[Rev. 11/21/2013 1:10:52
PM--2013]
CHAPTER 686C - NEVADA LIFE AND HEALTH
INSURANCE GUARANTY ASSOCIATION
GENERAL PROVISIONS
NRS 686C.010 Short
title.
NRS 686C.020 Purpose
of chapter.
NRS 686C.030 Scope
of chapter: Coverage provided.
NRS 686C.035 Scope
of chapter: Coverage not provided.
NRS 686C.040 Definitions.
NRS 686C.045 “Account”
defined.
NRS 686C.048 “Annuity”
defined.
NRS 686C.050 “Association”
defined.
NRS 686C.055 “Authorized
assessment” defined.
NRS 686C.061 “Benefit
plan” defined.
NRS 686C.065 “Called
assessment” defined.
NRS 686C.070 “Contractual
obligation” defined.
NRS 686C.080 “Covered
policy” defined.
NRS 686C.084 “Extra-contractual
claim” defined.
NRS 686C.090 “Impaired
insurer” defined.
NRS 686C.095 “Insolvent
insurer” defined.
NRS 686C.100 “Member
insurer” defined.
NRS 686C.104 “Owner”
defined.
NRS 686C.108 “Person”
defined.
NRS 686C.110 “Premiums”
defined.
NRS 686C.115 “Principal
place of business” defined.
NRS 686C.120 “Resident”
defined.
NRS 686C.123 “State”
defined.
NRS 686C.124 “Structured
settlement annuity” defined.
NRS 686C.125 “Supplemental
contract” defined.
NRS 686C.127 “Unallocated
annuity contract” defined.
NRS 686C.128 Document
describing general purposes and current limitations of chapter: Preparation;
distribution and revision; disclaimer.
ORGANIZATION; POWERS AND DUTIES
NRS 686C.130 Creation;
membership; operation; accounts; supervision by Commissioner.
NRS 686C.140 Board
of Directors.
NRS 686C.150 Powers
regarding impaired insurers.
NRS 686C.152 Duties
regarding insolvent insurers.
NRS 686C.153 Provision
of substitute benefits and coverage with respect to life and health insurance
policies and annuities.
NRS 686C.154 Alternative
policies: Adoption; approval; contents; premium; coverage.
NRS 686C.155 Ensuring
of payment or credit of guaranteed minimum interest rate.
NRS 686C.156 Issuance
of substitute coverage for policy or contract that uses external reference for
calculating returns or changes in value.
NRS 686C.158 Payment
of premiums; liability for unearned premiums.
NRS 686C.160 Imposition
of restraints on insurers.
NRS 686C.170 Liability
for guaranty provided by laws of another state or jurisdiction.
NRS 686C.175 Receipt
and disposition of deposit held pursuant to law or required by Commissioner for
benefit of creditors.
NRS 686C.180 Provision
of assistance to Commissioner.
NRS 686C.190 Legal
standing.
NRS 686C.200 Subrogation.
NRS 686C.210 Limitations
on obligations.
NRS 686C.220 General
powers.
NRS 686C.221 Determination
of means to provide benefits; limitation on entitlement to benefits.
NRS 686C.222 Requests
for information from member insurers.
NRS 686C.223 Election
to succeed to rights and obligations of member insurer; transfer of obligations
to another insurer.
NRS 686C.225 Termination
of obligations: Replacement of coverage or policy.
NRS 686C.226 Termination
of obligations: Failure to pay premiums.
ASSESSMENTS
NRS 686C.230 Imposition;
classes.
NRS 686C.240 Computation;
necessity; notification.
NRS 686C.250 Abatement
or deferment; maximum amount; effect of insufficiency; allocation of funds
among claims.
NRS 686C.260 Refund
to member insurers.
NRS 686C.270 Rates
and dividends may reflect assessments.
NRS 686C.280 Issuance,
effect and use of certificate of contribution; offset against liability for
premium tax.
NRS 686C.285 Protest
by member insurer.
OPERATION
NRS 686C.290 Plan
of operation.
NRS 686C.300 Powers
and duties of Commissioner; appeals to Commissioner; notification of effect of
chapter.
NRS 686C.303 Action
by Commissioner upon default of Association.
NRS 686C.306 Notice
of certain actions by Commissioner; reports by Commissioner of certain
information to Board of Directors.
NRS 686C.310 Provision
of information and advice relating to financial condition of insurers.
NRS 686C.330 Impaired
or insolvent insurers: Liability for unpaid assessments of insureds;
maintenance and disclosure of records of Association; status of Association as
creditor; distribution of ownership by court.
NRS 686C.333 Recovery
of distributions made before petition for liquidation or rehabilitation of
insurer.
NRS 686C.340 Impaired
or insolvent insurers: Stay of proceedings; reopening of default judgments.
NRS 686C.350 Examination
of Association; annual financial report.
NRS 686C.360 Association
tax exempt; exception.
NRS 686C.370 Immunity
from liability.
NRS 686C.380 Actions
arising under chapter: Venue; appeal bond.
NRS 686C.390 Unlawful
advertisement regarding existence of Association.
_________
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GENERAL PROVISIONS
NRS 686C.010 Short title. This
chapter may be cited as the Nevada Life and Health Insurance Guaranty
Association Act.
(Added to NRS by 1973, 302)
NRS 686C.020 Purpose of chapter. 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)
NRS 686C.030 Scope of chapter: Coverage provided.
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)
NRS 686C.035 Scope of chapter: Coverage not provided.
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. § 1002(40);
(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 other than an
annuity owned by a governmental retirement plan established under section 401,
403(b) or 457 of the Internal Revenue Code, 26 U.S.C. §§ 401, 403(b) and 457,
respectively, or the trustees of such a plan.
(l) A policy or contract providing any hospital,
medical, prescription drug or other health care benefits pursuant to 42 U.S.C.
§§ 1395w-21 et seq. and 1395w-101 et seq., and any regulations adopted pursuant
thereto.
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; 2011, 3369;
2013, 3354)
NRS 686C.040 Definitions. As
used in this chapter, unless the context otherwise requires, the words and
terms defined in NRS 686C.045 to 686C.127, inclusive, have the meanings ascribed to
them in those sections.
(Added to NRS by 1973, 302; A 1991, 870; 2001, 1033; 2011, 3370)
NRS 686C.045 “Account” defined. “Account”
means one of the accounts maintained pursuant to NRS
686C.130.
(Added to NRS by 1991, 863)
NRS 686C.048 “Annuity” defined. “Annuity”
includes an agreement for allocated funding, a structured settlement annuity
and an immediate or deferred annuity.
(Added to NRS by 2001, 1026)
NRS 686C.050 “Association” defined. “Association”
means the Nevada Life and Health Insurance Guaranty Association.
(Added to NRS by 1973, 303)
NRS 686C.055 “Authorized assessment” defined. “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)
NRS 686C.061 “Benefit plan” defined. “Benefit
plan” means a benefit plan for a specific employee, union or association of
natural persons.
(Added to NRS by 2001, 1026)
NRS 686C.065 “Called assessment” defined. “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)
NRS 686C.070 “Contractual obligation” defined. “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)
NRS 686C.080 “Covered policy” defined. “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)
NRS 686C.084 “Extra-contractual claim” defined. “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)
NRS 686C.090 “Impaired insurer” defined. “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)
NRS 686C.095 “Insolvent insurer” defined. “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)
NRS 686C.100 “Member insurer” defined. “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)
NRS 686C.104 “Owner” defined. “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)
NRS 686C.108 “Person” defined. “Person”
includes a government, governmental agency or political subdivision of a
government.
(Added to NRS by 2001, 1026)
NRS 686C.110 “Premiums” defined. “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)
NRS 686C.115 “Principal place of business” defined.
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)
NRS 686C.120 “Resident” defined. “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)
NRS 686C.123 “State” defined. “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)
NRS 686C.124 “Structured settlement annuity” defined. “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 the plaintiff or
other claimant.
(Added to NRS by 2001, 1027)
NRS 686C.125 “Supplemental contract” defined. “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)
NRS 686C.127 “Unallocated annuity contract” defined. “Unallocated
annuity contract” means an annuity contract or group annuity certificate which
is not issued to and owned by a natural person except to the extent such an
annuity contract or group annuity certificate is guaranteed to a natural person
by an insurer under such contract or certificate.
(Added to NRS by 2011, 3368)
NRS 686C.128 Document describing general purposes and current limitations of
chapter: Preparation; distribution and revision; disclaimer.
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
NRS 686C.130 Creation; membership; operation; accounts; supervision by
Commissioner.
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)
NRS 686C.140 Board of Directors.
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)
NRS 686C.150 Powers regarding impaired insurers. 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)
NRS 686C.152 Duties regarding insolvent insurers. 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)
NRS 686C.153 Provision of substitute benefits and coverage with respect to
life and health insurance policies and annuities. 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)
NRS 686C.154 Alternative policies: Adoption; approval; contents; premium;
coverage.
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)
NRS 686C.155 Ensuring of payment or credit of guaranteed minimum interest
rate. 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)
NRS 686C.156 Issuance of substitute coverage for policy or contract that uses
external reference for calculating returns or changes in value. 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)
NRS 686C.158 Payment of premiums; liability for unearned premiums. 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)
NRS 686C.160 Imposition of restraints on insurers. 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)
NRS 686C.170 Liability for guaranty provided by laws of another state or
jurisdiction. 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)
NRS 686C.175 Receipt and disposition of deposit held pursuant to law or
required by Commissioner for benefit of creditors. 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)
NRS 686C.180 Provision of assistance to Commissioner. The Association may render assistance and
advice to the Commissioner upon request by the Commissioner, 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)
NRS 686C.190 Legal standing. 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)
NRS 686C.200 Subrogation.
1. A person receiving benefits under this
chapter shall be deemed to have assigned his or her 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, the
person 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)
NRS 686C.210 Limitations on obligations.
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) Two hundred fifty 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
life:
(1) One hundred thousand dollars for
coverages other than disability insurance, long-term care 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 long-term care insurance; or
(3) Five hundred thousand dollars for
basic hospital, medical and surgical insurance or major medical insurance;
(d) With respect to each payee of a structured
settlement annuity, or beneficiary or beneficiaries of the payee if deceased,
$250,000 in present value of benefits from the annuity in the aggregate,
including any net cash for surrender or withdrawal; or
(e) With respect to each participant in a governmental
retirement plan covered by an unallocated annuity contract which is owned by a
governmental retirement plan established under section 401, 403(b) or 457 of
the Internal Revenue Code, 26 U.S.C. §§ 401, 403(b) and 457, respectively, or
the trustees of such a plan, and which is approved by the Commissioner, an
aggregate of $250,000 in present-value annuity benefits, including the value of
net cash for surrender and net cash for withdrawal, regardless of the number of
contracts.
2. In no event is the Association
obligated to cover more than:
(a) With respect to any one life or person under
paragraphs (b) to (e), inclusive, 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; 2011, 3370;
2013, 3356)
NRS 686C.220 General powers. 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 the person, 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)
NRS 686C.221 Determination of means to provide benefits; limitation on
entitlement to benefits.
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)
NRS 686C.222 Requests for information from member insurers. 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)
NRS 686C.223 Election to succeed to rights and obligations of member insurer;
transfer of obligations to another insurer.
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)
NRS 686C.225 Termination of obligations: Replacement of coverage or policy. 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)
NRS 686C.226 Termination of obligations: Failure to pay premiums. 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
NRS 686C.230 Imposition; classes.
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)
NRS 686C.240 Computation; necessity; notification.
1. The Board of Directors of the
Association 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 $300 for each member insurer
for any 1 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; 2007, 3322)
NRS 686C.250 Abatement or deferment; maximum amount; effect of insufficiency;
allocation of funds among claims.
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)
NRS 686C.260 Refund to member insurers. 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)
NRS 686C.270 Rates and dividends may reflect assessments. 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)
NRS 686C.280 Issuance, effect and use of certificate of contribution; offset
against liability for premium tax.
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)
NRS 686C.285 Protest by member insurer.
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
NRS 686C.290 Plan of 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
the Commissioner 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)
NRS 686C.300 Powers and duties of Commissioner; appeals to Commissioner;
notification of effect of chapter.
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)
NRS 686C.303 Action by Commissioner upon default of Association. 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)
NRS 686C.306 Notice of certain actions by Commissioner; reports by Commissioner
of certain information to Board of Directors.
1. The Commissioner shall notify the
commissioners of insurance of all the other states within 30 days after the
Commissioner 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 the Commissioner 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 the Commissioner 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)
NRS 686C.310 Provision of information and advice relating to financial
condition of insurers.
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 the duties and
responsibilities of the Commissioner 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)
NRS 686C.330 Impaired or insolvent insurers: Liability for unpaid assessments
of insureds; maintenance and disclosure of records of Association; status of
Association as creditor; distribution of ownership by court.
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)
NRS 686C.333 Recovery of distributions made before petition for liquidation
or rehabilitation of insurer.
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 was an affiliate that
controlled the insurer at the time the distributions were paid is liable up to
the amount of distributions the person 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 the person 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)
NRS 686C.340 Impaired or insolvent insurers: Stay of proceedings; reopening
of default judgments. 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)
NRS 686C.350 Examination of Association; annual financial report. 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)
NRS 686C.360 Association tax exempt; exception. 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)
NRS 686C.370 Immunity from liability. 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 the
representatives of the Commissioner 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)
NRS 686C.380 Actions arising under chapter: Venue; appeal bond. 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)
NRS 686C.390 Unlawful advertisement regarding existence of Association. 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)
