§ 27-6-8-7 — Powers and duties of the association

(a) The association shall do all of the following:
(1) Be obligated to pay covered claims existing before the order
of liquidation, or arising within thirty (30) days after the order of
liquidation, or before the policy expiration date if less than thirty
(30) days after the order of liquidation, or before the insured
replaces the policy or causes its cancellation, if the insured does
so within thirty (30) days of the order of liquidation. The
obligation shall be satisfied by paying to the claimant an amount
as follows:
(A) The full amount of a covered claim for benefits under
worker's compensation insurance.
(B) With respect to a claim for the return of unearned premium,
the lesser of:
(i) eighty percent (80%) of the paid but unearned premium;
or
(ii) six hundred fifty dollars ($650) multiplied by the number
of months or partial months remaining in the policy term, not
to exceed twelve (12) months.
(C) An amount not to exceed three hundred thousand dollars
($300,000) per covered claim. For purposes of this clause, all
claims of any kind that arise out of or are related to the bodily
injury to or death of one (1) person constitute a single claim,
regardless of the number of claims made or the number of
claimants.
The association is not, in any event, obligated to pay a claimant
any amount in excess of the obligation of the insolvent insurer
under the policy or coverage from which the claim arises.
In the case of a claim for wrongful death, the foregoing obligation
of the association shall, in addition to the limits set forth above,
be subject to the limitations provided by the wrongful death
statutes of the state. Such amounts which are legally payable
because of the death of a claimant shall be paid to the claimant's
estate, to the claimant's father or mother or guardian, to the
surviving spouse or children, or to the next of kin as set out in IC 34-23-1 and IC 34-23-2.
The amount for which the association shall be obligated may also
include payments in fact made to others, not members of
claimant's household, which were reasonably incurred to obtain
from such other persons ordinary and necessary services for the
production of income in lieu of those services the claimant would
have performed for the claimant had the claimant not been
injured.
In the case of claims arising from bodily injury, sickness, or
disease, including those in which death results, under IC 22-3 or
similar state or federal laws providing benefits for occupational
injury or disease, the association is obligated only to the extent
provided under IC 22-3.
A third party having a covered claim against any insured of an
insolvent member insurer may file such claim in the liquidation
proceeding under IC 27-9-3 if such insolvent member insurer is
a domestic insurer and pursuant to the applicable provisions of
law of the state of domicile if such insolvent member insurer is
not a domestic insurer. The liquidator shall immediately refer said
claim to the association to process as provided in this chapter
unless the claimant shall within thirty (30) days from the date of
filing said claim in the liquidation proceeding, file with the
commissioner as liquidator a written demand that said claim be
processed in liquidation proceedings as a claim not covered by
this chapter.
(2) Be deemed the insurer to the extent of its obligation on the
covered claims as limited by this chapter and to this extent shall
have all rights, duties, and obligations of the insolvent insurer as
if the insurer had not become insolvent, including those relating
to reinsurance contracts and treaties entered into by the insolvent
insurer. However, the association's obligation to defend any
insured of the insolvent insurer or to indemnity against the costs
of such defense terminates as soon as the claimant or claimants
have been paid all benefits that they are entitled to under this
chapter.
(3) Allocate claims paid and expenses incurred among the three
(3) accounts separately, and assess member insurers separately for
each account amounts necessary to pay the obligation of the
association under subdivision (1) subsequent to an insolvency, the
expenses of handling covered claims subsequent to an insolvency,
the cost of examination under IC 27-6-8-12 and other expenses
authorized by this chapter. The assessments of each member
insurer shall be on a uniform percentage basis in the proportion
that the net direct written premiums in this state 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. However, in addition to the pro rata
assessments already described, an assessment may be made
against each member insurer in a stated amount up to fifty dollars
($50) per year for the purpose of paying the administrative
expenses of the association. There shall be no assessment for any
account so long as assets held in such account are sufficient to
cover all estimated payments for liquidation in process under such
account. Each member insurer shall be notified of the assessment
not later than thirty (30) days before it is due. No member insurer
may be assessed in any year on any account an amount greater
than one percent (1%) of that member insurer's net direct written
premiums in this state 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 (1) 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 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. However, during the period of
deferment no dividends shall be paid to shareholders or
policyholders by a company whose assessment has been deferred.
A deferred assessment shall be paid when such payment will not
reduce capital or surplus below required minimums. Such
payments shall be refunded to those companies whose
assessments were increased as the result of such deferment, or at
the option of any such company, shall be credited to future
assessments against such company.
(4) Investigate, 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 insured were parties to
determine the extent to which such settlements, releases, and
judgments may be properly contested, and as appropriate to
contest them.
(5) Notify such persons as the commissioner directs under IC 27-6-8-9(b)(i).
(6) Handle claims through its employees or through one (1) 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.
(7) 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
chapter. Any unreimbursed obligation of the association to a
member insurer designated a servicing facility shall constitute an
admitted asset of such member insurer.
(8) Be entitled to and permitted to examine all claims, files, and
records of an insolvent insurer at such times and to such extent as
necessary or appropriate to obtain information regarding covered
claims individually and in the aggregate, and to establish such
procedures as appropriate to obtain prompt notice of all covered
claims and information pertaining thereto during the course of
liquidation.
(b) The association may do the following:
(1) Appear in, defend, and appeal any action on a covered claim,
but the association shall have no obligation to pay any amount in
excess of the provisions of IC 27-6-8-7.
(2) Employ or retain such persons as are necessary to handle
claims and perform other duties of the association.
(3) Borrow funds necessary to effect the purposes of this chapter
in accord with the plan of operation.
(4) Sue or be sued.
(5) Negotiate and become a party to any contracts as are
necessary to carry out the purpose of this chapter.
(6) Perform such other acts as are necessary or proper to
effectuate the purpose of this chapter.
(7) Refund to the then member insurers in proportion to the
contribution of each such member insurer to that account that
amount by which the assets of the account exceed the liabilities
if, at the end of the 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, provided that the association may retain as a reserve
fund from the excess of the assets over liabilities at the end of any
calendar year an amount not to exceed ten percent (10%) of such
excess assets of such account. Any such reserve fund or earnings
from its investment shall be used only for the payment of covered
claims and authorized association expenses. Upon appropriate
action by the board of directors such reserve fund shall be
refunded to the then member insurers in proportion to the total
contribution of each such member insurer to such account.
(c) The following apply with respect to an action involving the
association:
(1) Except for an action by the receiver, an action related to or
arising out of this chapter against the association must be brought
in an Indiana court.
(2) Indiana courts have exclusive jurisdiction over all actions
against the association related to or arising out of this chapter.
(3) The exclusive venue for an action by or against the association
is in the Marion County Circuit Court, Marion County, Indiana.
However, the association may waive this venue for a particular
action.
Formerly: Acts 1971, P.L.390, SEC.1; Acts 1975, P.L.280,
SEC.2. As amended by Acts 1977, P.L.281, SEC.6; P.L.163-1988,
SEC.3; P.L.3-1990, SEC.95; P.L.1-1998, SEC.150; P.L.52-2013,
SEC.5.