Section 9-407 - Powers and duties of Corporation.
§ 9-407. Powers and duties of Corporation.
(a) Domestic impaired insurer - Before order of liquidation or rehabilitation.- For a domestic insurer that is an impaired insurer, before an order of liquidation or rehabilitation and subject to any conditions imposed by the Corporation that do not impair the contractual obligations of the impaired insurer, if the impaired insurer and Commissioner approve, the Corporation may:
(1) guarantee or reinsure, or cause to be guaranteed, assumed, or reinsured, the impaired insurer's covered policies of residents;
(2) provide moneys, pledges, notes, guarantees, or other appropriate means to:
(i) carry out item (1) of this subsection; and
(ii) ensure payment of the contractual obligations of the impaired insurer, pending action under item (1) of this subsection; and
(3) lend money to the impaired insurer.
(b) Foreign or alien impaired insurer - Before order of liquidation, rehabilitation, or conservation.- For a foreign insurer or alien insurer that is an impaired insurer, before an order of liquidation, rehabilitation, or conservation and subject to any conditions imposed by the Corporation that do not impair the contractual obligations of the impaired insurer, if the impaired insurer and the Commissioner approve, the Corporation may, with respect to the covered policies of residents:
(1) guarantee or reinsure, or cause to be guaranteed, assumed, or reinsured, the impaired insurer's covered policies of residents;
(2) provide moneys, pledges, notes, guarantees, or other appropriate means to:
(i) carry out item (1) of this subsection; and
(ii) ensure payment of the contractual obligations of the impaired insurer to residents, pending action under item (1) of this subsection; and
(3) lend money to the impaired insurer.
(c) Domestic impaired insurer - Under order of liquidation or rehabilitation.-
(1) For a domestic insurer that is an impaired insurer under an order of liquidation or rehabilitation, if the Commissioner approves, the Corporation shall:
(i) guarantee, assume, or reinsure, or cause to be guaranteed, assumed, or reinsured, the impaired insurer's covered policies of residents;
(ii) ensure payment of the contractual obligations of the impaired insurer; and
(iii) provide moneys, pledges, notes, guarantees, or other means reasonably necessary to carry out this paragraph.
(2) If the Corporation fails to act within a reasonable period of time with respect to the domestic impaired insurer, the Commissioner shall have the powers and duties of the Corporation under this subtitle.
(d) Foreign or alien impaired insurer - Under order of liquidation, rehabilitation, or conservation.-
(1) For a foreign insurer or alien insurer that is an impaired insurer under an order of liquidation, rehabilitation, or conservation, if the Commissioner approves, the Corporation shall:
(i) guarantee, assume, or reinsure, or cause to be guaranteed, assumed, or reinsured, the impaired insurer's covered policies of residents;
(ii) ensure payment of the contractual obligations of the impaired insurer to residents; and
(iii) provide moneys, pledges, notes, guarantees, or other means reasonably necessary to carry out this paragraph.
(2) If the Corporation fails to act within a reasonable period of time with respect to the foreign or alien impaired insurer, the Commissioner shall have the powers and duties of the Corporation under this subtitle.
(e) Liens and moratoriums.-
(1) In carrying out its duties under subsections (c) and (d) of this section, the Corporation may request that policy liens, contract liens, moratoriums on payments, or other similar means be imposed.
(2) Policy liens, contract liens, moratoriums on payments, or other similar means may be imposed if the Commissioner approves the specific policy liens, contract liens, moratoriums on payments, or other similar means after finding that:
(i) the amounts that can be assessed under this subtitle are less than the amounts needed to ensure full and prompt performance of the impaired insurer's contractual obligations; or
(ii) the economic or financial conditions, as they affect member insurers, are sufficiently adverse to render the imposition of policy liens, contract liens, moratoriums on payments, or other similar means to be in the public interest.
(3) (i) Before being obligated under subsections (c) and (d) of this section, the Corporation may request that temporary moratoriums or liens on payments of cash values and policy loans be imposed.
(ii) If the Commissioner approves, the temporary moratoriums or liens requested by the Corporation under this paragraph may be imposed.
(f) Liability.- The Corporation is not liable under this section for a covered policy of a foreign insurer or alien insurer whose domiciliary jurisdiction or state of entry provides, by statute or regulation, protection for residents of this State substantially similar to that provided under this subtitle for residents of other states.
(g) Help and advice to Commissioner.- On request of the Commissioner, the Corporation may give help and advice to the Commissioner about rehabilitation, payment of claims, continuations of coverage, or the performance of other contractual obligations of an impaired insurer.
(h) Standing.-
(1) The Corporation has standing to appear before any court in the State with jurisdiction over an impaired insurer as to which the Corporation is or may become obligated under this subtitle.
(2) The standing extends to all matters germane to the powers and duties of the Corporation, including proposals for reinsuring or guaranteeing the covered policies of the impaired insurer and the determination of the covered policies and contractual obligations.
(i) Assignment of rights.-
(1) A person receiving benefits under this subtitle, whether the benefits are payments of contractual obligations or continuation of coverage, is deemed to have assigned all rights under the covered policy to the Corporation to the extent of the benefits received because of this subtitle.
(2) The Corporation may require a payee, policy or contract owner, beneficiary, insured, or annuitant to assign to the Corporation all rights to the extent of benefits received under the covered policy as a condition precedent to the receipt of any rights or benefits under this subtitle.
(3) The Corporation is subrogated to the rights assigned under this subsection against the assets of the impaired insurer.
(4) The subrogation rights of the Corporation under this subsection have the same priority against the assets of the impaired insurer as those of the person entitled to receive benefits under this subtitle.
(j) Contractual obligations of impaired or insolvent insurer.-
(1) Subject to paragraphs (2) and (3) of this subsection and unless the contractual obligations of the impaired insurer or insolvent insurer are reduced under subsection (e) of this section, the contractual obligations of the impaired insurer or insolvent insurer for which the Corporation is or may become liable shall be as great as, but no greater than, the contractual obligations that the impaired insurer or insolvent insurer would have had in the absence of the impairment or insolvency.
(2) The Corporation is not liable for health care received after the date of the impairment or insolvency unless the health care was in progress on the date of the impairment or insolvency or unless other health care coverage is not available from another insurer or nonprofit health service plan.
(3) Benefits for which the Corporation may become liable may not exceed the lesser of:
(i) the contractual obligations for which the insurer is or would have been liable if it were not an impaired insurer or insolvent insurer; or
(ii) with respect to any one life, regardless of the number of policies or contracts:
1. $300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance;
2. $300,000 in health insurance benefits, including net cash surrender and net cash withdrawal values; and
3. $250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values.
[An. Code 1957, art. 48A, § 527; 1996, ch. 11; 2010, ch. 414.]