§4159. Assessments

Link to law: http://legislature.vermont.gov/statutes/section/08/112/04159
Published: 2015

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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.)
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