26.1-38.1-06. Assessments

26.1-38.1-06. Assessments

1. 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 time and for such amounts as the board finds necessary.

Assessments must be due not less than thirty days after prior written notice to the

member insurers and must accrue interest at eighteen percent per annum on and after

the due date.

2. There must be two classes of assessment, as follows:

a. Class A assessments must be authorized and called for the purpose of meeting

administrative and legal costs and other expenses. Class A assessments may be

authorized and called whether or not related to a particular impaired or insolvent

insurer.

b. Class B assessments must be authorized and called to the extent necessary to

carry out the powers and duties of the association under section 26.1-38.1-05

with regard to an impaired or insolvent insurer.

3. The amount of any class A assessment must be determined at the discretion of the

board of directors and must be authorized and called on a non-pro rata basis.

4. The amount of any class B assessment, except for assessments related to long-term

care insurance, must be allocated for assessment purposes 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 or any other standard deemed by the board in its sole discretion as

being fair and reasonable under the circumstances.

5. The amount of the class B assessment for long-term care insurance written by the

impaired or insolvent insurer must be allocated according to a methodology included in

the plan of operation and approved by the commissioner. The methodology must

provide for fifty percent of the assessment to be allocated to accident and health

member insurers and fifty percent to be allocated to life and annuity member insurers.

6. Class B assessments 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 for the

three most recent calendar years for which information is available preceding the year

in which the member insurer became insolvent or, in the case of an assessment with

respect to an impaired insurer, the three most recent calendar years for which

information is available preceding the year in which the member insurer became

impaired, bears to such premiums received on business in this state for such calendar

years by all assessed member insurers.

7. Assessments for funds to meet the requirements of the association with respect to an

impaired or insolvent insurer may not be authorized or called until necessary to

implement the purposes of this chapter. Classification of assessments under

subsection 2 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

pro rata share of an authorized assessment not yet called within one hundred eighty

days after the assessment is authorized.

8. 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. In the event 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. Once the conditions that caused a deferral are removed or rectified, the

o fulfill its contractual obligations. In the event 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. Once the conditions that caused a deferral are removed or rectified, the

member insurer shall pay all assessments that were deferred pursuant to a repayment

plan approved by the association.

9. a. Subject to subdivision b, the total of all assessments authorized by the

association with respect to a member insurer for each subaccount of the life

insurance and annuity account and for the health account may not in any one

calendar year exceed two percent of that member 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.

b. If two or more assessments are authorized in one calendar year with respect to

member insurers that become impaired or insolvent in different calendar years,

the average annual premiums for purposes of the aggregate assessment

percentage limitation referenced in subdivision a must be equal and limited to the

higher of the three-year average annual premiums for the applicable subaccount

or account as calculated pursuant to this section.

c. If the maximum assessment, together with the other assets of the association in

an account, does not provide in one year in either account an amount sufficient to

carry out the responsibilities of the association, the necessary additional funds

must be assessed as soon after as permitted under this chapter.

10. 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.

11. If the maximum assessment for any subaccount of the life and annuity account in any

one year does not provide an amount sufficient to carry out the responsibilities of the

association, then pursuant to subsection 4, the board shall assess the other

subaccounts of the life and annuity account for the necessary additional amount,

subject to the maximum stated in subsection 9.

12. 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 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.

13. It is proper for any member insurer, in determining its premium rates and policy owner

dividends as to any kind of insurance or health maintenance organization business

within the scope of this chapter, to consider the amount reasonably necessary to meet

its assessment obligations under this chapter.

14. The association shall issue to each member insurer paying an assessment under this

chapter, other than a class A assessment, a certificate of contribution, in a form

prescribed by the commissioner, for the amount of the assessment so paid. All

outstanding certificates must be of equal dignity and priority without reference to

amounts or dates of issue. A certificate of contribution may be shown by the member

insurer in its financial statement as an asset in such form and for such amount, if any,

and period of time as the commissioner may approve.

n a form

prescribed by the commissioner, for the amount of the assessment so paid. All

outstanding certificates must be of equal dignity and priority without reference to

amounts or dates of issue. A certificate of contribution may be shown by the member

insurer in its financial statement as an asset in such form and for such amount, if any,

and period of time as the commissioner may approve.

15. a. A member insurer that wishes to protest all or part of an assessment shall pay

when due the full amount of the assessment as set forth in the notice provided by

the association. The payment must be available to meet association obligations

during the pendency of the protest or any subsequent appeal. Payment must be

accompanied by a statement in writing that the payment is made under protest

and must set forth a brief statement of the grounds for the protest.

b. Within sixty days following the payment of an assessment under protest by a

member insurer, the association shall notify the member insurer in writing of its

determination 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.

c. Within thirty days after a final decision was made, the association shall notify the

protesting member insurer in writing of that final decision. Within sixty days of

receipt of notice of the final decision, the protesting member insurer may appeal

that final action to the commissioner.

d. In the alternative to rendering a final decision with respect to a protest based on a

question regarding the assessment base, the association may refer protests to

the commissioner for a final decision, with or without a recommendation from the

association.

e. If the protest or appeal on the assessment is upheld, the amount paid in error or

excess must be returned to the member insurer. Interest on a refund due a

protesting member insurer shall be paid at the rate actually earned by the

association.

16. The association may request information of member insurers in order to aid in the

exercise of its power under this section and member insurers shall comply promptly

with a request.