MISSISSIPPI LEGISLATURE
2014 Regular Session
To: Insurance
By: Representative Chism
AN ACT TO AMEND SECTION 83-23-205, MISSISSIPPI CODE OF 1972, TO REVISE THE COVERAGES PROVIDED UNDER THE MISSISSIPPI LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION ACT BY CLARIFYING THE COVERAGE FOR EQUITY INDEX PRODUCTS, EXCLUDING THE COVERAGE FOR CERTAIN MEDICARE POLICIES, AND INCREASING THE COVERAGE LIMITATION FOR LONG-TERM CARE INSURANCE AND ANNUITY BENEFITS; TO AMEND SECTION 83-23-209, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT THE DEFINITION OF "MEMBER INSURER" DOES NOT INCLUDE AN ORGANIZATION THAT HAS A CERTIFICATE OR LICENSE LIMITED TO THE ISSUANCE OF CHARITABLE GIFT ANNUITIES; 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 INCREASE THE MAXIMUM CLASS A ASSESSMENT; TO AMEND SECTION 83-23-219, MISSISSIPPI CODE OF 1972, TO REQUIRE CERTAIN PROVISIONS OF PLAN OF OPERATION; TO AMEND SECTION 83-23-221, MISSISSIPPI CODE OF 1972, TO REVISE THE TIME FOR APPEALS OF ACTIONS BY THE ASSOCIATION; TO AMEND SECTION 83-23-223, MISSISSIPPI CODE OF 1972, TO CLARIFY A CERTAIN ACRONYM USED IN THE ACT; TO AMEND SECTION 83-23-225, MISSISSIPPI CODE OF 1972, TO CLARIFY THE ASSOCIATION'S DUTY TO DISCLOSE CERTAIN RECORDS WITH RESPECT TO IMPAIRED OR INSOLVENT INSURERS; TO AMEND SECTION 83-23-227, MISSISSIPPI CODE OF 1972, TO REVISE THE ANNUAL REPORTING REQUIREMENTS OF THE ASSOCIATION; TO AMEND SECTION 83-23-233, MISSISSIPPI CODE OF 1972, TO REVISE THE DURATION OF THE AUTOMATIC STAY OF JUDICIAL PROCEEDINGS UPON ORDER OF LIQUIDATION, REHABILITATION OR CONSERVATION; TO CREATE A NEW SECTION 83-23-237, 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 83-23-205, 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 of the persons covered under paragraph (b);
(b) To persons who are owners of or certificate holders 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 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 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; or
(ii) A person covered under paragraph (c) of this subsection, if any coverage is provided by the association of another state to the person.
(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, 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 direct, nongroup life, health, or annuity policies or contracts 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) This article shall not provide coverage for:
(i) A portion of a policy or contract not guaranteed by the 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 USCS 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 insurer to the 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 insurer without meeting applicable policy form filing or approval requirements;
3. Misrepresentations of or regarding policy 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 any regulations issued pursuant thereto.
(3) 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 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. In health insurance benefits:
a. One Hundred Thousand Dollars ($100,000.00) for coverages not defined as disability insurance or basic hospital, medical and surgical insurance or major medical insurance, including any net cash surrender and net cash withdrawal values;
b. Three Hundred Thousand Dollars ($300,000.00) for disability insurance and Three Hundred Thousand Dollars ($300,000.00) for long-term care insurance;
c. Five Hundred Thousand Dollars ($500,000.00) for basic hospital medical and surgical insurance or major medical insurance; or
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;
(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 basic hospital, medical and surgical insurance and major medical insurance 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 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.
(4) In performing its obligations to provide coverage under Section 83-23-215, the association shall not be required to guarantee, assume, reinsure or perform, or cause to be guaranteed, assumed, reinsured 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 2. 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 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) "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.
(k) "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.
(l) "Member insurer" means an insurer licensed or that holds a certificate of authority to transact in this state any kind of insurance for which coverage is provided under Section 83-23-205, and includes any insurer 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 health maintenance organization;
(iii) A fraternal benefit society;
(iv) A mandatory state pooling plan;
(v) A mutual assessment company or other person that operates on an assessment basis;
(vi) An insurance
exchange; * * *
(vii) An organization that has a certificate or license limited to the issuance of charitable gift annuities; or
(viii) Any entity similar to any of the above.
(m) "Moody's Corporate Bond Yield Average" means the Monthly Average Corporates as published by Moody's Investors Service, Inc., or any successor thereto.
(n) "Owner" of a policy or contract and "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 insurer. The terms owner, contract owner and policy owner do not include persons with a mere beneficial interest in a policy or contract.
(o) "Person" means any individual, corporation, limited liability company, partnership, association, governmental body or entity or voluntary organization.
(p) "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.
(q)
"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) 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 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.
(r) "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 (p)(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.
(s) "Receivership court" means the court in the insolvent or impaired insurer's state having jurisdiction over the conservation, rehabilitation or liquidation of the insurer.
(t) "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 insurer that issued the policies or contracts.
(u) "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.
(v) "State" means a state, the District of Columbia, Puerto Rico, and a United States possession, territory or protectorate.
(w) "Supplemental contract" means a written agreement entered into for the distribution of proceeds under a life, health or annuity policy or contract.
(x) "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 3. 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 or reinsure, or cause to be guaranteed, assumed 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 or reinsure, or cause to be guaranteed, assumed 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 life and health insurance policies and annuities, assure payment of benefits for premiums identical to the premiums and benefits (except for terms of conversion and renewability) that would have been payable under the policies or contracts of the insolvent insurer, for claims incurred:
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 or annuitants (for nongroup policies and contracts), or group policy 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 life and health insurance policies and annuities covered by the association, make available to each known insured or annuitant, or owner if other than the insured, or annuitant, and with respect to an individual formerly insured or formerly an annuitant under a group policy who is not eligible for replacement group coverage, make available substitute coverage on an individual basis in accordance with the provisions of subparagraph (iv), if the insureds or annuitants had a right under law or the terminated policy or annuity to convert coverage to individual coverage or to continue an individual policy or annuity in force until a specified age or for a specified time, during which the insurer had no right unilaterally to make changes in any provision of the policy 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;
2. Alternative or reissued policies shall be offered without requiring evidence of insurability, and shall not provide for any waiting period or exclusion that would not have applied under the terminated policy;
3. The
association may reinsure any alternative or reissued policy * * *;
(v) 1. Alternative policies adopted by the association shall be subject to the approval of the domiciliary insurance commissioner and the receivership court. The association may adopt alternative policies of various types for future issuance without regard to any particular impairment or insolvency;
2. Alternative policies 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 was last underwritten;
3. Any alternative policy issued by the association shall provide coverage of a type similar to that of the policy issued by the impaired or insolvent insurer, as determined by the association;
(vi) If the association elects to reissue terminated coverage at a premium rate different from that charged under the terminated policy, the premium shall be set by the association in accordance with the amount of insurance provided and the age and class of risk, subject to approval of the domiciliary insurance commissioner and the receivership court;
(vii) The association's obligations with respect to coverage under any policy of the impaired or insolvent insurer or under any reissued or alternative policy shall cease on the date such coverage or policy is replaced by another similar policy by the policy owner, the insured or the association; and
(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 or coverage under this article with respect to the policy 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 any 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 owners, not turned over to the domiciliary
liquidator upon the entry of a final order of liquidation or order approving a
rehabilitation plan of an insurer domiciled in this state or in a reciprocal
state, 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 owners' claims
related to that insolvency for which the association has provided statutory
benefits by the aggregate amount of all policy owners' claims in this state
related to that insolvency and shall remit to the domiciliary receiver the
amount so paid to the association * * * less the amount retained pursuant to
this subsection. Any amount so paid to the association * * * and retained by it shall
be treated as a distribution of estate assets pursuant to 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, 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 coverages. The association may
require an assignment to it of such rights and causes of action by any payee,
policy or contract owner, beneficiary, insured or annuitant as a condition
precedent to the receipt of any right or benefits conferred by this 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 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 therefor), 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 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 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 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 or health insurer, but in no case may the association issue insurance policies or annuity 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; and
(i) 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 or annuities covered * * *, in whole or in part * * *, by the association, 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 coverage date, in each case which relate to contracts
covered, in whole or in part, by the association. The
association may charge * * *
policies 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 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 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 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 * * *indemnity 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 or annuities
covered, in whole or in part, by the * * * association,
which calculation shall give full credit to all items paid by either the * * * 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 (ii), the receiver * * * shall remit the
same to the association as promptly as practicable;
* * *4. If the association or
receiver, 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 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 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 or annuities, or covered obligations with respect thereto, are transferred to an assuming insurer, reinsurance on the policies 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 or annuities
in addition to those transferred;
(ii) The
obligations described in * * *the proviso to 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 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 or reinsuring policies or contracts under Section 83-23-215(1) and (2), the association may, subject to approval of the receivership court, issue substitute coverage for a policy or contract that provides an interest rate, crediting rate or similar factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value by issuing an alternative policy or contract in accordance with the following provisions:
(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 4. 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 any
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. The total of all nonpro
rata assessments shall not exceed * * * Three
Hundred Dollars ($300.00) per member insurer in any one (1) calendar year.
The amount of a Class B assessment shall be allocated for assessment purposes
among the accounts 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.
(b) 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 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 insurer became impaired) bears to * * * premiums received on business in this
state for * * *
those calendar years by all assessed member insurers.
(c) 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 any 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 insurer became an impaired or insolvent insurer.
(ii) If two (2) or more assessments are authorized in one (1) calendar year with respect to 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 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 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 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 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 company. Interest on a refund due a protesting member 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 5. Section 83-23-219, Mississippi Code of 1972, is amended as follows:
83-23-219. (1) (a) The
association shall submit to the commissioner a plan of operation and any
amendments thereto necessary or suitable to assure the fair, reasonable and
equitable administration of the association. The plan of operation and any
amendments thereto shall become effective upon the commissioner's written
approval or unless * * *
it has not been disapproved * * * within thirty (30) days.
(b) If the association fails to submit a suitable plan of operation within one hundred eighty (180) days following April 9, 1985, or if at any time thereafter the association fails to submit suitable amendments to the plan, the commissioner shall, after notice and hearing, adopt and promulgate such reasonable rules as are necessary or advisable to effectuate the provisions of this article. Such rules shall continue in force until modified by the commissioner or superseded by a plan submitted by the association and approved by the commissioner.
(2) All member insurers shall comply with the plan of operation.
(3) The plan of operation shall, in addition to requirements enumerated elsewhere in this article:
(a) Establish procedures for handling the assets of the association;
(b) Establish the amount and method of reimbursing members of the board of directors under Section 83-23-213;
(c) Establish regular places and times for meetings including telephone conference calls of the board of directors;
(d) Establish procedures for records to be kept of all financial transactions of the association, its agents and the board of directors;
(e) Establish the procedures whereby selections for the board of directors will be made and submitted to the commissioner;
(f) Establish any additional procedures for assessments under Section 83-23-217;
(g) Contain additional
provisions necessary or proper for the execution of the powers and duties of
the association * * *;
(h) Establish procedures whereby a director may be removed for cause, including in the case where a member insurer director becomes an impaired or insolvent insurer;
(i) Require the board of directors to establish a policy and procedures for addressing conflicts of interests.
(4) The plan of operation may provide that any or all powers and duties of the association, except those under Sections 83-23-215 and 83-23-217, are delegated to a corporation, association or other organization which performs or will perform functions similar to those of this association, or its equivalent, in two (2) or more states. Such a corporation, association or organization shall be reimbursed for any payments made on behalf of the association and shall be paid for its performance of any function of the association. A delegation under this subsection shall take effect only with the approval of both the board of directors and the commissioner, and may be made only to a corporation, association or organization which extends protection not substantially less favorable and effective than that provided by this article.
SECTION 6. 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 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 insurance 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 of 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 7. Section 83-23-223, Mississippi Code of 1972, is amended as follows:
83-23-223. To aid in the detection and prevention of 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 company 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 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 companies seeking admission to transact insurance 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 company seeking to do an insurance 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 insurer insolvencies.
SECTION 8. 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 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, as used in this subsection, are that proportion of the assets which 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 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 an 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, 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 of the continuing or successor 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 an insurer domiciled in this state 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 petition
for liquidation or rehabilitation subject to the limitations of paragraphs (b)
through (d).
(b) No such distribution shall be recoverable if the insurer shows that when 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 its contractual obligations.
(c) Any person who was
an affiliate that controlled the 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 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 9. Section 83-23-227, Mississippi Code of 1972, is amended as follows:
83-23-227. The association
shall be subject to examination and regulation by the commissioner. The board
of directors shall submit to the commissioner, each year not later than * * * one hundred twenty (120) days
after 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. Upon the request of a member insurer, the association
shall provide the member insurer with a copy of the report.
SECTION 10. Section 83-23-233, Mississippi Code of 1972, is amended as follows:
83-23-233. All proceedings
in which the insolvent insurer is a party in any court in this state shall be
stayed * * *
one hundred and eighty (180) days from the date an order of liquidation,
rehabilitation or conservation is final to permit proper legal action by the
association on any 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 such judgment set aside by the same court that made such judgment and
shall be permitted to defend against such suit on the merits.
SECTION 11. The following shall be codified as Section 83-23-237, Mississippi Code of 1972:
83-23-237. The amendments made to this article by this act during the 2014 Regular Session of the Legislature 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 its passage.