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The Vermont Statutes Online
Title
08
:
Banking and Insurance
Chapter
112
:
LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION
Subchapter
001
:
LIFE AND HEALTH INSURANCE COMPANIES
§
4159. Assessments
(a) For the
purpose of providing the funds necessary to carry out the powers and duties of
the Association, the Board of Directors shall assess the member insurers,
separately for each account, at such times and for such amounts as the Board
finds necessary. The Board shall collect the assessment after 30 days written
notice to the member insurers before payment is due.
(b) There shall
be three classes of assessments, as follows:
(1) Class A
assessments shall be made for the purpose of meeting administrative costs and
other general expenses not related to a particular impaired or insolvent
insurer.
(2) Class B
assessments shall be made to the extent necessary to carry out the powers and
duties of the Association under section 4158 of this title with regard to an
impaired or insolvent domestic insurer.
(3) Class C
assessments shall be made to the extent necessary to carry out the powers and
duties of the Association under section 4158 of this title with regard to an
impaired or insolvent foreign or alien insurer.
(c)(1) The
amount of any Class A assessment for each account shall be determined by the
Board. The amount of any Class B or C assessment shall be divided among the
accounts in the proportion that the premiums received by the impaired or
insolvent insurer on the policies covered by each account bears to the premiums
received by such insurer on all covered policies.
(2) Class A and
Class C assessments against member insurers for each account shall be in the
proportion that the premiums received on business in this State by each
assessed member insurer on policies covered by each account bears to such
premiums received on business in this State by all assessed member insurers.
(3) Class B
assessments for each account shall be made separately for each state in which
the impaired or insolvent domestic insurer was authorized to transact insurance
at any time, in the proportion that the premiums received on business in such
state by the impaired or insolvent insurer on policies covered by such account
bears to such premiums received in all such states by the impaired or insolvent
insurer. The assessments against member insurers shall be in the proportion
that the premiums received on business in each such state by each assessed
member insurer on policies covered by each account bears to such premiums
received on business in each such state by all assessed member insurers.
(4) Assessments
for funds to meet the requirements of the Association with respect to an
impaired or insolvent insurer shall not be made until necessary to implement
the purposes of this subchapter. Classification of assessments under
subdivision (2) of this subsection and computation of assessments under this
subdivision shall be made with a reasonable degree of accuracy, recognizing
that exact determinations may not always be possible.
(d) The
Association may abate or defer, in whole or in part, the assessment of a member
insurer if, in the opinion of the Board, payment of the assessment would
endanger the ability of the member insurer to fulfill its contractual
obligations. The total of all assessments upon a member insurer for each
account shall not in any one calendar year exceed two percent of such insurer's
premiums in this State on the policies covered by the account.
(e)(1) In the
event an assessment against a member insurer is abated or deferred, in whole or
in part, because of the limitations set forth in subsection (d) of this
section, the amount by which such 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. If the maximum assessment,
together with the other assets of the Association in any account, does not
provide in any one year in any account an amount sufficient to carry out the
responsibilities of the Association, the necessary additional funds shall be
assessed as soon thereafter as permitted by this subchapter.
(2) The Board
may provide in the plan of operation a method of allocating funds among claims,
whether relating to one or more impaired or insolvent insurers, when the
maximum assessment will be insufficient to cover anticipated claims.
(f) The Board
may, by an equitable method as established in the plan of operation, refund to
member insurers, in proportion to the contribution of each member insurer to
that account, the amount by which the assets of the account exceed the amount
the Board finds is necessary to carry out during the coming year the
obligations of the Association with regard to that account, including assets
accruing from net realized gains and income from investments. A reasonable
amount may be retained in any account to provide funds for the continuing
expenses of the Association and for future losses if refunds are impractical.
In lieu of sending a refund directly to a member insurer, the Board may, in its
discretion, pay all or any portion of the refund to the Commissioner of Taxes,
who shall apply the payment to the insurer's obligation to repay the amount of
any insurance premium taxes previously offset by the insurer pursuant to
subsection 4167(b) of this title. To effectuate this payment, the Commissioner
of Taxes is specifically authorized to disclose to the Association and to the
Commissioner of Financial Regulation the amount of insurance premium taxes
offset by the insurer.
(g) The
Association shall issue to each insurer paying an assessment under this
subchapter a certificate of contribution, in a form prescribed by the
Commissioner, for the amount so paid. All outstanding certificates shall be of
equal dignity and priority without reference to amounts or dates of issue.
(Added 1971, No. 170 (Adj. Sess.), § 2, eff. April 27, 1972; amended 1989, No.
222 (Adj. Sess.), § 2, eff. May 31, 1990; 1989, No. 225 (Adj. Sess.), § 25;
1993, No. 55, § 7, eff. June 3, 1993; 1995, No. 180 (Adj. Sess.), § 38; 2009,
No. 137 (Adj. Sess.), § 7e, eff. May 29, 2010; 2011, No. 78 (Adj. Sess.), § 2,
eff. April 2, 2012.)
