687A.060 - Obligations, rights, powers and duties of Association.
687A.060 Obligations, rights, powers and duties of Association.
1. The Association:
(a) Is obligated to the extent of the covered claims existing before the determination of insolvency and arising within 30 days after the determination of insolvency, or before the expiration date of the policy if that date is less than 30 days after the determination, or before the insured replaces the policy or on request cancels the policy if the insured does so within 30 days after the determination. The obligation of the Association to pay a covered claim is limited to the payment of:
(1) The entire amount of the claim, if the claim is for workers’ compensation pursuant to the provisions of chapters 616A to 616D, inclusive, or chapter 617 of NRS;
(2) Not more than $300,000 for each policy if the claim is for the return of unearned premiums; or
(3) The limit specified in a policy or $300,000, whichever is less, for each occurrence for any covered claim other than a covered claim specified in subparagraph (1) or (2).
(b) Shall be deemed the insurer to the extent of its obligations on the covered claims and to that extent has any rights, duties and obligations of the insolvent insurer as if the insurer had not become insolvent. The rights include, without limitation, the right to seek and obtain any recoverable salvage and to subrogate a covered claim, to the extent that the Association has paid its obligation under the claim.
(c) Shall assess member insurers amounts necessary to pay the obligations of the Association pursuant to paragraph (a) after an insolvency, the expenses of handling covered claims subsequent to an insolvency, the cost of examinations pursuant to NRS 687A.110 and other expenses authorized by this chapter. The assessment of each member insurer must be in the proportion that the net direct written premiums of the member insurer for the calendar year preceding the assessment bear to the net direct written premiums of all member insurers for the same calendar year. Each member insurer must be notified of the assessment not later than 30 days before it is due. No member insurer may be assessed in any year an amount greater than 2 percent of the net direct written premiums of that member insurer for the calendar year preceding the assessment. If the maximum assessment, together with the other assets of the Association, does not provide in any 1 year an amount sufficient to make all necessary payments, the money available may be prorated and the unpaid portion must be paid as soon as money becomes available. The Association may pay claims in any order, including the order in which the claims are received or in groups or categories. The Association may exempt or defer, in whole or in part, the assessment of any member insurer if the assessment would cause the financial statement of the member insurer 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. During the period of deferment, no dividends may be paid to shareholders or policyholders. Deferred assessments must be paid when payment will not reduce capital or surplus below required minimums. Payments must be refunded to those companies receiving larger assessments because of deferment, or, in the discretion of the company, credited against future assessments. Each member insurer must be allowed a premium tax credit for any amounts paid pursuant to the provisions of this chapter:
(1) For assessments made before January 1, 1993, at the rate of 10 percent per year for 10 successive years beginning March 1, 1996; or
(2) For assessments made on or after January 1, 1993, at the rate of 20 percent per year for 5 successive years beginning with the calendar year following the calendar year in which the assessments are paid.
(d) Shall investigate claims brought against the fund and adjust, compromise, settle and pay covered claims to the extent of the obligation of the Association and deny any other claims.
(e) Shall notify such persons as the Commissioner directs pursuant to paragraph (a) of subsection 2 of NRS 687A.080.
(f) Shall act on claims through its employees or through one or more member insurers or other persons designated as servicing facilities. Designation of a servicing facility is subject to the approval of the Commissioner, but the designation may be declined by a member insurer.
(g) Shall 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 pay the other expenses of the Association authorized by this chapter.
2. The Association may:
(a) Appear in, defend and appeal any action on a claim brought against the Association.
(b) Employ or retain persons necessary to handle claims and perform other duties of the Association.
(c) Borrow money necessary to carry out the purposes of this chapter in accordance with the plan of operation.
(d) Sue or be sued.
(e) Negotiate and become a party to contracts necessary to carry out the purposes of this chapter.
(f) Perform other acts necessary or proper to effectuate the purposes of this chapter.
(g) Perform any administrative acts requested by the Commissioner in furtherance of the purposes of this title and, if the cost of the action is not paid for by the Association or its member insurers, the Nevada Industrial Insurance Act.
(h) If, at the end of any calendar year, the Board of Directors of the Association finds that the assets of the Association exceed its liabilities as estimated by the Board of Directors for the coming year, refund to the member insurers in proportion to the contribution of each that amount by which the assets of the Association exceed the liabilities.
(i) Assess each member insurer equally not more than $100 per year for administrative expenses not related to the insolvency of any insurer.
(Added to NRS by 1971, 1944; A 1977, 435; 1993, 1397; 1995, 2057; 1999, 2522; 2003, 3308; 2005, 2131)