This chapter may be cited as the Nevada
Life and Health Insurance Guaranty Association Act.
(Added to NRS by 1973, 302)
The purpose of this chapter is
to protect, within certain limits, the persons specified in subsections 1
and 2 of NRS 686C.030 against failure
in the performance of contractual obligations under life and health
insurance policies and contracts, and annuities, specified in subsection
4 of NRS 686C.030 because of the
impairment or insolvency of a member insurer issuing such policies or
contracts.
(Added to NRS by 1973, 302; A 1991, 869; 2001, 1030 )
1. This chapter provides coverage for the policies or contracts
described in subsection 4 to persons who are:
(a) Owners of or certificate holders under such policies or
contracts, other than structured settlement annuities, and who:
(1) Are residents of this state; or
(2) Are not residents, but only if:
(I) The insurer that issued the policies or contracts
is domiciled in this state;
(II) The states in which the persons reside have
associations similar to the Association created by this chapter; and
(III) The persons are not eligible for coverage by an
association in another state because the insurer was not authorized in
the other state at the time specified in that state’s law governing
guaranty associations; and
(b) Beneficiaries, assignees or payees of the persons covered under
paragraph (a), wherever they reside, except for nonresident certificate
holders under group policies or contracts.
2. For structured settlement annuities, except as otherwise
provided in subsection 3, this chapter provides coverage to a payee under
the annuity, or beneficiary of a payee if the payee is deceased, if the
payee or beneficiary:
(a) Is a resident of this state, regardless of the residence of the
owner of the annuity; or
(b) Is not a resident of this state, but:
(1) The owner of the annuity is a resident of this state, or
the issuer of the annuity is domiciled in this state and the state in
which the owner resides has an association similar to the Association
created by this chapter; and
(2) Neither the payee or beneficiary nor the owner of the
annuity is eligible for coverage by the association of the state in which
the payee, beneficiary or owner resides.
3. This chapter does not provide coverage for a payee or
beneficiary of a structured settlement annuity if the owner of the
annuity is a resident of this state and the payee or beneficiary is
afforded any coverage by the association of another state. In determining
the application of the provisions of this chapter to a situation where a
person could be covered by the association of more than one state, this
chapter must be construed in conjunction with the laws of other states to
result in coverage by only one association.
4. This chapter provides coverage to the persons described in
subsections 1 and 2 for direct, nongroup life, health and supplemental
policies or contracts, and annuities, and certificates under direct group
policies and contracts, and annuities, except as limited by this chapter.
(Added to NRS by 1973, 302; A 1991, 869; 2001, 1030 )
1. This chapter does not provide coverage for:
(a) A portion of a policy or contract not guaranteed by the
insurer, or under which the risk is borne by the owner of the policy or
contract.
(b) A policy or contract of reinsurance unless assumption
certificates have been issued pursuant to that policy or contract.
(c) 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 the 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 4 years before the date on
which the association becomes obligated with respect to the policy or
contract, exceeds the rate of interest determined by subtracting 2
percentage points from Moody’s Corporate Bond Yield Average averaged for
the same period, or for the period between the date of issuance of the
policy or contract and the date the association became obligated,
whichever period is less; and
(2) On or after the date on which the association becomes
obligated with respect to the policy or contract, exceeds the rate of
interest determined by subtracting 3 percentage points from Moody’s
Corporate Bond Yield Average as most recently available.
(d) 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 other persons 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 described in 29
U.S.C. § 1144;
(2) A minimum-premium group insurance plan;
(3) A stop-loss group insurance plan; or
(4) A contract for administrative services only.
(e) A portion of a policy or contract to the extent that it
provides for dividends, credits for experience, voting rights or the
payment of any fee or allowance to any person, including the owner of a
policy or contract, for services or administration connected with the
policy or contract.
(f) A policy or contract issued in this state by a member insurer
at a time when the member insurer was not authorized to issue the policy
or contract in this state.
(g) A portion of a policy or contract to the extent that the
assessments required by NRS 686C.230
with respect to the policy or contract are preempted by federal law.
(h) An obligation that does not arise under the express written
terms of the policy or contract issued by the insurer, including:
(1) Claims based on marketing materials;
(2) Claims based on side letters or other documents that
were issued by the insurer without satisfying applicable requirements for
filing or approval of policy forms;
(3) Misrepresentations of or regarding policy benefits;
(4) Extra-contractual claims; or
(5) A claim for penalties or consequential or incidental
damages.
(i) A contractual agreement that establishes the member insurer’s
obligation to provide a guarantee based on accounting at book value for
participants in a defined-contribution benefit plan by reference to a
portfolio of assets owned by the benefit plan or its trustee, which in
each case is not an affiliate of the member insurer.
(j) A portion of a policy or contract to the extent that it
provides for interest or other changes in value which are 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 rights of the owner of the policy or contract are subject
to forfeiture, determined on the date the member insurer becomes an
impaired or insolvent insurer, whichever occurs first. If the interest or
changes in value of a policy or contract are credited less frequently
than annually, for the purpose of determining the values that have been
credited and are not subject to forfeiture, the interest or change in
value determined by using procedures stated in the policy or contract
must be credited as if the contractual date for crediting interest or
changing values was the date of the impairment or insolvency of the
insured member, whichever occurs first and is not subject to forfeiture.
(k) An unallocated annuity contract.
2. As used in this section, “Moody’s Corporate Bond Yield Average”
means the monthly average for corporate bonds published by Moody’s
Investors Service, Inc., or any successor average.
(Added to NRS by 1991, 864; A 1995, 1623; 1999, 2800 ; 2001, 1031 )
As used in this chapter, unless the
context otherwise requires, the words and terms defined in NRS 686C.045
to 686C.125 , inclusive, have the meanings ascribed to
them in those sections.
(Added to NRS by 1973, 302; A 1991, 870; 2001, 1033 )
“Account” means one of the
accounts maintained pursuant to NRS 686C.130 .
(Added to NRS by 1991, 863)
“Annuity” includes an agreement
for allocated funding, a structured settlement annuity and an immediate
or deferred annuity.
(Added to NRS by 2001, 1026 )
“Association” means the
Nevada Life and Health Insurance Guaranty Association.
(Added to NRS by 1973, 303)
“Authorized
assessment” or “authorized” as used in the context of assessments means
or describes an assessment authorized by a resolution of the Board of
Directors of the Association to be imposed immediately or later on member
insurers in a specified amount.
(Added to NRS by 2001, 1026 )
“Benefit plan” means a
benefit plan for a specific employee, union or association of natural
persons.
(Added to NRS by 2001, 1026 )
“Called assessment” or
“called” as used in the context of assessments means or describes an
authorized assessment required by a notice mailed by the Association to
member insurers to be paid within the time set forth in the notice.
(Added to NRS by 2001, 1026 )
“Contractual
obligation” means any obligation under a policy or contract or a
certificate under a group policy or contract, or portion thereof, for
which coverage is provided under NRS 686C.030 .
(Added to NRS by 1973, 303; A 1989, 565; 1991, 870; 2001, 1033
)
“Covered policy” means any
policy or contract included within the scope of this chapter, as
expressed in NRS 686C.030 and
686C.035 .
(Added to NRS by 1973, 303; A 1991, 870)
“Extra-contractual claim” includes a claim relating to bad faith in the
payment of claims and a claim for punitive or exemplary damages or for
costs and attorney’s fees.
(Added to NRS by 2001, 1026 )
“Impaired insurer” means
an insurer which is not an insolvent insurer and is placed under an order
of rehabilitation or conservation by a court of competent jurisdiction.
(Added to NRS by 1973, 303; A 1991, 870; 2001, 1033 )
“Insolvent insurer”
means an insurer which is ordered to liquidate by a court of competent
jurisdiction after a finding of insolvency.
(Added to NRS by 1991, 863)
“Member insurer” means an
insurer which is licensed or holds a certificate of authority to transact
in this state any kind of insurance for which coverage is provided in
this chapter and includes an insurer whose license or certificate of
authority in this state has been suspended, revoked, not renewed or
voluntarily withdrawn. The term does not include:
1. A hospital or medical organization, whether or not for profit;
2. A health maintenance organization;
3. A fraternal benefit society;
4. A mandatory state pooling plan;
5. A mutual assessment company or other person that operates on
the basis of assessments;
6. An insurance exchange;
7. An organization that is authorized only to issue charitable
gift annuities under NRS 688A.281 to
688A.285 , inclusive; or
8. An organization similar to any of those listed in subsections 1
to 7, inclusive.
(Added to NRS by 1973, 303; A 1991, 870; 2001, 1033 )
“Owner” of a policy or contract
means 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 issuer.
(Added to NRS by 2001, 1026 )
“Person” includes a government,
governmental agency or political subdivision of a government.
(Added to NRS by 2001, 1026 )
“Premiums” means amounts
received in any calendar year on covered policies or contracts less
premiums, considerations and deposits returned thereon, and less
dividends and credits for experience thereon. The term does not include:
1. Any amounts received for policies or contracts or for the
portions of policies or contracts for which coverage is not provided
under NRS 686C.030 except that the
assessable premium is not reduced on account of paragraph (c) of
subsection 1 of NRS 686C.035 relating
to limitations on interest and subsection 2 or paragraph (b) of
subsection 1 of NRS 686C.210 relating
to limitations with respect to any one life.
2. Premiums for an unallocated annuity contract.
3. Premiums that exceed $5,000,000 for several nongroup policies
of life insurance owned by one owner, regardless of:
(a) Whether the owner is a natural person, firm, corporation or
other person;
(b) Whether any person insured under the policies is an officer,
manager, employee or other person; or
(c) The number of policies or contracts held by the owner.
(Added to NRS by 1973, 303; A 1991, 870; 2001, 1033 )
1. “Principal place of business” of an organization means the
single state in which the natural persons who establish policy for the
direction, control and coordination of the operations of the organization
as a whole primarily perform that function, determined by the Association
in its reasonable judgment by considering:
(a) The state in which the primary executive and administrative
headquarters of the organization is located;
(b) The state in which the principal office of the chief executive
officer of the organization is located;
(c) The state in which the board of directors, or similar governing
authority, of the organization conducts the majority of its meetings;
(d) The state in which the executive or managerial committee of the
board of directors, or similar governing authority, of the organization
conducts the majority of its meetings; and
(e) The state from which the management of the overall operations
of the organization is directed.
2. “Principal place of business” of the sponsor of a benefit plan
means the principal place of business of the association, committee,
joint board of trustees or similar group of representatives of the
parties who establish or maintain the plan or, if that cannot be
ascertained, of the employer or the employee organization that has the
largest investment in the plan, except that in either case if more than
half of the participants of the plan are employed in one state, it means
that state. In the case of a benefit plan sponsored by affiliated
companies comprising a consolidated corporation, it means the state in
which the holding company or controlling affiliate has its principal
place of business as determined by using the factors set forth in
subsection 1.
(Added to NRS by 2001, 1026 )
“Resident” means any 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
impaired or insolvent, whichever determination is first made. A person
may be a resident of but one state, which in the case of a person other
than a natural person is its principal place of business. A citizen of
the United States who is a resident of a foreign country or of a
territory or insular possession subject to the jurisdiction of the United
States which does not have an association similar to the Association
created by this chapter shall be deemed to be a resident of the state of
domicile of the insurer that issued the policy or contract.
(Added to NRS by 1973, 303; A 1991, 871; 2001, 1034 )
“State” means a state of the United
States, the District of Columbia, Puerto Rico, the United States Virgin
Islands or any territory or insular possession subject to the
jurisdiction of the United States.
(Added to NRS by 2001, 1027 )
“Structured
settlement annuity” means an annuity purchased to fund periodic payments
to a plaintiff or other claimant in payment for or with respect to
personal injury suffered by him.
(Added to NRS by 2001, 1027 )
“Supplemental
contract” means a written agreement for the distribution of proceeds from
a life or health insurance policy or an annuity.
(Added to NRS by 1991, 864; A 2001, 1034 )
1. The Association shall prepare, and submit to the Commissioner
for approval, a summary document describing the general purposes and
current limitations of this chapter. After the expiration of 60 days
after the approval of the summary document by the Commissioner, an
insurer may not deliver a policy or contract to the owner of the policy
or contract unless the summary document is delivered to the owner at the
time of delivery of the policy or contract. The document must also be
available upon request by the owner of a policy. The distribution,
delivery, contents or interpretation of this document does not guarantee
that the policy or the contract or its owner is covered in the event of
the impairment or insolvency of a member insurer. The descriptive
document must be revised by the Association as amendments to this chapter
may require. Failure to receive this document does not give the owner of
a policy or contract, or an insured, any greater rights than those stated
in this chapter.
2. The document prepared pursuant to subsection 1 must contain a
clear and conspicuous disclaimer on its face. The Commissioner shall
establish the form and content of the disclaimer. The disclaimer must:
(a) State the name and address of the Association and of the
Division;
(b) Prominently warn the owner of the policy or contract that the
Association may not cover the policy 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 for which guaranty funds will
provide coverage;
(d) State that the insurer and its agents are prohibited by law
from using the existence of the Association for the purpose of sales,
solicitation or inducement to purchase any form of insurance;
(e) State that the owner of a policy or contract should not rely on
coverage under the Association when selecting an insurer;
(f) Explain the rights and procedures for filing a complaint to
allege a violation of any provision of this chapter; and
(g) Provide other information as directed by the Commissioner,
including sources of information about the financial condition of
insurers, if the information is not proprietary and is subject to
disclosure under the law of the state in which the insurer is domiciled.
3. A member insurer shall retain evidence of compliance with
subsection 1 while the policy or contract for which the notice is given
remains in effect.
(Added to NRS by 1991, 868; A 2001, 1034 )
ORGANIZATION; POWERS AND DUTIES
1. There is hereby created a nonprofit legal entity to be known as
the Nevada 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 in this state. The Association
shall perform its functions under the plan of operation established and
approved pursuant to NRS 686C.290 and
shall exercise its powers through a Board of Directors established
pursuant to NRS 686C.140 .
2. For purposes of administration and assessment, the Association
shall maintain two accounts:
(a) The Account for Health Insurance; and
(b) The Account for Life Insurance and Annuities, which consists of:
(1) The Subaccount for Life Insurance; and
(2) The Subaccount for Annuities, including annuities owned
by a governmental retirement plan, or its trustees, established under
section 401, 403(b) or 457 of the Internal Revenue Code, 26 U.S.C. §§
401, 403(b) and 457.
3. The Association is under the immediate supervision of the
Commissioner and is subject to the applicable provisions of the Nevada
Insurance Code. Meetings or records of the Association may be opened to
the public by majority vote of the Board of Directors.
(Added to NRS by 1973, 303; A 1991, 871; 2001, 1035 )
1. The Board of Directors of the Association consists of not less
than five nor more than nine members, serving terms as established in the
plan of operation.
2. The members of the Board who represent insurers must be
selected by member insurers subject to the approval of the Commissioner.
If practicable, one of the members of the Board must be an officer of a
domestic insurer.
3. Two public representatives must be appointed to the Board by
the Commissioner. A public representative may not be an officer, director
or employee of an insurer or engaged in the business of insurance.
4. Vacancies on the Board must be filled for the remaining period
of the term by majority vote of the members of the Board, subject to the
approval of the Commissioner, for members who represent insurers, and by
the Commissioner for public representatives.
5. To select the initial Board of Directors, and initially
organize the Association, the Commissioner shall give notice to all
member insurers of the time and place of the organizational meeting. In
determining voting rights at the organizational meeting, each member
insurer is entitled to one vote in person or by proxy. If the Board of
Directors is not selected within 60 days after notice of the
organizational meeting, the Commissioner may appoint the initial members
to represent insurers in addition to the public representatives.
6. In approving selections or in appointing members to the Board,
the Commissioner shall consider, among other things, whether all member
insurers are fairly represented.
7. Members of the Board may be reimbursed from the assets of the
Association for expenses incurred by them as members of the Board of
Directors, but members of the Board may not otherwise be compensated by
the Association for their services.
(Added to NRS by 1973, 303; A 2001, 1035 ; 2003, 2805 )
If a member
insurer is an impaired insurer, the Association may, subject to any
conditions it may impose which do not impair the contractual obligations
of the impaired insurer and which are approved by the Commissioner:
1. Guarantee, assume or reinsure, or cause to be guaranteed,
assumed or reinsured, any or all of the covered policies or contracts of
the impaired insurer.
2. Provide such money, pledges, loans, notes, guarantees or other
means as are proper to effectuate subsection 1, and assure payment of the
contractual obligations of the impaired insurer pending action under
subsection 1.
(Added to NRS by 1973, 304; A 1991, 871; 2001, 1036 )
If a member
insurer is an insolvent insurer, the Association shall:
1. Guarantee, assume or reinsure, or cause to be guaranteed,
assumed or reinsured, the policies or contracts of the insolvent insurer;
or
2. Ensure payment of the contractual obligations of the insolvent
insurer and:
(a) Provide such money, pledges, loans, notes, guarantees or other
means as are reasonably necessary to discharge its duties; or
(b) Provide benefits and coverages in accordance with NRS 686C.153
and 686C.154 .
(Added to NRS by 1991, 865; A 2001, 1036 )
When
proceeding pursuant to paragraph (b) of subsection 2 of NRS 686C.152
, the Association shall:
1. With respect to life and health insurance policies and
annuities, ensure payment of benefits for premiums identical to the
premiums and benefits, except for terms of conversion and renewability,
which would have been payable under policies or contracts of the
insolvent insurer, for claims incurred with respect to:
(a) A group policy or contract, not later than the earlier of the
next renewal date under the policy or contract or 45 days, but in no
event less than 30 days, after the date when the Association becomes
obligated with respect to that policy or contract.
(b) A nongroup policy, contract or annuity, not later than the
earlier of the next renewal date, if any, under the policy, contract or
annuity or 1 year, but in no event less than 30 days, after the date when
the Association becomes obligated with respect to that policy, contract
or annuity.
2. Make diligent efforts to provide all known insureds or owners
with respect to group policies or contracts, or annuitants with respect
to annuities, 30 days’ notice of termination of the benefits provided
pursuant to subsection 1.
3. With respect to nongroup life and health insurance policies and
annuities, make available substitute coverage on an individual basis, in
accordance with the provisions of subsection 4, to each known insured or
annuitant, or owner if other than the insured or annuitant, and to each
natural person formerly insured, or formerly an annuitant, under a group
policy who is not eligible for replacement group coverage, if the insured
or annuitant 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
period, 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.
4. In providing the substitute coverage required under subsection
3, the Association may offer to reissue the terminated coverage or to
issue an alternative policy that must be offered without requiring
evidence of insurability or a waiting period or exclusion that would not
have applied under the terminated policy, and may reinsure any
alternative or reinsured policy.
(Added to NRS by 1991, 865; A 2001, 1036 )
1. Alternative policies adopted by the Association are subject to
the approval of the Commissioner and the court in the insolvent or
impaired insurer’s state which has jurisdiction over the conservation,
rehabilitation or liquidation of the insurer. The Association may adopt
alternative policies of various types for future issuance without regard
to any particular impairment or insolvency.
2. An alternative policy must contain at least the minimum
statutory provisions required in this state and provide benefits that are
not 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 must reflect the amount of insurance to be provided
and the age and class of risk of each insured, but must not reflect any
changes in the health of the insured after the original policy was last
underwritten.
3. An alternative policy issued by the Association must provide
coverage of a type similar to that of the policy issued by the impaired
or insolvent insurer, as determined by the Association.
4. If the Association elects to reissue terminated coverage at a
rate of premium different from that charged under the terminated policy,
the premium must be set by the Association in accordance with the amount
of insurance provided and the age and class of risk, subject to approval
by the Commissioner and the court described in subsection 1.
(Added to NRS by 1991, 866; A 2001, 1037 )
When proceeding pursuant to paragraph (b) of subsection 2
of NRS 686C.152 with respect to any
policy or contract carrying guaranteed minimum interest rates, the
Association shall ensure the payment or crediting of a rate of interest
consistent with paragraph (c) of subsection 1 of NRS 686C.035 .
(Added to NRS by 1991, 866; A 2001, 1038 )
In carrying out its duties in connection with guaranteeing,
assuming or reinsuring a policy or contract under NRS 686C.150 and 686C.152 , the Association, subject to the approval of
the court in the insolvent or impaired insurer’s state which has
jurisdiction over the conservation, rehabilitation or liquidation of the
insurer, 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 if:
1. In lieu of the index or other external reference stated in the
original policy or contract, the alternative policy or contract provides
for a fixed interest rate, payment of dividends guaranteed as to minimum
amount, or a different method of calculating interest or changes in value;
2. 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
3. The alternative policy or contract is substantially similar to
the replaced policy or contract in all other material terms.
(Added to NRS by 2001, 1029 )
Premiums due for coverage after entry of an order of liquidation of an
insolvent insurer belong to and are payable at the direction of the
Association, and the Association is liable for unearned premiums due to
owners of policies or contracts arising after the entry of such an order.
(Added to NRS by 2001, 1027 )
In carrying
out its responsibilities under NRS 686C.152 , the Association may, subject to approval by
a court of this state:
1. Impose permanent liens on policies and contracts in connection
with any guarantee, assumption or reinsurance if the Association finds
that the amounts which can be assessed under this chapter are less than
the amounts needed to ensure full and prompt performance of the
Association’s duties or that the economic or financial conditions as they
affect member insurers are sufficiently adverse that the imposition of
such permanent liens is in the public interest.
2. Impose temporary moratoriums or liens on payments of cash
values and policy loans or any right to withdraw money held in
conjunction with policies or contracts, in addition to any contractual
provisions for deferral of paying cash value or lending against the
policy. In addition, in the event of a temporary moratorium or charge
imposed by the court in the insolvent or impaired insurer’s state which
has jurisdiction over the conservation, rehabilitation or liquidation of
the insurer on such payment or lending, or on any other right to withdraw
money held in conjunction with policies or contracts, the Association may
defer such payment, lending or withdrawal for the period of the
moratorium or charge, except for claims covered by the Association to be
paid in accordance with a procedure for cases of hardship established by
the liquidator or rehabilitator and approved by the court.
(Added to NRS by 1973, 305; A 1991, 872; 2001, 1038 )
The Association is not liable under NRS 686C.152
where a guaranty 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.
(Added to NRS by 1973, 305; A 1991, 873; 2001, 1038 )
A deposit in
this state, held pursuant to law or required by the Commissioner for the
benefit of creditors, including owners of policies, not turned over to
the domiciliary receiver upon the entry of a final order of liquidation
or order approving a plan of rehabilitation of an insurer domiciled in
this state or a reciprocal state pursuant to NRS 696B.290 or 696B.300 must be promptly paid to the Association.
The Association is entitled to retain a portion of an amount so paid to
it that is 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 the remainder to the domiciliary receiver. The amount so
remitted is a distribution of the assets of the insurer for the purposes
of chapter 696B of NRS.
(Added to NRS by 2001, 1027 )
The
Association may render assistance and advice to the Commissioner upon his
request, concerning rehabilitation, payment of claims, continuation of
coverage or the performance of other contractual obligations of an
impaired or insolvent insurer.
(Added to NRS by 1973, 305; A 2001, 1038 )
The Association has standing:
1. To appear or intervene before a court or agency in this state
which has jurisdiction over an impaired or insolvent insurer concerning
which the Association is or may become obligated under this chapter or
over any person or property against whom or which the Association may
have rights through subrogation or otherwise. Its standing extends to all
matters germane to the powers and duties of the Association, including
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.
2. To appear or intervene before a court or agency in another
state which has jurisdiction over an impaired or insolvent insurer for
which the Association is or may become obligated, or over any person or
property against whom or which the Association may have rights through
subrogation or otherwise.
(Added to NRS by 1973, 305; A 1991, 873; 2001, 1038 )
1. A person receiving benefits under this chapter shall be deemed
to have assigned his 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 chapter, 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 those rights and causes of
action by any payee, owner of a policy or contract, beneficiary, insured
or annuitant as a condition precedent to the receipt of any rights or
benefits conferred by this chapter upon that person.
2. The rights of the Association to subrogation under this
subsection 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 chapter.
3. In addition to the rights provided under subsections 1 and 2,
the Association has all rights of subrogation at common law and any other
equitable or legal remedy which would have been available to the impaired
or insolvent insurer or the owner, beneficiary or payee of a policy or
contract with respect to the policy or contract, including, in the case
of a structured settlement annuity, any rights of the owner, beneficiary
or payee of the annuity, to the extent of benefits received under this
chapter, against a person originally or by succession responsible for the
losses arising from the personal injury relating to the annuity or
payment for it, except any such person responsible solely by reason of
serving as an assignee under section 130 of the Internal Revenue Code, 26
U.S.C. § 130.
4. If the provisions of subsections 1, 2 and 3 are invalid or
ineffective with respect to any person or any claim for any reason, the
amount payable to the Association with respect to the related covered
obligations is reduced by the amount realized by any other person with
respect to the person or claim which is attributable to the policies or
portions thereof covered by the Association.
5. If the Association has provided benefits with respect to a
covered obligation and a person recovers amounts as to which the
Association has rights under subsections 1 to 4, inclusive, he shall pay
to the Association the portion of the recovery attributable to the
policies or portions thereof covered by the Association.
(Added to NRS by 1973, 305; A 1991, 873; 2001, 1039 )
1. The benefits that the Association may become obligated to cover
may not 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;
(b) With respect to one life, regardless of the number of policies
or contracts:
(1) Three hundred thousand dollars in death benefits from
life insurance, but not more than $100,000 in net cash for surrender and
withdrawal for life insurance; or
(2) One hundred thousand dollars in the present value of
benefits from annuities, including net cash for surrender and withdrawal;
(c) With respect to health insurance for any one natural person:
(1) One hundred thousand dollars for coverages other than
disability insurance, basic hospital, medical and surgical insurance or
major medical insurance, including any net cash for surrender or
withdrawal;
(2) Three hundred thousand dollars for disability insurance;
or
(3) Five hundred thousand dollars for basic hospital,
medical and surgical insurance or major medical insurance; or
(d) With respect to each payee of a structured settlement annuity,
or beneficiary or beneficiaries of the payee if deceased, $100,000 in
present value of benefits from the annuity in the aggregate, including
any net cash for surrender or withdrawal.
2. In no event is the Association obligated to cover more than:
(a) With respect to any one life or person under paragraphs (b) and
(c) of subsection 1:
(1) An aggregate of $300,000 in benefits, excluding benefits
for basic hospital, medical and surgical insurance or major medical
insurance; or
(2) An aggregate of $500,000 in benefits, including benefits
for basic hospital, medical and surgical insurance or major medical
insurance.
(b) With respect to one owner of several nongroup policies of life
insurance, whether the owner is a natural person or an organization and
whether the persons insured are officers, managers, employees or other
persons, more than $5,000,000 in benefits, regardless of the number of
policies and contracts held by the owner.
3. The limitations set forth in this section are limitations on
the benefits for which the Association is obligated before taking into
account its rights to subrogation or assignment 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 cost of the
Association’s obligations under this chapter may be met by the use of
assets attributable to covered policies, or reimbursed to the Association
pursuant to its rights to subrogation or assignment.
4. In performing its obligation to provide coverage under NRS
686C.150 and 686C.152 , the Association need not guarantee, assume,
reinsure or perform, or cause to be guaranteed, assumed, reinsured or
performed, the contractual obligations of the impaired or insolvent
insurer under a covered policy or contract which do not materially affect
the economic value or economic benefits of the covered policy or contract.
(Added to NRS by 1973, 306; A 1979, 767; 1991, 874; 2001, 1039
)
The Association may:
1. Enter into such contracts as are necessary or proper to carry
out the provisions and purposes of this chapter.
2. Sue or be sued, including the taking of any legal action
necessary or proper for recovery of any unpaid assessments under NRS
686C.230 or to settle claims or
potential claims against it.
3. Borrow money to effect the purposes of this chapter. Any notes
or other evidence of indebtedness of the Association not in default are
legal investments for domestic insurers and may be carried as admitted
assets.
4. 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 chapter.
5. Take such legal action as may be necessary or appropriate to
avoid or recover payment of improper claims.
6. Exercise, for the purposes of this chapter and to the extent
approved by the Commissioner, the powers of a domestic life or health
insurer, but in no case may the Association issue insurance policies or
annuities other than those issued to perform its contractual obligations
under this chapter.
7. Join an organization of one or more other state associations
having similar purposes, to further the purposes and administer the
powers and duties of the Association.
8. Organize itself as a corporation or in other legal form
permitted by the laws of this state.
9. Request information from a person seeking coverage from the
Association to aid the Association in determining its obligations under
this chapter with respect to him, and the person shall promptly comply
with the request.
10. Take other necessary or appropriate action to perform its
duties and discharge its obligations under this chapter or to exercise
its power under this chapter.
(Added to NRS by 1973, 306; A 1991, 874; 2001, 1040 )
1. The Board of Directors of the Association may exercise
reasonable business judgment to determine the means by which the
Association is to provide the benefits of this chapter in an economical
and efficient manner.
2. Where the Association has arranged or offered to provide the
benefits of this chapter to a covered person under a plan or arrangement
that satisfies the obligations of the Association under this chapter, the
covered person is not entitled to benefits from the Association in
addition to or other than those provided under the plan or arrangement.
(Added to NRS by 2001, 1029 )
The
Association may request information from member insurers to aid in the
exercise of its powers under this chapter, and each member shall promptly
comply with such a request.
(Added to NRS by 2001, 1030 )
1. As used in this section, “coverage date” means the date on
which the Association becomes liable for the obligations of a member
insurer.
2. At any time after the coverage date, the Association may elect
to succeed to the rights and obligations of the member insurer which
accrue on or after the coverage date and relate to contracts covered, in
whole or in part, by the Association under any one or more agreements for
indemnity reinsurance entered into by the member insurer as ceding
insurer and selected by the Association. However, the Association may not
exercise its right of election with respect to an agreement for
reinsurance if the receiver, rehabilitator or liquidator of the member
insurer has previously expressly disaffirmed the agreement. The election
must be effected by a notice to the receiver, rehabilitator or liquidator
and the affected reinsurers. If the Association makes such an election:
(a) The Association is responsible for all unpaid premiums due
under each agreement for periods both before and after the coverage date,
and for the performance of all other obligations to be performed after
the coverage date, in each case which relates to a contract covered in
whole or in part by the Association. The Association may charge a
contract covered in part by it, through reasonable methods of allocation,
for the costs of reinsurance in excess of the obligations of the
Association.
(b) The Association is entitled to any amount payable by the
reinsurer under each agreement with respect to losses or events that
occur in periods after the coverage date and relate to contracts covered
in whole or in part by the Association, but upon receipt of any such
amount, the Association is obligated to pay, to the beneficiary under the
contract on account of which the amount was paid, that portion of the
amount received by the Association that exceeds the benefits paid by the
Association on account of the contract less the retention by the impaired
or insolvent member insurer applicable to the loss or event.
(c) The Association and each reinsurer shall, within 30 days after
the election, calculate the net balance due to or from the Association
under each agreement as of the date of the election, giving full credit
for all items paid by the member insurer or its receiver, rehabilitator
or liquidator, or the reinsurer, between the coverage date and the date
of the election. The Association or the reinsurer shall pay the net
balance within 5 days after the completion of the calculation. If a
receiver, rehabilitator or liquidator has received any amount due the
Association pursuant to paragraph (b), the recipient shall remit the
amount to the Association as promptly as practicable.
(d) The reinsurer may not terminate an agreement for reinsurance
insofar as it relates to contracts covered by the Association in whole or
in part, or set off any unpaid premium due for a period before the
coverage date against the amount due the Association, if the Association,
within 60 days after the election, pays the premiums due for periods both
before and after the coverage date which relate to such contracts.
3. If the Association transfers its obligation to another insurer,
and the Association and the other insurer so agree, the other insurer
succeeds to the rights and obligations of the Association under
subsection 2 effective as of the agreed date, whether or not the
Association has made the election described in subsection 2, except that:
(a) An agreement for indemnity reinsurance automatically terminates
as to new reinsurance unless the reinsurer and the other insurer agree to
the contrary;
(b) The obligation of the Association to the beneficiary under
paragraph (b) of subsection 2 ceases on the date of the transfer to the
other insurer; and
(c) This subsection does not apply if the Association has
previously expressly determined in writing that it will not exercise its
right of election under subsection 2.
4. The provisions of this section supersede an affected agreement
for reinsurance which provides for or requires payment of proceeds of
reinsurance, on account of a loss or event that occurs after the coverage
date, to the receiver, rehabilitator or liquidator of the insolvent
member insurer. The receiver, rehabilitator or liquidator remains
entitled to any amounts payable by the reinsurer under the agreement with
respect to losses or events that occur before the coverage date, subject
to any applicable setoff.
5. Except as otherwise expressly provided, this section does not
alter or modify the terms or conditions of any agreement of the insolvent
insurer for reinsurance, abrogate or limit any right of a reinsurer to
rescind an agreement for reinsurance, or give an owner or beneficiary of
a policy an independent cause of action against a reinsurer under an
agreement for indemnity reinsurance that is not otherwise set forth in
the agreement.
(Added to NRS by 2001, 1027 )
The Association’s obligations with respect to coverage under
any policy of the impaired or insolvent insurer or under any reissued or
alternative policy ceases on the date the coverage or policy is replaced
by another similar policy by the policyholder, the insured or the
Association.
(Added to NRS by 1991, 866)
Failure to pay premiums within 31 days after the date required pursuant
to the terms of any guaranteed, assumed, alternative or reissued policy
or contract or substitute coverage terminates the Association’s
obligations under 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 chapter.
(Added to NRS by 1991, 866)
ASSESSMENTS
1. To provide the money 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 times and for such amounts
as the Board finds necessary. An assessment is due upon at least 30 days’
written notice to the member insurer and accrues interest after it is due
at the rate provided in NRS 99.040 .
2. There are two classes of assessments, as follows:
(a) Assessments in Class A must be authorized and called for the
purpose of meeting administrative and legal costs and other expenses. An
assessment in Class A need not be related to a particular impaired or
insolvent insurer.
(b) Assessments in Class B must be authorized and called to the
extent necessary to carry out the powers and duties of the Association
under NRS 686C.150 to 686C.220 , inclusive, with regard to an impaired or
insolvent insurer.
(Added to NRS by 1973, 306; A 1991, 875; 2001, 1041 )
1. The Board of Directors shall determine the amount of each
assessment in Class A and may, but need not, prorate it. If an assessment
is prorated, the Board may provide that any surplus be credited against
future assessments in Class B. An assessment which is not prorated must
not exceed $150 for each member insurer for any one calendar year.
2. The Board may allocate any assessment in Class B among the
accounts according to the premiums or reserves of the impaired or
insolvent insurer or any other standard which it considers fair and
reasonable under the circumstances.
3. Assessments in Class B against member insurers for each account
and subaccount must 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 or subaccount for the 3 most recent
calendar years for which information is available preceding the year in
which the insurer became impaired or insolvent bears to premiums received
on business in this State for those calendar years by all assessed member
insurers.
4. Assessments for money to meet the requirements of the
Association with respect to an impaired or insolvent insurer must not be
authorized or called until necessary to carry out the purposes of this
chapter. Classification of assessments under subsection 2 of NRS 686C.230
and computation of assessments under
this section must 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 prorated
share of an assessment authorized but not yet called within 180 days
after it is authorized.
(Added to NRS by 1973, 307; A 1979, 767; 1981, 579; 1991, 875;
1995, 1070; 2001, 1041 )
1. The Association may abate or defer, in whole or in part, the
assessment of a member insurer if, in the opinion of the Board of
Directors, payment of the assessment would endanger the ability of the
member insurer to fulfill its contractual obligations. If an assessment
against a member insurer is abated or deferred in whole or in part, the
amount by which that 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. As soon as the conditions that
caused a deferral have been removed or rectified, the member insurer
shall pay all assessments that were deferred pursuant to a plan of
repayment approved by the Association.
2. Except as otherwise provided in subsection 3, the total of all
assessments authorized by the Association with respect to a member
insurer for:
(a) The Account for Life Insurance and Annuities and each of its
subaccounts; and
(b) The Account for Health Insurance,
Ê respectively must not in any 1 calendar year exceed 2 percent of the
insurer’s average annual premiums received in this state on the policies
and contracts covered by the subaccount or account during the 3 calendar
years preceding the year in which the insurer became impaired or
insolvent.
3. If two or more assessments are authorized in 1 calendar year
with respect to insurers that became impaired or insolvent in different
calendar years, the average annual premiums received for the purposes of
the limitation provided in subsection 2 are equal and limited to the
higher of the 3-year annual premiums for the applicable account or
subaccount as calculated pursuant to this section.
4. If the maximum assessment, together with the other assets of
the Association in an account, does not provide in any 1 year in either
account an amount sufficient to carry out the responsibilities of the
Association, the necessary additional money must be assessed as soon
thereafter as permitted by this chapter.
5. If the maximum assessment for a subaccount of the Account for
Life Insurance and Annuities in any 1 year does not provide an amount
sufficient to carry out the responsibilities of the Association, then
pursuant to subsection 3 of NRS 686C.240 , the Board shall assess the other subaccount
for the necessary additional amount, subject to the maximum stated in
subsection 2.
6. 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 is insufficient to
cover anticipated claims.
(Added to NRS by 1973, 307; A 1991, 876; 2001, 1042 )
The Board of Directors
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 that
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 claims.
(Added to NRS by 1973, 307; A 1991, 877; 2001, 1043 )
It is
proper for any member insurer, in determining its rates of premium and
dividends to owners of policies as to any kind of insurance within the
scope of this chapter, to consider the amount reasonably necessary to
meet its obligations for assessment under this chapter.
(Added to NRS by 1973, 308; A 1991, 877)
1. The Association shall issue to each insurer paying an
assessment under this chapter, other than an assessment in Class A, a
certificate of contribution, in a form prescribed by the Commissioner,
for the amount of the assessment so paid. All outstanding certificates
are of equal dignity and priority without reference to amounts or dates
of issue. A member insurer may show a certificate of contribution as an
asset in its financial statement in such form, for such amount, if any,
and for such period as the Commissioner may approve.
2. A member insurer may offset against its liability for premium
tax to this state, accrued with respect to business transacted in a
calendar year, an amount equal to 20 percent of the amount certified
pursuant to subsection 1 in each of the 5 calendar years following the
year in which the assessment was paid. If an insurer ceases to transact
business, it may offset all uncredited assessments against its liability
for premium tax for the year in which it so ceases.
3. Any sum acquired by refund from the Association pursuant to NRS
686C.260 which previously had been
written off by the contributing insurer and offset against premium taxes
as provided in subsection 2 must be paid to the Department of Taxation
and deposited by it with the State Treasurer for credit to the State
General Fund. The Association shall notify the Commissioner and the
Department of Taxation of each refund made.
(Added to NRS by 1973, 308; A 1991, 877; 1995, 1103; 2001, 1043
)
1. A member insurer that wishes to protest all or part of an
assessment shall pay the full amount of the assessment when due, as set
forth in the notice from the Association. The payment may be used to meet
obligations of the Association during the pendency of the assessment and
any subsequent appeal. Payment must be accompanied by a statement in
writing that the payment is made under protest and setting forth briefly
the grounds for the protest.
2. Within 60 days after the payment of an assessment under
protest, the Association shall notify the member insurer in writing of
the determination of the Association 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.
3. Within 30 days after a final decision is made, the Association
shall notify the protesting member insurer in writing of the final
decision. Within 60 days after receipt of that notice, the protesting
member insurer may appeal the decision to the Commissioner.
4. As an alternative to making a final decision with respect to a
protest concerning the basis of assessment, the Association may refer the
protest to the Commissioner for a final decision, with or without a
recommendation from the Association.
5. If a protest or appeal is upheld, the amount paid in error or
excess must be returned to the member insurer. Interest must be paid on
the refund at the rate actually earned by the Association.
(Added to NRS by 2001, 1029 )
OPERATION
1. The Association shall submit to the Commissioner a plan of
operation and any amendments thereto necessary or suitable to ensure the
fair, reasonable and equitable administration of the Association. The
plan of operation and any amendments thereto become effective upon
approval in writing by the Commissioner, or 30 days after submission if
he has not disapproved them. All member insurers shall comply with the
plan of operation.
2. If at any time the Association fails to submit suitable
amendments to the plan, the Commissioner shall adopt, after notice and
hearing, such reasonable regulations as are necessary or advisable to
effectuate the provisions of this chapter. The regulations continue in
force until modified by the Commissioner or superseded by a plan
submitted by the Association and approved by the Commissioner.
3. In addition to satisfying the other requirements of this
chapter, the plan of operation must:
(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 NRS 686C.140 .
(c) Establish regular places and times for meetings of the Board.
(d) Establish procedures for records to be kept of all financial
transactions of the Association, its agents and the Board.
(e) Establish the procedures whereby selections for the Board will
be made and submitted to the Commissioner.
(f) Establish any additional procedures for assessments under NRS
686C.230 to 686C.270 , inclusive.
(g) Contain additional provisions necessary or proper for the
execution of the powers and duties of the Association.
4. The plan of operation may provide that any or all powers and
duties of the Association, except those under subsection 3 of NRS
686C.220 and NRS 686C.230 to 686C.285 , inclusive, 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
or more states. Such an organization must be reimbursed for any payments
made on behalf of the Association and paid for its performance of any
function of the Association. A delegation under this subsection takes
effect only with the approval of the Board of directors and the
Commissioner, and may be made only to an organization that extends
protection not substantially less favorable and effective than that
provided by this chapter.
(Added to NRS by 1973, 308; A 1981, 105; 1991, 878; 2001, 1043
)
1. In addition to the duties and powers otherwise provided in this
chapter, the Commissioner:
(a) Shall, 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.
(b) Shall, 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 insurer
is notice to its stockholders, if any. The failure of the insurer to
comply with such demand promptly does not excuse the Association from the
performance of its powers and duties under this chapter.
(c) Must, in any liquidation or rehabilitation involving a domestic
insurer, be appointed as the liquidator or rehabilitator.
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 may not exceed 5 percent of the
unpaid assessment per month, but no forfeiture may be less than $100 per
month.
3. A final action of the Board of Directors or the Association may
be appealed to the Commissioner by any member insurer if the appeal is
taken within 60 days after the insurer receives notice of the final
action. A final action or order of the Commissioner is subject to
judicial review in a court of competent jurisdiction pursuant to the
procedure provided in chapter 233B of NRS
for contested cases.
4. The liquidator, rehabilitator or conservator of any impaired
insurer may notify all interested persons of the effect of this chapter.
(Added to NRS by 1973, 309; A 1991, 879; 2001, 1044 )
If the Association fails to act within a reasonable time with respect to
an insolvent insurer, as provided in NRS 686C.150 to 686C.155 , inclusive, the Commissioner may exercise
the powers and perform the duties of the Association under this chapter
with respect to the insolvent insurer.
(Added to NRS by 1991, 867; A 2001, 1045 )
1. The Commissioner shall notify the commissioners of insurance of
all the other states within 30 days after he takes any of the following
actions against a member insurer:
(a) Revokes a member insurer’s license;
(b) Suspends a member insurer’s license; or
(c) Makes any formal order that a member insurer is to 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 the owners of
its policies or its creditors.
2. The Commissioner shall report to the Board of Directors when he
has taken any of the actions set forth in subsection 1, 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 must contain all
significant details of the action taken or the report received from
another Commissioner.
3. The Commissioner shall report to the Board of Directors when he
has reasonable cause to believe from an examination of a member insurer,
whether completed or in process, that the insurer may be impaired or
insolvent.
4. The Commissioner shall furnish to the Board the ratios of the
“Insurance Regulatory Information System” developed by the National
Association of Insurance Commissioners and listings of companies not
included in those ratios, and the Board may use the information contained
therein in carrying out its duties and responsibilities under this
chapter. Such reports and the information contained therein must be kept
confidential by the Board until such time as made public by the
Commissioner or other lawful authority.
(Added to NRS by 1991, 867; A 2001, 1045 )
1. The Board of Directors may, upon majority vote, notify the
Commissioner of any information indicating any member insurer may be
impaired or insolvent.
2. The Board 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 person seeking admission to
transact insurance in this state. These reports and recommendations are
not open to public inspection.
3. The Commissioner may seek the advice and recommendations of the
Board concerning any matter affecting his duties and responsibilities
regarding the financial condition of member insurers and of persons
seeking admission to transact insurance in this state.
4. The Board may, upon majority vote, make recommendations to the
Commissioner for the detection and prevention of the insolvency of
insurers.
(Added to NRS by 1973, 310; A 1991, 880; 2001, 1046 )
1. This chapter does not reduce the liability for unpaid
assessments of the insureds of an impaired insurer operating under a plan
with liability for assessments.
2. Records must 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 NRS 686C.150 to
686C.220 , inclusive. The records of
the Association with respect to an impaired or insolvent insurer may not
be disclosed before the termination of a proceeding for liquidation,
rehabilitation or conservation involving the impaired or insolvent
insurer or the termination of the impairment or insolvency of the
insurer, except upon the order of a court of competent jurisdiction. This
subsection does not limit the duty of the Association to render a report
of its activities under NRS 686C.350 .
3. For the purpose of carrying out its obligations under this
chapter, 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 NRS 686C.200 .
Assets of the impaired or insolvent insurer attributable to covered
policies must be used to continue all covered policies and pay all
contractual obligations of the impaired or insolvent insurer as required
by this chapter. 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 covered 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 under
subsection 3 and consistent with NRS 696B.415 , the Association and other similar
associations are entitled to receive a disbursement 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 chapter. If the
liquidator has not, within 120 days after a final determination of
insolvency of an insurer by the court in the insolvent or impaired
insurer’s state which has jurisdiction over the conservation,
rehabilitation or liquidation of the insurer, made an application to the
court for the approval of a proposal to disburse assets out of marshaled
assets to guaranty associations having obligations because of the
insolvency, the Association is entitled to make application to the court
for approval of its own proposal to disburse those assets.
5. Before the termination of any proceeding for liquidation,
rehabilitation or conservation, the court may take into consideration the
contributions of the respective parties, including the Association, the
shareholders and owners of policies and contracts of the impaired or
insolvent insurer, and any other party with a bona fide interest, in
making an equitable distribution of the ownership of the impaired or
insolvent insurer. In making such a determination, consideration must be
given to the welfare of the owners of policies issued by the continuing
or successor insurer. No distribution to stockholders, if any, of an
impaired or insolvent insurer may be made until the total amount of valid
claims of the Association, with interest thereon, for money expended in
exercising its powers and performing its duties under NRS 686C.150 to 686C.155 , inclusive, with respect to that insurer
have been fully recovered by the Association.
(Added to NRS by 1973, 310; A 1991, 881; 2001, 1047 )
1. If an order for liquidation or rehabilitation of an insurer
domiciled in this state has been entered, the receiver appointed under
such order is entitled 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 5 years preceding the petition for liquidation or
rehabilitation, subject to the limitations of subsections 2, 3 and 4.
2. No distribution is 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.
3. Any person who as an affiliate that controlled the insurer at
the time the distributions were paid is liable up to the amount of
distributions he received. Any person who was an affiliate that
controlled the insurer at the time the distributions were declared, is
liable up to the amount of distributions he would have received if they
had been paid immediately. If two or more persons are liable with respect
to the same distributions, they are jointly and severally liable.
4. The maximum amount recoverable pursuant to this subsection is
the amount needed in excess of all other available assets of the impaired
or insolvent insurer to pay the contractual obligations of the impaired
or insolvent insurer.
5. If any person liable under subsection 3 is insolvent, all its
affiliates that controlled it at the time the dividend was paid are
jointly and severally liable for any resulting deficiency in the amount
recovered from the insolvent affiliate.
(Added to NRS by 1991, 868)
All proceedings in which the impaired or
insolvent insurer is a party in any court in this state must be stayed
for 60 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. If a judgment has been
entered under any decision, order, verdict or finding based on default,
the Association may apply to have the judgment set aside by the same
court that entered the judgment and is entitled to defend against the
suit on the merits.
(Added to NRS by 1973, 312; A 1991, 882)
The Association is subject to examination and regulation by the
Commissioner. The Board of Directors shall submit to the Commissioner,
not later than 120 days after the end of its 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 insurer with a copy of the
report.
(Added to NRS by 1973, 312; A 1991, 882; 2001, 1048 )
The Association
is exempt from payment of all fees and all taxes levied by this state or
any of its political subdivisions, except taxes on property.
(Added to NRS by 1973, 312)
There is no liability on
the part of and no cause of action of any nature arises against any
member insurer or its agents or employees, the Association or its agents
or employees, members of the Board or the Commissioner or his
representatives for any act or omission by them in the performance of
their powers and duties under this chapter. This immunity extends to
participation in any organization of other state associations whose
purposes are similar, and to any such organization and its agents or
employees.
(Added to NRS by 1973, 312; A 1991, 882)
Venue in an action against the Association arising under this chapter
lies in Washoe County. No appeal bond may be required of the Association
in an appeal that relates to a cause of action arising under this chapter.
(Added to NRS by 2001, 1029 )
It is unlawful for an insurer, agent or affiliate of an
insurer, or other person to make, publish, circulate or place before the
public, or cause any other person to do so, in any publication, notice,
circular, letter or poster, or over any radio or television station, any
advertisement or statement, written or oral, which uses the existence of
the Association for the sale, solicitation or inducement to purchase any
form of insurance covered by the Association. This section does not apply
to the association or any other person that does not sell or solicit
insurance.
(Added to NRS by 2001, 1030 )
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