1. The association shall:
a. Be obligated to pay covered claims existing prior to the final order of liquidation and
arising within thirty days after the final order of liquidation, or before the policy expiration
date if less than thirty days after the final order of liquidation, or before the insured replaces
the policy or causes its cancellation, if the insured does so within thirty days of the final
order of liquidation. Such obligation shall be satisfied by paying to the claimant an amount
as follows:
(1)The full amount of a covered claim for benefits under a workers’ compensation
insurance coverage.
(2)An amount in excess of one hundred dollars but not exceeding ten thousand dollars
per policy for a covered claim for the return of unearned premium.
(3)An amount not exceeding the l
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1. The association shall:
a. Be obligated to pay covered claims existing prior to the final order of liquidation and
arising within thirty days after the final order of liquidation, or before the policy expiration
date if less than thirty days after the final order of liquidation, or before the insured replaces
the policy or causes its cancellation, if the insured does so within thirty days of the final
order of liquidation. Such obligation shall be satisfied by paying to the claimant an amount
as follows:
(1) The full amount of a covered claim for benefits under a workers’ compensation
insurance coverage.
(2) An amount in excess of one hundred dollars but not exceeding ten thousand dollars
per policy for a covered claim for the return of unearned premium.
(3) An amount not exceeding the lesser of the policy limits or five hundred thousand
dollars per claim for all covered claims for all damages arising out of any one or series of
accidents, occurrences, or incidents, regardless of the number of persons making claims or
the number of applicable policies.
b. Be obligated to pay covered claims subject to a limitation as established by the rights,
duties, and obligations under the policy of the insolvent insurer. However, the association is
§515B.5, INSURANCE GUARANTY ASSOCIATION 4
not obligated to pay a claimant an amount in excess of the obligation under the policy of the
insolvent insurer, regardless of whether such claim is based on contract or tort.
c. (1) Assess member insurers amounts necessary to pay the obligations of the
association under paragraph “a” of this subsection subsequent to an insolvency, the expenses
of handling covered claims subsequent to an insolvency, the cost of examinations under
section 515B.10, and other expenses authorized by this chapter. The assessment of each
member insurer shall be in the proportion that the net direct written premiums of the
member insurer for the preceding calendar year bear to the net direct written premiums
of all member insurers for the preceding calendar year. 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 an amount greater than two percent of that member insurer’s
net direct written premiums for the preceding calendar year. If the maximum assessment,
together with the other assets of the association, does not provide in any one year an
amount sufficient to make all necessary payments, the funds available shall be prorated
and the unpaid portion shall be paid as soon as funds become available. The association
may exempt or 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. Each
member insurer serving as a servicing facility pursuant to this section 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. In addition, the association shall have
the authority to levy an administrative assessment of not more than fifty dollars per year
per member insurer on a non pro rata basis, which assessment shall be credited against any
future insolvency assessment. Such assessment shall be used to pay authorized expenses
not directly attributable to any particular insolvency or insolvent insurer. All overdue and
unpaid assessments shall draw interest at the rate of seven percent per annum.
(2) The association shall also have the right to pursue and retain for its own account
salvage and subrogation recoverable on paid covered claim obligations. An obligation of the
association to defend an insured shall cease upon the association’s payment or tender to an
excess insurer of an amount equal to the lesser of the association’s covered claim obligation
or the applicable policy limits.
d. Investigate claims brought against the association and adjust, compromise, settle,
and pay covered claims to the extent of the association’s obligations on covered claims and
deny all other claims. The association may review settlements, releases, and judgments to
which the insolvent insurer or its insureds were parties to determine the extent to which
settlements, releases, and judgments may properly be contested, and, to that end, any
uncontested or default judgment against the insolvent insurer or its insured shall not be
binding on the association. The association shall have the right to appoint or substitute legal
counsel retained to defend insureds on covered claims.
e. Notify such persons as the commissioner directs under section 515B.7, subsection 2,
paragraph “a”.
f. Process 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 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 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 funds necessary to effect the purposes of this chapter in accord with the plan
of operation.
d. Sue or be sued.
5 INSURANCE GUARANTY ASSOCIATION, §515B.6
e. Negotiate and become a party to contracts necessary to carry out the purpose of this
chapter.
f. Perform such other acts necessary or proper to effectuate the purposes of this chapter.
g. The board of directors, in its discretion, may from time to time refund excess amounts
to member insurers that are not needed for current or projected liabilities of a particular
insolvency. The amount of each refund is equal to the net direct written premiums of the
member insurer for the preceding calendar year divided by the net written premiums of
all member insurers for the preceding calendar year, multiplied by the total amount to be
refunded to all members. Any assessments or refunds of any member insurer in amounts
not to exceed twenty-five dollars may, at the discretion of the board of directors, be waived.
h. Request that all future payments of workers’ compensation weekly benefits, medical
expenses, or other payments under chapter 10A, subchapter III, chapter 85, 85A, 85B, or 87
becommutedtoapresentlumpsumanduponthepaymentofwhich, eithertotheclaimantor
to a licensed insurer for purchase of an annuity or other periodic payment plan for the benefit
of the claimant, the employer and the association shall be discharged from all further liability
for the workers’ compensation claim. Notwithstanding the provisions of section 85.45, any
future payment of medical expenses, weekly compensation benefits, or other payment by
the association under this chapter pursuant to chapter 10A, subchapter III, chapter 85, 85A,
85B, or 87, is deemed an undue expense, hardship, or inconvenience upon the employer for
purposesofafullcommutationpursuanttosection85.45,subsection1,paragraph“b”,andthe
workers’ compensation commissioner shall fix the lump sum of the probable future medical
expenses and weekly compensation benefits capitalized at their present value upon the basis
of interest at the rate provided in section 535.3 for court judgments and decrees.