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Alabama Code (Last Updated: November 28, 2014) |
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Title27 INSURANCE. |
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Chapter42. INSURANCE GUARANTY ASSOCIATION. |
§27-42-8. Powers and duties.
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(a) The association shall:
(1) Be obligated to the extent of the covered claims existing prior to the determination of insolvency and arising within 30 days after the determination of insolvency, or before the policy expiration date if less than 30 days after the determination, on or before the insured replaces the policy or causes its cancellation, if he or she does so within 30 days of the determination, but the association's obligation shall include only that amount of each covered claim which is in excess of one hundred dollars ($100) and is less than one hundred fifty thousand dollars ($150,000), except that the association shall pay the full amount of any covered employee benefit claim arising under Section A of workers' compensation policy. In no event shall the association be obligated to a policyholder or claimant in an amount in excess of the obligation of the insolvent insurer under the policy from which the claim arises. Notwithstanding any other provisions of this chapter, a covered claim shall not include any claim filed with the guaranty fund after the final date set by the court for the filing of claims against the liquidator or receiver of an insolvent insurer.
(2) Be deemed the insurer only to the extent of its obligation on the covered claims and to such extent, subject to the limitations provided in this chapter, shall have all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent including, but not limited to, the right to pursue subrogation recoveries and retain salvage and subrogation recoveries on paid covered claims. The association shall not be deemed the insolvent insurer for any purpose relating to the issue of whether the association is amendable to the personal jurisdiction of the courts of any jurisdiction.
(3) Allocate claims paid and expenses incurred among the three accounts separately, and assess member insurers separately for each account amounts necessary to pay the obligations of the association under subdivision (1) of this subsection subsequent to an insolvency, the expenses of handling covered claims subsequent to an insolvency, the cost of examinations under Section 27-42-13 and other expenses authorized by this chapter. The assessments of each member insurer shall be in the proportion that the net direct written premiums of the member insurer for the calendar year preceding the assessment on the kinds of insurance in the account bears to the net direct written premiums of all member insurers for the calendar year preceding the assessment on the kinds of insurance in the account. Each member insurer shall be notified of the assessment not later than 30 days before it is due. No member insurer may be assessed in any one year on any account an amount greater than one percent of that member insurer's net direct written premiums for the calendar year preceding the assessment on the kinds of insurance in the account. 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 make all necessary payments from that account, the funds available shall be prorated and the unpaid portion shall be paid as soon thereafter as funds become available. The association shall pay claims in any order which it may deem reasonable, including the payment of claims as they are received from the claimants or in groups or categories of claims. The association may exempt or defer, in whole or in part, the assessment of any member insurer, if the assessment would cause the member insurer's financial statement to reflect amounts of capital or surplus less than the minimum amounts required for a certificate of authority by any jurisdiction in which the member insurer is authorized to transact insurance; provided, however, that during the period of deferment, no dividends shall be paid to shareholders or policyholders. Deferred assessments shall be paid when payment will not reduce capital or surplus below required minimums. Payments shall be refunded to those companies receiving larger assessments by virtue of a deferment or, at the election of any company, credited against future assessments. Each member insurer may set off against any assessment, authorized payments made on covered claims and expenses incurred in the payment of claims by the member insurer if they are chargeable to the account for which the assessment is made.
(4) Investigate claims brought against the association and adjust, compromise, settle, and pay covered claims to the extent of the association's obligation and deny all other claims and may review settlements, releases, and judgments to which the insolvent insurer or its insureds were parties to determine the extent to which the settlements, releases, and judgments may be properly contested.
(5) Notify such persons as the commissioner directs under subdivision (1) of subsection (b) of Section 27-42-10.
(6) Handle claims through its employees or through one or more insurers or other persons designated as servicing facilities. Designation of a servicing facility is subject to the approval of the commissioner, but such designation may be declined by a member insurer.
(7) Reimburse each servicing facility for obligations of the association paid by the facility and for expenses incurred by the facility while handling claims on behalf of the association and shall pay the other expenses of the association authorized by this chapter.
(b) The association may:
(1) Employ or retain those persons as are necessary to handle claims and perform other duties of the association.
(2) Borrow funds necessary to effect the purposes of this chapter in accord with the plan of operation.
(3) Sue or be sued, and the power to sue includes the power and right to intervene as a party before any court in this state that has jurisdiction over an insolvent insurer as defined by this chapter.
(4) Negotiate and become a party to any contracts as are necessary to carry out the purpose of this chapter.
(5) Perform other acts as are necessary or proper to effectuate the purpose of this chapter.
(6) Refund to the member insurers, in proportion to the contribution of each member insurer to that account, that amount by which the assets of the account exceed the liabilities if, at the end of any calendar year, the board of directors finds that the assets of the association in any account exceed the liabilities of that account as estimated by the board of directors for the coming year.
(c) Suit against the association:
Except for actions by member insurers aggrieved by final actions or decisions of the association pursuant to subdivision (7) of subsection (c) of Section 27-42-9, all actions against the association relating to or arising out of Act 2009-716 shall be brought in the Alabama state courts. Such courts shall have exclusive jurisdiction over all actions relating to or arising out of Act 2009-716 against the association.