SB 493 — Relating to guaranty associations

(F) (E) An organization which has a certificate or license limited to the issuance of charitable gift annuities under §33-13B-1 et seq.

or (G) (F) Any entity similar to any of the above.

(18) “Premiums” means amounts or considerations (by whatever name called) received on covered policies or contracts less premiums, considerations, and deposits,deposits returned thereon, and less dividends and experience credits thereon.

“Premiums” does not include any amounts or considerations received for any policies or contracts or for the portions of any policies or contracts for which coverage is not provided under §33-26A-3(b) of this code, except that assessable premium shall not be reduced on account of §33-26A-3(b)(2)(C) of this code relating to interest limitations and §33-26A-3(c)(2) of this code relating to limitations with respect to any one individual, any one participant, and any one policy or contract owner.

and however (vii) In the case of a plan sponsor, if more than 50 percent of the participants in the benefit plan are employed in a single state, that state shall be deemed to be the principal place of business of the plan sponsor.

(B) The principal place of business of a plan sponsor of a benefit plan described in paragraph (C), subdivision (16) of this section §33-26A-5(17)(C) of this code shall be deemed to be the principal place of business of the association, committee, joint board of trustees, or other similar group of representatives of the parties who establish or maintain the benefit plan that, in lieu of a specific or clear designation of a principal place of business, shall be deemed to be the principal place of business of the employer or employee organization that has the largest investment in the benefit plan in question.

(23) “Health insurance” means accident and sickness insurance as defined in subsection (b), section ten, article one of this chapter and benefits provided pursuant to articles twenty-four and twenty-five of this chapter (24) (23) “Supplemental contract” means any a written agreement entered into for the distribution of proceeds under a life, health, or annuity policy or contract.contract proceeds.

(25) (24) “Unallocated annuity contract” means any annuity contract or group annuity certificate which is not issued to and owned by an individual, except to the extent of any annuity benefits guaranteed to an individual by an insurer under such contract or certificate.

(2) The health insurance account.

(a) The board of directors of the association shall consist of not less than five seven nor more than nine 11 member insurers serving terms as established in the plan of operation.

(A) With respect to life and health insurance policies and annuities policies and contracts, assure payment of benefits for premiums identical to the premiums and benefits, except for terms of conversion and renewability, that would have been payable under the policies or contracts of the insolvent insurer, for claims incurred:

(B) Make diligent efforts to provide all known insureds, enrollees, or annuitants, or group policyholders policy or contract owners with respect to group policies and contracts 30-days’ notice of the termination (pursuant to §33-26A-8(b)(2)(A) of this code) of the benefits provided;provided pursuant to paragraph (A) of this subdivision;

and (C) With respect to nongroup life and health insurance policies and annuities policies and contracts covered by the association, make available to each known insured, enrollee, or annuitant, or owner if other than the insured or annuitant, and with respect to an individual formerly insured or formerly an insured, enrollee, or annuitant under a group policy or contract who is not eligible for replacement group coverage, make available substitute coverage on an individual basis in accordance with the provisions of §33-26A-8(b)(2)(D) of this code, if the insureds, enrollees, or annuitants had a right under law or the terminated policy, contract, or annuity to convert coverage to individual coverage or to continue an individual policy, contract, or annuity in force until a specified age or for a specified time, during which the insurer or health maintenance organization had no right unilaterally to make changes in any provision of the policy, contract, or annuity or had a right only to make changes in premium by class;

(E) (i) Alternative policies or contracts adopted by the association shall be subject to the approval of the domiciliary commissioner.

and the receivership court The association may adopt alternative policies or contracts of various types for future issuance without regard to any particular impairment or insolvency.

(F) If the association elects to reissue terminated coverage at a premium rate different from that charged under the terminated policy or contract, the premium shall be actuarially justified and set by the association in accordance with the amount of insurance or coverage provided and the age and class of risk, subject to prior approval of the domiciliary commissioner and the receivership court commissioner;

(G) The association’s obligations with respect to coverage under any policy or contract of the impaired or insolvent insurer or under any reissued or alternative policy or contract shall cease on the date that the coverage or policy or contract is replaced by another similar policy or contract by the policy or contract owner, policyholder the insured, the enrollee, or the association;

(H) When proceeding under subdivision (2) of this subsection this subdivision with respect to any policy or contract carrying guaranteed minimum interest rates, the association shall assure the payment or crediting of a rate of interest consistent with §33-26A-3(b)(2)(C) of this code.

(g) A deposit in this state, held pursuant to law or required by the commissioner for the benefit of creditors, including policy or contract owners, not turned over to the domiciliary liquidator upon the entry of a final order of liquidation or order approving a rehabilitation plan of an a member insurer domiciled in this state or in a reciprocal state, pursuant to §33-10-1 et seq.

standing Standing shall extend to all matters germane to the powers and duties of the association, including, but not limited to, proposals for reinsuring, reissuing, modifying, or guaranteeing the policies or contracts of the impaired or insolvent insurer and the determination of the policies or contracts and contractual obligations.

The association shall also have the right to appear or intervene before a court or agency in another state with jurisdiction over an impaired or insolvent insurer for which the association is or may become obligated or with jurisdiction over any person or property against whom the association may have rights through subrogation of the insurer’s policyholders, payees, or beneficiaries or otherwise.

(6) Exercise, for the purposes of this article and to the extent approved by the commissioner, the powers of a domestic life insurer, or health insurer, or health maintenance organization, but in no case may the association issue insurance policies or annuity contracts other than those issued to perform its obligations under this article;

and (9) Unless prohibited by law, in accordance with the terms and conditions of the policy or contract, file for actuarially justified rate or premium increases for any policy or contract for which it provides coverage under this article;

and (9) (10) Take other necessary or appropriate action to discharge its duties and obligations under this article or to exercise its powers under this article.

(r) In carrying out its duties in connection with guaranteeing, assuming, reissuing, or reinsuring policies or contracts under §33-26A-8(a) or §33-26A-8(b) of this code, the association may subject to approval of the receivership court 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 in accordance with the following provisions:

(2)A Thenonpro amountrata ofassessment any Class B assessment, except for assessments related to long-term care insurance, shall benot allocatedexceed for$300 assessmentper purposesmember between the accounts and among the subaccounts of the life insurance and annuity account, pursuant to an allocation formula which may be based on the premiums or reserves of the impaired or insolvent insurer orin any otherone standardcalendar determinedyear. by the board in its sole discretion as being fair and reasonable under the circumstances.

(3) The amount of theany Class B assessment shall be allocated for long-termassessment carepurposes insuranceamong writtenthe byaccounts pursuant to an allocation formula which may be based on the premiums or reserves of the impaired or insolvent insurer or any other standard deemed by the board in its sole discretion as being fair and reasonable under the circumstances (2) The amount of any Class B assessment, except for assessments related to long-term care insurance, shall be allocated accordingfor toassessment apurposes methodologybetween includedthe inaccounts and among the plansubaccounts of operationthe life insurance and approvedannuity account, pursuant to an allocation formula which may be based on the premiums or reserves of the impaired or insolvent insurer or any other standard determined by the commissioner.board in its sole discretion as being fair and reasonable under the circumstances.

(3) The amount of the Class B assessment for long-term care insurance written by the impaired or insolvent insurer shall be allocated according to a methodology included in the plan of operation and approved by the commissioner.  The methodology shall provide for 50 percent of the assessment to be allocated to accident and health member insurers and 50 percent to be allocated to life and annuity member insurers.

(2) (4) Class B assessments against member insurers for each account and subaccount shall 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 for the three most recent calendar years for which information is available preceding the year in which the member insurer became impaired or insolvent, as the case may be, bears to such premiums received on business in this state for such calendar years by all assessed member insurers.

(3) (5) Assessments for funds to meet the requirements of the association with respect to an impaired or insolvent insurer shall not be authorized or called until necessary to implement the purposes of this article.

In the event If an assessment against a member insurer is abated or deferred in whole or in part, 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.

(e) (1) (A) Subject to the provisions of §33-26A-9(e)(1)(B) of this code, the total of all assessments upon authorized by the association with respect to a member insurer for each subaccount of the life and annuity account and for the health account shall not in any one calendar year exceed two percent of such insurer’s average annual premiums received in this state on the policies and contracts covered by the subaccount or account during the three calendar years preceding the year in which the member insurer became an impaired or insolvent insurer.

company Interest on a refund due a protesting member insurer shall be paid at the rate actually earned by the association.

(b) The commissioner may suspend or revoke, after notice and hearing, the certificate of authority to transact insurance business in this state of any member insurer which fails to pay an assessment when due or fails to comply with the plan of operation.

(c) Any A final action of the board of directors or the association may be appealed to the commissioner by any member insurer if such appeal is taken within 60 days of its receipt of notice of the final action being appealed.

(1) To notify the commissioners of all the other states, territories of the United States, and the District of Columbia within 30 days following the action taken or the date the action occurs, when he the commissioner takes any of the following actions against a member insurer:

or (C) Makes any formal order that the member insurer such company 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 policyholders policy owners, contract owners, certificate holders, or creditors.creditors:

(2)Provided, ToThat reportsuch tonotice theshall boardbe ofmailed directorsto whenall thecommissioners commissionerwithin has30 takendays anyfollowing of the actionsaction settaken forth in §33-26A-12(a)(1) of this code or hasthe receiveddate aon reportwhich fromthe any other commissioner indicating that any such action hasoccurs. been taken in another state.

The(2) To report to the board of directors shallwhen containhe allor significantshe detailsthe commissioner has taken any of the actionactions takenset orforth thein report§33-26A-12(a)(1) of this code or has received a report from any other commissioner indicating that any such action has been taken in another commissioner.state.

(3)Such ToThe report to the board of directors whenshall thecontain commissionerall hassignificant reasonabledetails causeof tothe believeaction fromtaken any examination, whether completed or in process, of any member insurer that the insurerreport mayreceived befrom ananother impairedcommissioner. or insolvent insurer.

(4)(3) To furnishreport to the board of directors thewhen Nationalhe Associationor ofshe Insurancethe Commissionerscommissioner (NAIC)has Insurancereasonable Regulatorycause Informationto Systembelieve (IRIS)from ratiosany andexamination, listingswhether ofcompleted companiesor not included in theprocess, ratiosof developedany bymember thecompany NAIC,insurer andthat the boardcompany insurer may usebe thean informationimpaired containedor thereininsolvent ininsurer. carrying out its duties and responsibilities under this section.

(4) To furnish to the board of directors the national association National Association of Insurance Commissioners (NAIC) insurance regulatory information system Insurance Regulatory Information System (IRIS) ratios and listings of companies not included in the ratios developed by the national association of insurance commissioners NAIC, and the board may use the information contained therein in carrying out its duties and responsibilities under this section.

(b) The commissioner may seek the advice and recommendations of the board of directors concerning any matter affecting his or her duties and responsibilities regarding the financial condition of member insurers and companies insurers or health maintenance organizations seeking admission to transact insurance business in this state.

(c) The board of directors 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 company insurer or health maintenance organization seeking to do an insurance business in this state.

(e) The board of directors may, upon majority vote, makerequest recommendationsthat to the commissioner fororder thean detectionexamination andof preventionany ofmember insurer insolvencies.which the board in good faith believes may be an impaired or insolvent insurer.

Within 30 days of the receipt of a request, the commissioner shall begin an examination.

The examination may be conducted as a national association of Insurance Commissioner’s examination or may be conducted by persons that the commissioner designates.

The cost of such examination shall be paid by the association, and the examination report shall be treated as are other examination reports.

In no event shall the examination report be released to the board of directors prior to its release to the public, but this shall not preclude the commissioner from complying with §33-26A-12(a) of this code.

The commissioner shall notify the board of directors when the examination is completed.

The request for an examination shall be kept on file by the commissioner, but it shall not be open to public inspection prior to the release of the examination report to the public.

(f) The board of directors may, upon majority vote, make recommendations to the commissioner for the detection and prevention of insurer insolvencies.

(g) The board of directors shall, at the conclusion of any insurer insolvency in which the association was obligated to pay covered claims, prepare a report to the commissioner containing such information as it may have in its possession bearing on the history and causes of such insolvency.

The board shall cooperate with the boards of directors of guaranty associations in other states in preparing a report on the history and causes of insolvency of a particular insurer, and may adopt by reference any report prepared by such other associations.

(c) For the purpose of carrying out its obligations under this article, the association shall be deemed to be a creditor of the impaired or insolent insolvent insurer to the extent of assets attributable to covered policies reduced by any amounts to which the association is entitled as assignee or subrogee pursuant to subsection (m), section eight of this article §33-26A-8(k) of this code.

Assets attributable to covered policies or contracts, as used in this subsection, are that proportion of the assets which the reserves that should have been established for the such policies or contracts bear to the reserves that should have been established for all policies of insurance or health benefit plans written by the impaired or insolvent insurer.

In making such a determination, consideration shall be given to the welfare of the policyholders policy owners, contract owners, certificate holders, and enrollees of the continuing or successor member insurer.

 (f)(1)(e)(f)(1) If an order for liquidation or rehabilitation of an a member insurer domiciled in this state has been entered, the receiver appointed under such order shall have a right to recover on behalf of the member insurer, from any affiliate that controlled it, the amount of distributions, other than stock dividends paid by the member insurer on its capital stock, made at any time during the five years preceding the petition for liquidation or rehabilitation subject to the limitations of this subsection.

(2) Distribution shall not No such distribution shall be recoverable if the member insurer shows that when paid the distribution was lawful and reasonable, and that the member insurer did not know and could not reasonably have known that the distribution might adversely affect the ability of the member insurer to fulfill its contractual obligations.

(3) Any person who, as an affiliate, controlled the member insurer at the time the distributions were paid shall be liable up to the amount of distributions he or she received.

Any person who, as an affiliate, controlled the member insurer at the time the distributions were declared, shall be liable up to the amount of distributions he or she which would have been received if they had been paid immediately.

(4) The maximum amount recoverable under this subsection shall be the amount required 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.

(a) A person, including any a member insurer, agent, or affiliate of an a member insurer, shall not make, publish, disseminate, circulate, or place before the public, or cause directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in any newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio station or television station, or in any other way, any advertisement, announcement, or statement, written or oral, which uses the existence of the insurance guaranty association of this state for the purpose of sales, solicitation, or inducement to purchase any form of insurance or other coverage covered by the West Virginia life and health insurance guaranty association act Life and Health Insurance Guaranty Association Act:

(b) Within 180 days of the effective date of this section article, the association shall prepare a summary document describing the general purposes and current limitations of the act and complying with §33-26A-19(c) of this code.

Sixty days after receiving such approval, no member insurer may deliver a policy or contract described in §33-26A-3(b)(1) of this code to a policy owner, or contract owner, certificate holder, or enrollee unless the summary document is delivered to the policy owner, or contract owner, certificate holder, or enrollee prior to or at the time of delivery of the policy or contract except if §33-26A-19(d) of this code applies.

The document should also be available upon request by a policyholder policy owner, contract owner, certificate holder, or enrollee.

The distribution, delivery, or contents or interpretation of this document shall not mean guarantee that either the policy or the contract of the holder thereof would be or the policy owner, contract owner, certificate holder, or enrollee is covered in the event of the impairment or insolvency of a member insurer.

The description document shall be revised by the association as amendments to the act article may require.

Failure to receive this document does not give the policyholder policy owner, contract holder owner, certificate holder, enrollee, or insured any greater rights than those stated in this article.

The commissioner shall promulgate a rule propose rules for legislative approval in accordance with the provisions of §29A-3-1 et seq.

(2) Prominently warn the policy owner, or contract owner, certificate holder, or enrollee that the association may not cover the policy or contract or, if coverage is available, it will be subject to substantial limitations and exclusions and conditioned on continued residence in the state;

(4) (5) Emphasize that the policy owner, or contract owner, certificate holder, or enrollee should not rely on coverage under the association when selecting an insurer or health maintenance organization;

and (5) (7) Provide other information as directed by the commissioner.

(d) An insurer or agent may not deliver a policy or contract described in §33-26A-3(b)(1) of this code and excluded under §33-26A-3(b)(2)(A) of this code from coverage under this article unless the insurer or agent, prior to or at the time of delivery, gives the policy owner, or contract owner, certificate holder, or enrollee a separate written notice which clearly and conspicuously discloses that the policy or contract is not covered by the association.

The commissioner shall by rule specify propose rules for legislative approval in accordance with the provisions of §29A-3-1 et seq.

of this code specifying the form and content of the notice.notice, which rules shall be promulgated on or before August 2, 1993.

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The purpose of this bill is to ensure the West Virginia Life and Health Insurance Guaranty Association assesses member insurers in a fair and reasonable manner and has sufficient assessment capacity for all insolvencies, and to update article 26A of the Code of West Virginia to maintain consistency with the National Association of Insurance Commissioners Life and Health Insurance Guaranty Association Model Act.

Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.

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