(1)The association shall:
(a)(I) Be obligated to the extent of the covered claims existing prior to a
determination of insolvency and arising within thirty days after the determination of
insolvency, or before the policy expiration date, if less than thirty days after such
determination, or before the insured replaces the policy or on request effects
cancellation, if the insured does so within thirty days after such determination, but
such obligation includes only that amount of each covered claim that is less than
fifty thousand dollars; except that:
(A)For an order of liquidation with a finding of insolvency by a court of
competent jurisdiction entered between July 1, 1988, and August 10, 2011, such
obligation includes only that amount of each covered claim that is less than
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(1) The association shall:
(a) (I) Be obligated to the extent of the covered claims existing prior to a
determination of insolvency and arising within thirty days after the determination of
insolvency, or before the policy expiration date, if less than thirty days after such
determination, or before the insured replaces the policy or on request effects
cancellation, if the insured does so within thirty days after such determination, but
such obligation includes only that amount of each covered claim that is less than
fifty thousand dollars; except that:
(A) For an order of liquidation with a finding of insolvency by a court of
competent jurisdiction entered between July 1, 1988, and August 10, 2011, such
obligation includes only that amount of each covered claim that is less than one
hundred thousand dollars;
(B) For an order of liquidation with a finding of insolvency by a court of
competent jurisdiction entered on or after August 10, 2011, such obligation includes
only that amount of each covered claim that is less than three hundred thousand
dollars; and
(C) Notwithstanding sub-subparagraph (A) or (B) of this subparagraph (I), the
association shall pay the full amount of any covered claim arising out of workers'
compensation policies.
(II) In no event is the association obligated to a policyholder or claimant in an
amount in excess of the face amount of the policy from which the claim arises.
(III) Notwithstanding any other provision of this part 5, a covered claim does
not include any claim filed with the guaranty fund after the earlier of:
(A) Twenty-four months after the date of the order of liquidation; or
(B) The final date set by the court for the filing of claims against the
liquidator or receiver of an insolvent insurer.
(b) Be deemed the insurer to the extent of its obligation on the covered
claims and to such extent shall have all rights, duties, and obligations of the
insolvent insurer as if the insurer had not become insolvent;
(c) Allocate claims paid and expenses incurred among the three accounts
separately and assess member insurers amounts separately for each account
necessary to pay: The obligations of the association under paragraph (a) of this
subsection (1) subsequent to an insolvency; the expenses of handling covered
claims subsequent to an insolvency; the cost of examinations under section 10-4-513; and other expenses authorized by this part 5. The assessments of each
member insurer shall be in the proportion that the net direct written premiums of
the member insurer for the preceding calendar year on the kinds of insurance in the
account bears to the net direct written premiums of all member insurers for the
preceding calendar year on the kinds of insurance in the account. Each member
insurer shall be notified of the assessment not later than thirty days before it is due.
No member insurer may be assessed in any year on any account an amount greater
than two percent of that member insurer's net direct written premiums for the
preceding calendar year 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 may 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; but during the period of deferment no dividends shall be paid
to shareholders or policyholders. Deferred assessments shall be paid when such
payment will not reduce capital and surplus below required minimums. Such
payment shall be refunded to those companies receiving larger assessments by
virtue of such deferment or, in the discretion of any such 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 such claims by the member insurer if they are chargeable to the
account for which the assessment is made.
(d) 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 such settlements, releases, and judgments may be properly
contested;
(e) Notify such persons as the commissioner directs under section 10-4-510
(2)(a);
(f) 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.
(g) 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 part 5.
(2) The association may:
(a) Employ or retain such persons as are necessary to handle claims and
perform other duties of the association;
(b) Borrow funds necessary to effect the purposes of this part 5 in accord
with the plan of operation;
(c) Sue or be sued, and such 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 in section 10-4-503 (5);
(d) Negotiate and become a party to such contracts as are necessary to
carry out the purpose of this part 5;
(e) Perform such other acts as are necessary or proper to effectuate the
purposes of this part 5;
(f) 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.