy or contract.
SECTION 3. Section 83-23-209, Mississippi Code of 1972, is amended as follows:
83-23-209. As used in this article:
(a) "Account" means either of the two (2) accounts created under Section 83-23-211.
(b) "Association" means the Mississippi Life and Health Insurance Guaranty Association created under Section 83-23-211.
(c) "Authorized assessment" or the term "authorized" when used in the context of assessments means a resolution by the board of directors has been passed whereby an assessment will be called immediately or in the future from member insurers for a specified amount. An assessment is authorized when the resolution is passed.
(d) "Benefit plan" means a specific employee, union or association of natural persons benefit plan.
(e) "Called assessment" or the term "called" when used in the context of assessments means that a notice has been issued by the association to member insurers requiring that an authorized assessment be paid within the time frame set forth within the notice. An authorized assessment becomes a called assessment when notice is mailed by the association to member insurers.
(f) "Commissioner" means the Commissioner of Insurance of this state.
(g) "Contractual obligation" means an obligation under a policy or contract or certificate under a group policy or contract, or portion thereof for which coverage is provided under Section 83-23-205.
(h) "Covered contract" or "covered policy" means a policy or contract or portion of a policy or contract for which coverage is provided under Section 83-23-205.
(i) "Extra-contractual claims" shall include, for example, claims relating to bad faith in the payment of claims, punitive or exemplary damages or attorneys' fees and costs.
(j) "Health benefit plan" means any hospital or medical expense policy or certificate, or health maintenance organization subscriber contract or any other similar health contract. "Health benefit plan" does not include:
(i) Accident only insurance;
(ii) Credit insurance;
(iii) Dental only insurance;
(iv) Vision only insurance;
(v) Medicare Supplement insurance;
(vi) Benefits for long-term care, home health care, community-based care, or any combination thereof;
(vii) Disability income insurance;
(viii) Coverage for on-site medical clinics; or
(ix) Specified disease, hospital confinement indemnity or limited benefit health insurance if the types of coverage do not provide coordination of benefits and are provided under separate policies or certificates.
( * * *k) "Impaired insurer" means
a member insurer which, after April 9, 1985, is not an insolvent insurer, and
is placed under an order of rehabilitation or conservation by a court of
competent jurisdiction.
( * * *l) "Insolvent insurer" means
a member insurer which after April 9, 1985, is placed under an order of
liquidation by a court of competent jurisdiction with a finding of insolvency.
( * * *m) "Member insurer" means an
insurer or health maintenance organization licensed or that holds a
certificate of authority to transact in this state any kind of insurance or
a health maintenance organization business for which coverage is provided
under Section 83-23-205, and includes any insurer or health maintenance
organization whose license or certificate of authority in this state may
have been suspended, revoked, not renewed or voluntarily withdrawn, but does
not include:
(i) A hospital or medical service organization whether profit or nonprofit;
* * *
( * * *ii) A fraternal benefit society;
( * * *iii) A mandatory state pooling plan;
( * * *iv) A mutual assessment company or
other person that operates on an assessment basis;
( * * *v) An insurance exchange;
( * * *vi) An organization that has a
certificate or license limited to the issuance of charitable gift annuities; or
( * * *vii) * * * An entity similar to any of the
above.
( * * *n) "Moody's Corporate Bond Yield
Average" means the Monthly Average Corporates as published by Moody's
Investors Service, Inc., or any successor thereto.
( * * *o) "Owner" of a policy or
contract and "policyholder," "policy owner" and
"contract owner" mean the person who is identified as the legal owner
under the terms of the policy or contract or who is otherwise vested with legal
title to the 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 member insurer. The terms owner, contract owner,
policyholder and policy owner do not include persons with a mere beneficial
interest in a policy or contract.
( * * *p) "Person" means any
individual, corporation, limited liability company, partnership, association,
governmental body or entity or voluntary organization.
( * * *q) "Plan sponsor" means:
(i) The employer in the case of a benefit plan established or maintained by a single employer;
(ii) The employee organization in the case of a benefit plan established or maintained by an employee organization; or
(iii) In a case of a benefit plan established or maintained by two (2) or more employers or jointly by one or more employers and one or more employee organizations, the association, committee, joint board of trustees, or other similar group of representatives of the parties who establish or maintain the benefit plan.
( * * *r) "Premiums" means amounts
or considerations (by whatever name called) received on covered policies or
contracts less returned premiums, considerations and deposits, and less
dividends and experience credits. "Premiums" does not include
amounts or considerations received for policies or contracts or for the
portions of policies or contracts for which coverage is not provided under
Section 83-23-205(2), except that assessable premium shall not be reduced on
account of Sections 83-23-205(2)(b)(iii) relating to interest limitations and
83-23-205(3)(b) relating to limitations with respect to one (1) individual, one
(1) participant and one (1) policy or contract owner.
"Premiums" shall not include:
(i) Premiums in excess of Five Million Dollars ($5,000,000.00) on an unallocated annuity contract not issued under a governmental retirement benefit plan (or its trustee) established under Section 401, 403(b) or 457 of the United States Internal Revenue Code; or
(ii) With respect to multiple nongroup policies of life insurance owned by one (1) owner, whether the policy or contract owner is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees or other persons, premiums in excess of Five Million Dollars ($5,000,000.00) with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.
( * * *s) "Principal place of
business" of a plan sponsor or a person other than a natural person means
the single state in which the natural persons who establish policy for the
direction, control and coordination of the operations of the entity as a whole
primarily exercise that function, determined by the association in its
reasonable judgment by considering the following factors:
(i) The state in which the primary executive and administrative headquarters of the entity is located;
(ii) The state in which the principal office of the chief executive officer of the entity is located;
(iii) The state in which the board of directors (or similar governing person or persons) of the entity conducts the majority of its meetings;
(iv) The state in which the executive or management committee of the board of directors (or similar governing person or persons) of the entity conducts the majority of its meetings;
(v) The state from which the management of the overall operations of the entity is directed; and
(vi) In the case of a benefit plan sponsored by affiliated companies comprising a consolidated corporation, the state in which the holding company or controlling affiliate has its principal place of business as determined using the above factors.
However, in the case of a plan sponsor, if more than fifty percent (50%) of the participants in the benefit plan are employed in a single state, that state shall be deemed to be the principal place of business of the plan sponsor.
The principal place of
business of a plan sponsor of a benefit plan described in paragraph ( * * *q)(iii) of this section shall be deemed
to be the principal place of business of the association, committee, joint
board of trustees or other similar group of representatives of the parties who
establish or maintain the benefit plan that, in lieu of a specific or clear
designation of a principal place of business, shall be deemed to be the
principal place of business of the employer or employee organization that has
the largest investment in the benefit plan in question.
( * * *t) "Receivership court"
means the court in the insolvent or impaired insurer's state having
jurisdiction over the conservation, rehabilitation or liquidation of the member
insurer.
( * * *u) "Resident" means a person
to whom a contractual obligation is owed and who resides in this state on the
date of entry of a court order that determines a member insurer to be an
impaired insurer or a court order that determines a member insurer to be an
insolvent insurer, whichever occurs first. A person may be a resident of only
one (1) state, which in the case of a person other than a natural person shall
be its principal place of business. Citizens of the United States that are
either (i) residents of foreign countries, or (ii) residents of United States
possessions, territories or protectorates that do not have an association
similar to the association created by this article, shall be deemed residents
of the state of domicile of the member insurer that issued the policies
or contracts.
( * * *v) "Structured settlement
annuity" means an annuity purchased in order 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.
( * * *w) "State" means a state,
the District of Columbia, Puerto Rico, and a United States possession,
territory or protectorate.
( * * *x) "Supplemental contract"
means a written agreement entered into for the distribution of proceeds under a
life, health or annuity policy or contract.
( * * *y) "Unallocated annuity
contract" means an annuity contract or group annuity certificate which is
not issued to and owned by an individual, except to the extent of any annuity
benefits guaranteed to an individual by an insurer under such contract or
certificate.
SECTION 4. Section 83-23-211, Mississippi Code of 1972, is amended as follows:
83-23-211. (1) There is created a nonprofit legal entity to be known as the Mississippi Life and Health Insurance Guaranty Association. All member insurers shall be and remain members of the association as a condition of their authority to transact insurance or a health maintenance organization business in this state. The association shall perform its functions under the plan of operation established and approved under Section 83-23-219 and shall exercise its powers through a board of directors established under Section 83-23-213. For purposes of administration and assessment the association shall maintain two (2) accounts:
(a) The life insurance and annuity account which includes the following subaccounts:
(i) Life insurance account;
(ii) Annuity account which shall include annuity contracts owned by a governmental retirement plan (or its trustee) established under Section 401, 403(b) or 457 of the United States Internal Revenue Code, but shall otherwise exclude unallocated annuities; and
(iii) Unallocated annuity account which shall exclude contracts owned by a governmental retirement benefit plan (or its trustee) established under Section 401, 403(b) or 457 of the United States Internal Revenue Code.
(b) The health * * * account.
(2) The association shall come under the immediate supervision of the commissioner and shall be subject to the applicable provisions of the insurance laws of this state. Meetings or records of the association may be opened to the public upon majority vote of the board of directors of the association.
SECTION 5. Section 83-23-215, Mississippi Code of 1972, is amended as follows:
83-23-215. (1) 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, and that are approved by the commissioner:
(a) Guarantee, assume, reissue, or reinsure, or cause to be guaranteed, assumed, reissued or reinsured, any or all of the policies or contracts of the impaired insurer; or
(b) Provide such monies, pledges, loans, 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).
(2) If a member insurer is an insolvent insurer, the association shall, in its discretion, either:
(a) (i) 1. Guarantee, assume, reissue, or reinsure, or cause to be guaranteed, assumed, reissued or reinsured, the policies or contracts of the insolvent insurer; or
2. Assure payment of the contractual obligations of the insolvent insurer; and
(ii) Provide monies, pledges, loans, notes, guarantees or other means reasonably necessary to discharge the association's duties; or
(b) Provide benefits and coverages in accordance with the following provisions:
(i) With respect
to * * * policies and * * * contracts, assure payment of
benefits * * * that would have been payable under the policies or
contracts of the insolvent insurer, for claims incurred:
1. With respect to group policies and contracts, not later than the earlier of the next renewal date under those policies or contracts or forty-five (45) days, but in no event less than thirty (30) days, after the date on which the association becomes obligated with respect to the policies and contracts;
2. With respect to nongroup policies, contracts and annuities not later than the earlier of the next renewal date (if any) under the policies or contracts or one (1) year, but in no event less than thirty (30) days, from the date on which the association becomes obligated with respect to the policies or contracts;
(ii) Make diligent efforts to provide all known insureds, enrollees or annuitants (for nongroup policies and contracts), or group policy or contract owners with respect to group policies and contracts, thirty (30) days' notice of the termination (pursuant to subparagraph (i) of this paragraph) of the benefits provided;
(iii) With respect
to nongroup * * * policies and * * * contracts covered by the
association, make available to each known insured, enrollee, or
annuitant, or owner if other than the insured, or annuitant, and with respect
to an individual formerly an insured * * *, enrollee or annuitant
under a group policy or contract who is not eligible for replacement
group coverage, make available substitute coverage on an individual basis in
accordance with the provisions of subparagraph (iv), if the insureds,
enrollees or annuitants had a right under law or the terminated policy,
contract or annuity to convert coverage to individual coverage or to
continue an individual policy, contract or annuity in force until a
specified age or for a specified time, during which the insurer or health
maintenance organization had no right unilaterally to make changes in any
provision of the policy, contract or annuity or had a right only to make
changes in premium by class;
(iv) 1. In providing the substitute coverage required under subparagraph (iii), the association may offer either to reissue the terminated coverage or to issue an alternative policy or contract at actuarially justified rates, subject to the prior approval of the commissioner;
2. Alternative or reissued policies or contracts 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 or contract;
3. The
association may reinsure any alternative or reissued policy * * * or contract;
(v) 1. Alternative
policies or contracts adopted by the association shall be subject to the
approval of the * * * commissioner * * *. The association
may adopt alternative policies or contracts of various types for future
issuance without regard to any particular impairment or insolvency;
2. Alternative policies or contracts shall contain at least the minimum statutory provisions required in this state and provide benefits that shall not be unreasonable in relation to the premium charged. The association shall set the premium in accordance with a table of rates which it shall adopt. The premium shall reflect the amount of insurance to be provided and the age and class of risk of each insured, but shall not reflect any changes in the health of the insured after the original policy or contract was last underwritten;
3. Any alternative policy or contract issued by the association shall provide coverage of a type similar to that of the policy or contract 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 or contract, the premium
shall be actuarially justified and set by the association in accordance
with the amount of insurance or coverage provided and the age and class
of risk, subject to prior approval of the * * * commissioner * * *;
(vii) The
association's obligations with respect to coverage under any policy or
contract of the impaired or insolvent insurer or under any reissued or
alternative policy or contract shall cease on the date such coverage or
policy or contract is replaced by another similar policy or contract
by the policy or contract owner, the insured, the enrollee or the
association; * * *
(viii) When proceeding under subsection (2) 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 Section 83-23-205(2)(b)(iii).
(3) 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, contract or coverage under this article with respect to the policy, contract or coverage, except with respect to any claims incurred or any net cash surrender value which may be due in accordance with the provisions of this article.
(4) Premiums due for coverage after entry of an order of liquidation of an insolvent insurer shall belong to and be payable at the direction of the association. If the liquidator of an insolvent insurer requests, the association shall provide a report to the liquidator regarding such premium collected by the association. The association shall be liable for unearned premiums due to policy or contract owners arising after the entry of such order.
(5) The protection provided by this article 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.
(6) In carrying out its duties under subsection (2) of this section, the association may:
(a) Subject to
approval by a court in this state, impose permanent policy or contract liens in
connection with * * *
a guarantee, assumption or reinsurance agreement, if the association
finds that the amounts which can be assessed under this article are less than
the amounts needed to assure full and prompt performance of the association's
duties under this article, or that the economic or financial conditions as they
affect member insurers are sufficiently adverse to render the imposition of
such permanent policy or contract liens, to be in the public interest;
(b) Subject to approval by a court in this state, 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 a 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.
(7) A deposit in this
state, held pursuant to law or required by the commissioner for the benefit of
creditors, including policy or contract owners, not turned over to the
domiciliary liquidator upon the entry of a final order of liquidation or order
approving a rehabilitation plan of * * * a member insurer domiciled in this
state or in a reciprocal state, pursuant to Section 83-24-103 of the Insurers
Rehabilitation and Liquidation Act, 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 or contract owners' claims related to that insolvency for which
the association has provided statutory benefits by the aggregate amount of all
policy or contract 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 Section 83-24-67 of the Insurers
Rehabilitation and Liquidation Act or similar provision of the state of
domicile of the impaired or insolvent insurer.
(8) If the association fails to act within a reasonable period of time with respect to an insolvent insurer as provided in subsection (2) of this section, the commissioner shall have the powers and duties of the association under this article with respect to the insolvent insurer.
(9) The association may render assistance and advice to the commissioner, upon the commissioner's request, concerning rehabilitation, payment of claims, continuance of coverage or the performance of other contractual obligations of an impaired or insolvent insurer.
(10) The association shall have standing to appear or intervene before a 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 article 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, reissuing, 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 another state with jurisdiction over an impaired or insolvent insurer for which 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.
(11) (a) A person receiving benefits under this article 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 article, whether the benefits are payments of or on account of contractual obligations, continuation of coverage or provision of substitute or alternative policies, contracts or coverages. The association may require an assignment to it of such rights and causes of action by any enrollee, payee, policy or contract owner, beneficiary, insured or annuitant as a condition precedent to the receipt of any right or benefits conferred by this article upon the person.
(b) 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 article.
(c) In addition to paragraphs (a) and (b) above, the association shall have all common law rights of subrogation and any other equitable or legal remedy that would have been available to the impaired or insolvent insurer or owner, beneficiary, enrollee or payee of a policy or contract with respect to such policy or contracts (including, without limitation, in the case of a structured settlement annuity, any rights of the owner, beneficiary or payee of the annuity, to the extent of benefits received pursuant to this article, against a person originally or by succession responsible for the losses arising from the personal injury relating to the annuity or payment therefore), excepting any such person responsible solely by reason of serving as an assignee in respect of a qualified assignment under Internal Revenue Code Section 130.
(d) If the preceding 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 contracts (or portion thereof) covered by the association.
(e) 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 the preceding paragraphs of this subsection, the person shall pay to the association the portion of the recovery attributable to the policies or contracts (or portion thereof) covered by the association.
(12) In addition to the rights and powers elsewhere in this article, the association may:
(a) Enter into such contracts as are necessary or proper to carry out the provisions and purposes of this article;
(b) Sue or be sued, including taking any legal actions necessary or proper to recover any unpaid assessments under Section 83-23-217 and to settle claims or potential claims against it;
(c) Borrow money to effect the purposes of this article; any notes or other evidence of indebtedness of the association not in default shall be legal investments for domestic member insurers and may be carried as admitted assets;
(d) Employ or retain such persons as are necessary or appropriate to handle the financial transactions of the association, and to perform such other functions as become necessary or proper under this article;
(e) Take such legal action as may be necessary or appropriate to avoid or recover payment of improper claims;
(f) Exercise, for the purposes
of this article and to the extent approved by the commissioner, the powers of a
domestic life * * *
insurer, health insurer or health maintenance organization, but
in no case may the association issue * * * policies or * * * contracts other than those issued to
perform its obligations under this article;
(g) Organize itself as a corporation or in other legal form permitted by the laws of the state;
(h) Request
information from a person seeking coverage from the association in order to aid
the association in determining its obligations under this article with respect
to the person, and the person shall promptly comply with the request; * * *
(i) Unless prohibited by law, in accordance with the terms and conditions of the policy or contract, file for actuarially justified rate or premium increases for any policy or contract for which it provides coverage under this article; and
( * * *j) Take other necessary or appropriate
action to discharge its duties and obligations under this article or to
exercise its powers under this article.
(13) The association may join an organization of one or more other state associations of similar purposes, to further the purposes and administer the powers and duties of the association.
(14) (a) (i) At any time within one hundred eighty (180) days of the date of the order of liquidation, the association may elect to succeed to the rights and obligations of the ceding member insurer that relate to policies, contracts or annuities covered, in whole or in part, by the association, in each case under any one or more indemnity reinsurance contracts entered into by the insolvent insurer and its reinsurers and selected by the association. Any such assumption shall be effective as of the date of the order of liquidation. The election shall be effected by the association or the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA) on its behalf sending written notice, return receipt requested to the affected reinsurers.
(ii) To facilitate the earliest practicable decision about whether to assume any of the contracts of reinsurance, and in order to protect the financial position of the estate, the receiver and each reinsurer of the ceding member insurer shall make available upon request to the association or to NOLHGA on its behalf as soon as possible after commencement of formal delinquency proceedings.
1. Copies of in-force contracts of reinsurance and all related files and records relevant to the determination of whether such contracts should be assumed, and
2. Notices of any defaults under the reinsurance contracts or any known event or condition which with the passage of time could become a default under the reinsurance contracts.
(iii) The following items 1 through 4 shall apply to reinsurance contracts so assumed by the association:
1. The
association shall be responsible for all unpaid premiums due under the
reinsurance contracts * * * for periods both before and after the date of the order of
liquidation * * *,
and shall be responsible for the performance of all other obligations to be
performed after the * * * date of the order of liquidation, in each case which
relate to policies, contracts or annuities covered * * *, in whole or in part * * *, by the association. The association
may charge policies, contracts or annuities covered in part by the
association, through reasonable allocation methods, the costs for reinsurance
in excess of the obligations of the association and shall provide notice and an
accounting of these charges to the liquidator;
2. The association shall be entitled to any amounts payable by the reinsurer under the reinsurance contracts with respect to losses or events that occur in periods after the date of the order of liquidation and that relate to policies, contracts or annuities covered, in whole or in part, by the association provided that, upon receipt of any such amounts, the association shall be obliged to pay to the beneficiary under the policy, contract or annuity on account of which the amounts were paid a portion of the amount equal to the lesser of:
a. The amount received by the association, and
b. The excess of the amount received by the association over the amount equal to the benefits paid by the association on account of the policy, contract or annuity less the retention of the insurer applicable to the loss or event;
3. Within thirty (30) days following the association's election (the "election date"), the association and each reinsurer under contracts assumed by the association shall calculate the net balance due to or from the association under each reinsurance contract as of the election date with respect to policies, contracts or annuities covered, in whole or in part, by the association, which calculation shall give full credit to all items paid by either the member insurer or its receiver or the reinsurer prior to the election date. The reinsurer shall pay the receiver any amounts due for losses or events prior to the date of the order of liquidation, subject to any set-off for premiums unpaid for periods prior to the date, and the association or reinsurer shall pay any remaining balance due the other, in each case within five (5) days of the completion of the aforementioned calculation. Any disputes over the amounts due to either the association or the reinsurer shall be resolved by arbitration pursuant to the terms of the affected reinsurance contracts or, if the contract contains no arbitration clause, as otherwise provided by law. If the receiver has received any amounts due the association pursuant to subparagraph (iii), the receiver shall remit the same to the association as promptly as practicable;
4. If the association or receiver, on the association's behalf, within sixty (60) days of the election date, pays the unpaid premiums due for periods both before and after the election date that relate to policies, contracts or annuities covered, in whole or in part, by the association, the reinsurer shall not be entitled to terminate the reinsurance contracts for failure to pay premium (insofar as the reinsurance contracts) relate to policies, contracts or annuities covered, in whole or in part, by the association and shall not be entitled to set off any unpaid amounts due under other contracts, or unpaid amounts due from parties other than the association against amounts due the association.
(b) During the period
from the date of the order of liquidation until the election date (or, if the
election date does not occur, until one hundred eighty (180) days after the
date of the order of liquidation) * * *.
(i) 1. Neither the association nor the reinsurer shall have any rights or obligations under reinsurance contracts that the association has the right to assume under paragraph (a), whether for periods prior to or after the date of the order of liquidation; and
2. The reinsurer, the receiver and the association shall, to the extent practicable, provide each other data and record reasonably requested;
(ii) Provided that once the association has elected to assume a reinsurance contract, the parties' rights and obligations shall be governed by paragraph (a).
(c) If the association does not elect to assume a reinsurance contract by the election date pursuant to paragraph (a), the association shall have no rights or obligations, in each case for periods both before and after the date of the order of liquidation, with respect to the reinsurance contract.
(d) When policies, contracts, or annuities, or covered obligations with respect thereto, are transferred to an assuming insurer, reinsurance on the policies, contracts or annuities may also be transferred by the association, in the case of contracts assumed under paragraph (a), subject to the following:
(i) Unless the reinsurer and the assuming insurer agree otherwise, the reinsurance contract transferred shall not cover any new policies of insurance, contracts or annuities in addition to those transferred;
(ii) The obligations described in paragraph (a) of this subsection shall no longer apply with respect to matters arising after the effective date of the transfer; and
(iii) Notice shall be given in writing, return receipt requested, by the transferring party to the affected reinsurer not less than thirty (30) days prior to the effective date of the transfer.
(e) The provisions of this subsection shall supersede the provisions of any law or of any affected reinsurance contract that provides for or requires any payment of reinsurance proceeds, on account of losses or events that occur in periods after the date of the order of liquidation, to the receiver of the insolvent insurer or any other person. The receiver shall remain entitled to any amounts payable by the reinsurer under the reinsurance contracts with respect to losses or events that occur in periods prior to the date of the order of liquidation (subject to applicable setoff provisions).
(f) Except as otherwise provided in this subsection, nothing in this subsection shall alter or modify the terms and conditions of any reinsurance contract. Nothing in this subsection shall abrogate or limit any rights of any reinsurer to claim that it is entitled to rescind a reinsurance contract. Nothing in this subsection shall give a policyholder, contract owner, enrollee, certificate holder or beneficiary an independent cause of action against a reinsurer that is not otherwise set forth in the reinsurance contract. Nothing in this subsection shall limit or affect the association's rights as a creditor of the estate against the assets of the estate. Nothing in this subsection shall apply to reinsurance agreements covering property or casualty risks.
(15) The board of directors of the association shall have discretion and may exercise a reasonable business judgment to determine the means by which the association is to provide the benefits of this article in an economical and efficient manner.
(16) Where the association has arranged or offered to provide the benefits of this article to a covered person under a plan or arrangement that fulfills the association's obligations under this article, the person shall not be entitled to benefits from the association in addition to or other than those provided under the plan or arrangement.
(17) Venue in a suit against the association arising under the article shall be in Hinds County, Mississippi. The association shall not be required to give an appeal bond in an appeal that relates to a cause of action arising under this article.
(18) In carrying out its
duties in connection with guaranteeing, assuming, reissuing, or
reinsuring policies or contracts under subsections (1) and (2) of this section,
the association may * * * 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:
(a) In lieu of the index or other external reference provided for in the original policy or contract, the alternative policy or contract provides for (i) a fixed interest rate or (ii) payment of dividends with minimum guarantees or (iii) a different method for calculating interest or changes in value;
(b) 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
(c) The alternative policy or contract is substantially similar to the replaced policy or contract in all other material terms.
SECTION 6. Section 83-23-217, Mississippi Code of 1972, is amended as follows:
83-23-217. (1) For the purpose of providing the funds necessary to carry out the powers and duties of the association, the board of directors shall assess the member insurers, separately for each account, at such time and for such amounts as the board finds necessary. Assessments shall be due not less than thirty (30) days after prior written notice to the member insurers and shall accrue interest at twelve percent (12%) per annum on and after the due date.
(2) There shall be two (2) classes of assessments, as follows:
(a) Class A assessments shall be authorized and called 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 or insolvent insurer.
(b) Class B assessments shall be authorized and called to the extent necessary to carry out the powers and duties of the association under Section 83-23-215 with regard to an impaired or insolvent insurer.
(3) (a) The amount of * * * a Class A assessment shall be
determined by the board and may be authorized and called on a pro rata or
nonpro rata basis. If pro rata, the board may provide that it be credited
against future Class B assessments. * * *
(b) The amount of a Class B assessment, except for assessments related to long-term care insurance, shall be allocated for assessment purposes between the accounts and among the subaccounts of the life insurance and annuity account, pursuant to an allocation formula which may be based on the premiums or reserves of the impaired or insolvent insurer or any other standard deemed by the board in its sole discretion as being fair and reasonable under the circumstances.
(c) The amount of the Class B assessment for long-term care insurance written by the impaired or insolvent insurer shall be allocated according to a methodology included in the plan of operation and approved by the commissioner. The methodology shall provide for fifty percent (50%) of the assessment to be allocated to accident and health member insurers and fifty percent (50%) to be allocated to life and annuity member insurers.
( * * *d) Class B assessments against member
insurers for each account and subaccount shall be in the proportion that the
premiums received on business in this state by each assessed member insurer on
policies or contracts covered by each account for the three (3) most recent
calendar years for which information is available preceding the year in which
the member insurer became insolvent (or, in the case of an assessment
with respect to an impaired insurer, the three (3) most recent calendar years
for which information is available preceding the year in which the member
insurer became impaired) bears to premiums received on business in this state
for those calendar years by all assessed member insurers.
( * * *e) Assessments for funds to meet the
requirements of the association with respect to an impaired or insolvent
insurer shall not be authorized or called until necessary to implement the
purposes of this article. Classification of assessments under subsection (2)
and computation of assessments under this subsection shall be made with a
reasonable degree of accuracy, recognizing that exact determinations may not
always be possible. The association shall notify each member insurer of its anticipated
pro rata share of an authorized assessment not yet called within one hundred
eighty (180) days after the assessment is authorized.
(4) 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 contractual 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 all assessments that were deferred pursuant to a repayment plan approved by the association.
(5) (a) (i) Subject to the
provisions of subparagraph (ii) of this paragraph, the total of all assessments
authorized by the association with respect to a member insurer for each
subaccount of the life insurance and annuity account and for the health account
shall not in * * *
one (1) calendar year exceed two percent (2%) of that member insurer's average
annual premiums received in this state on the policies and contracts covered by
the subaccount or account during the three (3) calendar years preceding the
year in which the member insurer became an impaired or insolvent
insurer.
(ii) If two (2) or more assessments are authorized in one (1) calendar year with respect to member insurers that become impaired or insolvent in different calendar years, the average annual premiums for purposes of the aggregate assessment percentage limitation referenced in subparagraph (i) of this paragraph shall be equal and limited to the higher of the three-year average annual premiums for the applicable subaccount or account as calculated pursuant to this section.
(iii) If the maximum assessment, together with the other assets of the association in an account, does not provide in one (1) year in either account an amount sufficient to carry out the responsibilities of the association, the necessary additional funds shall be assessed as soon thereafter as permitted by this article.
(b) The board may provide in the plan of operation a method of allocating funds among claims, whether relating to one or more impaired or insolvent insurers, when the maximum assessment will be insufficient to cover anticipated claims.
(c) If the maximum assessment for a subaccount of the life and annuity account in one (1) year does not provide an amount sufficient to carry out the responsibilities of the association, then pursuant to subsection (3)(b) of this section, the board shall assess the other subaccounts of the life and annuity account for the necessary additional amount, subject to the maximum stated in subsection (5)(a) above.
(6) The board may, by an equitable method as established in the plan of operation, refund to member insurers, in proportion to the contribution of each member insurer to that account, the amount by which the assets of the account exceed the amount the board finds is necessary to carry out during the coming year 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 any account to provide funds for the continuing expenses of the association and for future losses claims.
(7) It shall be proper for any member insurer, in determining its premium rates and policy owner dividends as to any kind of insurance or health maintenance organization business within the scope of this article, to consider the amount reasonably necessary to meet its assessment obligations under this article.
(8) The association shall issue to each member insurer paying an assessment under this article, other than a Class A assessment, a certificate of contribution, in a form prescribed by the commissioner, for the amount of the assessment so paid. All outstanding certificates shall be 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 such form and for such amount, if any, and period of time as the commissioner may approve.
(9) (a) A member insurer that wishes to protest all or part of an assessment shall pay when due the full amount of the assessment as set forth in the notice provided by the association. The payment shall be available to meet association obligations during the pendency of the protest or any subsequent appeal. Payment shall be accompanied by a statement in writing that the payment is made under protest and setting forth a brief statement of the grounds for the protest.
(b) Within sixty (60) days following the payment of an assessment under protest by a member insurer, the association shall notify the member insurer in writing of its 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) Within thirty (30) days after a final decision has been made, the association shall notify the protesting member insurer in writing of that final decision. Within sixty (60) days of receipt of notice of the final decision, the protesting member insurer may appeal that final action to the commissioner.
(d) In the alternative to rendering a final decision with respect to a protest based on a question regarding the assessment base, the association may refer protests to the commissioner for a final decision, with or without a recommendation from the association.
(e) If the protest or
appeal on the assessment is upheld, the amount paid in error or excess shall be
returned to the member * * * insurer. Interest on a refund due a protesting
member insurer shall be paid at the rate actually earned by the
association.
(10) The association may request information of member insurers in order to aid in the exercise of its power under this section and member insurers shall promptly comply with a request.
SECTION 7. Section 83-23-221, Mississippi Code of 1972, is amended as follows:
83-23-221. (1) In addition to the duties and powers enumerated elsewhere in this article, the commissioner shall:
(a) Upon request of the board of directors, provide the association with a statement of the premiums in this and any other appropriate states for each member insurer; and
(b) When an impairment is declared and the amount of the impairment is determined, serve a demand upon the impaired insurer to make good the impairment within a reasonable time; notice to the impaired insurer shall constitute notice to its shareholders, if any; the failure of the impaired insurer to promptly comply with such demand shall not excuse the association from the performance of its powers and duties under this article.
(2) The commissioner may
suspend or revoke, after notice and hearing, the certificate of authority to
transact * * *
business in this state of any member insurer which 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 any member insurer which
fails to pay an assessment when due. The forfeiture shall not exceed five
percent (5%) of the unpaid assessment per month, but no forfeiture shall be
less than One Hundred Dollars ($100.00) per month.
(3) A final action of the board of directors or the association may be appealed to the commissioner by a member insurer if the appeal is taken within sixty (60) days of its receipt of notice of the final action being appealed. A final action or order of the commissioner shall be subject to judicial review in a court of competent jurisdiction in accordance with the laws of this state that apply to the actions or orders of the commissioner.
(4) The liquidator, rehabilitator or conservator of an impaired or insolvent insurer may notify all interested persons of the effect of this article.
SECTION 8. Section 83-23-223, Mississippi Code of 1972, is amended as follows:
83-23-223. To aid in the detection and prevention of member insurer insolvencies or impairments:
(1) It shall be the duty of the commissioner;
(a) To notify the commissioners of all the other states, territories of the United States and the District of Columbia within thirty (30) days following the action taken or the date the action occurs, when the commissioner takes any of the following actions against a member insurer:
(i) Revocation of license;
(ii) Suspension of license; or
(iii) Makes a
formal order that the * * * member insurer restrict its premium writing, obtain
additional contributions to surplus, withdraw from the state, reinsure all or
any part of its business, or increase capital, surplus or any other account for
the security of policy owners, contract owners, certificate holders or
creditors.
(b) To report to the board of directors when the commissioner has taken any of the actions set forth in subparagraph (a) or has received a report from any other commissioner indicating that any such action has been taken in another state. The report to the board of directors shall contain all significant details of the action taken or the report received from another commissioner.
(c) To report to the board of directors when the commissioner has reasonable cause to believe from an examination, whether completed or in process, of any member insurer that the insurer may be an impaired or insolvent insurer.
(d) To furnish to the board of directors the NAIC Insurance Regulatory Information System (IRIS) ratios and listings of companies not included in the ratios developed by the National Association of Insurance Commissioners, and the board may use the information contained therein in carrying out its duties and responsibilities under this section. The report and the information contained therein shall be kept confidential by the board of directors until such time as made public by the commissioner or other lawful authority.
(2) The commissioner
may seek the advice and recommendations of the board of directors concerning
any matter affecting the duties and responsibilities of the commissioner regarding
the financial condition of member insurers and * * * insurers or health maintenance
organizations seeking admission to transact * * * business in this state.
(3) The board of
directors may, upon majority vote, make reports and recommendations to the
commissioner upon any matter germane to the solvency, liquidation,
rehabilitation or conservation of any member insurer or germane to the solvency
of any * * *
insurer or health maintenance organization seeking to do * * * business in this state. The
reports and recommendations shall not be considered public documents.
(4) The board of directors may, upon majority vote, notify the commissioner of any information indicating a member insurer may be an impaired or insolvent insurer.
(5) The board of directors may, upon majority vote, make recommendations to the commissioner for the detection and prevention of member insurer insolvencies.
SECTION 9. Section 83-23-225, Mississippi Code of 1972, is amended as follows:
83-23-225. (1) This article shall not be construed to reduce the liability for unpaid assessments of the insureds of an impaired or insolvent insurer operating under a plan with assessment liability.
(2) Records shall be kept of all meetings of the board of directors to discuss the activities of the association in carrying out its powers and duties under Section 83-23-215. The records of the association with respect to an impaired or insolvent insurer shall not be disclosed prior to the termination of a liquidation, rehabilitation or conservation proceeding involving the impaired or insolvent insurer, except (a) upon the termination of the impairment or insolvency of the member insurer, or (b) upon the order of a court of competent jurisdiction. Nothing in this subsection shall limit the duty of the association to render a report of its activities under Section 83-23-227.
(3) For the purpose of carrying out its obligations under this article, the association shall be deemed to be a creditor of the impaired or insolvent insurer to the extent of assets attributable to covered policies reduced by any amounts to which the association is entitled as subrogee pursuant to Section 83-23-215(11). Assets of the impaired or insolvent insurer attributable to covered policies shall be used to continue all covered policies and pay all contractual obligations of the impaired or insolvent insurer as required by this article. Assets attributable to covered policies or contracts, as used in this subsection, are that proportion of the assets which the reserves that should have been established for such policies or contracts bear to the reserves that should have been established for all policies of insurance or health benefit plans written by the impaired or insolvent insurer.
(4) As a creditor of the
impaired or insolvent insurer as established in subsection (3) of this section
and consistent with Section 83-24-67, the association and other similar
associations shall be entitled to receive a disbursement of assets out of the
marshaled assets, from time to time as the assets become available to reimburse
it, as a credit against contractual obligations under this article. If the
liquidator has not, within one hundred twenty (120) days of a final
determination of insolvency of * * * a member insurer by the receivership
court, 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, then the association shall be entitled
to make application to the receivership court for approval of its own proposal
to disburse these assets.
(5) (a) Prior to the termination of any liquidation, rehabilitation or conservation proceeding, the court may take into consideration the contributions of the respective parties, including the association, the shareholders, contract owners, certificate holders, enrollees and policy owners of the insolvent insurer, and any other party with a bona fide interest, in making an equitable distribution of the ownership rights of the insolvent insurer. In such a determination, consideration shall be given to the welfare of the policy owners, contract owners, certificate holders and enrollees of the continuing or successor member insurer.
(b) No distribution to stockholders, if any, of an impaired or insolvent insurer shall be made until and unless the total amount of valid claims of the association with interest thereon for funds expended in carrying out its powers and duties under Section 83-23-215 with respect to such insurer have been fully recovered by the association.
(6) (a) If an order for
liquidation or rehabilitation of * * * a member insurer domiciled in this
state has been entered, the receiver appointed under the order shall have a
right to recover on behalf of the member insurer, from any affiliate
that controlled it, the amount of distributions, other than stock dividends
paid by the member insurer on its capital stock, made at any time during
the five (5) years preceding the petition for liquidation or rehabilitation
subject to the limitations of paragraphs (b) through (d).
(b) No such distribution shall be recoverable if the member insurer shows that when paid the distribution was lawful and reasonable, and that the member insurer did not know and could not reasonably have known that the distribution might adversely affect the ability of the member insurer to fulfill its contractual obligations.
(c) Any person who was an affiliate that controlled the member insurer at the time the distributions were paid shall be liable up to the amount of distributions received. Any person who was an affiliate that controlled the member insurer at the time the distributions were declared, shall be liable up to the amount of distributions which would have been received if they had been paid immediately. If two (2) or more persons are liable with respect to the same distributions, they shall be jointly and severally liable.
(d) The maximum amount recoverable under this subsection shall be the amount needed in excess of all other available assets of the insolvent insurer to pay the contractual obligations of the insolvent insurer.
(e) If any person liable under paragraph (c) is insolvent, all its affiliates that controlled it 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.
SECTION 10. Section 83-23-235, Mississippi Code of 1972, is amended as follows:
83-23-235. (1) No person, including * * * a member insurer, agent or affiliate
of * * * a
member insurer shall 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, any advertisement, announcement or statement, written or oral, which
uses the existence of the Insurance Guaranty Association of this state for the
purpose of sales, solicitation or inducement to purchase any form of insurance or
other coverage covered by the Mississippi Life and Health Insurance
Guaranty Association Act. However, this section shall not apply to the
Mississippi Life and Health Insurance Guaranty Association or any other entity
which does not sell or solicit insurance or coverage by a health maintenance
organization.
(2) Within one hundred eighty (180) days of April 9, 1985,
the association shall prepare a summary document describing the general
purposes and current limitations of the article and complying with subsection
(3) of this section. This document shall be submitted to the commissioner for
approval. At the expiration of the sixtieth day after the date on which the
commissioner approves the document, * * * a member insurer may not deliver a
policy or contract to a policy * * * owner, contract owner,
certificate holder or enrollee unless the summary document is delivered to
the policy * * *
owner, contract owner, certificate holder or enrollee at the time
of delivery of the policy or contract. The document shall also be available
upon request by a policy owner, contract owner, certificate holder or
enrollee. The distribution, delivery or contents or interpretation of this
document does not guarantee that either the policy or the contract or the * * * policy * * * owner, contract owner, certificate
holder or enrollee is covered in the event of the impairment or insolvency
of a member insurer. The description document shall be revised by the
association as amendments to the article may require. Failure to receive this
document does not give the policy owner, contract owner, certificate holder,
enrollee or insured any greater rights than those stated in this article.
(3) The document prepared under subsection (2) shall contain a clear and conspicuous disclaimer on its face. The commissioner shall establish the form and content of the disclaimer. The disclaimer shall:
(a) State the name and address of the Life and Health Insurance Guaranty Association and insurance department;
(b) Prominently warn the policy * * * owner, contract owner,
certificate holder or enrollee that the Life and Health Insurance Guaranty
Association may not cover the policy or contract or, if coverage is
available, it will be subject to substantial limitations and exclusions and
conditioned on continued residence in this state;
(c) State the types of policies or contracts for which guaranty funds will provide coverage;
(d) State that the member insurer and its agents are prohibited by law from using the existence of the Life and Health Insurance Guaranty Association for the purpose of sales, solicitation or inducement to purchase any form of insurance or health maintenance organization coverage;
(e) State that the policy * * * owner, contract owner,
certificate holder or enrollee should not rely on coverage under the Life
and Health Insurance Guaranty Association when selecting an insurer or
health maintenance organization;
(f) Explain rights available and procedures for filing a complaint to allege a violation of any provisions of this article; and
(g) Provide other information as directed by the commissioner including, but not limited to, sources for information about the financial condition of insurers provided that the information is not proprietary and is subject to disclosure under that state's public records law.
(4) A member insurer shall retain evidence of compliance with subsection (2) for so long as the policy or contract for which the notice is given remains in effect.
SECTION 11. The following shall be codified as Section 83-23-239, Mississippi Code of 1972:
83-23-239. The amendments made to this article by Senate Bill No. ____, 2020 Regular Session, shall not apply to any member insurer that, before the effective date of those amendments, has been placed under an order of liquidation with a finding of insolvency.
SECTION 12. This act shall take effect and be in force from and after July 1, 2020.