§ 27-8-8-6 — Assessments

(a) For the purpose of providing funds necessary
to carry out the powers and duties of the association and necessary to
pay administrative costs and expenses incurred by the commissioner in
supervising the association and discharging the commissioner's
obligations under this chapter, the board shall assess the member
insurers, separately for each account, at a time and for amounts as the
board finds necessary. Assessments are due not less than thirty (30)
days after prior written notice to the member insurers and accrue
interest at six percent (6%) per annum on and after the due date.
(b) There are two (2) classes of assessments as follows:
(1) Class A assessments are assessments that are authorized and
called by the board for the purpose of meeting administrative and
legal costs and other expenses. Class A assessments may be
authorized and called whether or not related to a particular
impaired insurer or insolvent insurer.
(2) Class B assessments are assessments that are authorized and
called by the board to the extent necessary to carry out the powers
and duties of the association under this chapter with regard to an
impaired insurer or insolvent insurer.
(c) The amount of a Class A assessment must be determined by the
board and may be authorized and called on a pro rata or non-pro rata
basis. If pro rata, the board may provide that the assessment be credited
against future Class B assessments.
(d) The amount of a Class B assessment, except for assessments
related to long term care insurance, must be allocated for assessment
purposes:
(1) between the accounts; and
(2) among the subaccounts of the life insurance and annuity
account;
under an allocation formula that may be based on the premiums or
reserves of the impaired insurer or insolvent insurer or another standard
considered by the board in the board's sole discretion as fair and
reasonable under the circumstances.
(e) The amount of a Class B assessment related to long term care
insurance must be allocated for assessment purposes according to the
following:
(1) The allocation to:
(A) accident and health insurance member insurers is fifty
percent (50%) of the assessment; and
(B) life insurance and annuity member insurers is fifty percent
(50%) of the assessment.
(2) The share of the assessment that must be allocated to the life
insurance and annuity account must be determined as follows:
STEP ONE: Determine the life insurance and annuity member
insurers' share of the following:
(i) The health account.
(ii) The life insurance and annuity account.
STEP TWO: Determine the remainder of:
(i) fifty-hundredths (0.50); minus
(ii) the life insurance and annuity member insurers' share of
the health account.
STEP THREE: Determine the remainder of:
(i) the life insurance and annuity member insurers' share of
the life insurance and annuity account; minus
(ii) the life insurance and annuity member insurers' share of
the health account.
STEP FOUR: Divide the remainder determined under STEP
TWO by the remainder determined under STEP THREE.
For purposes of this subsection, "life insurance and annuity member
insurer" means a member insurer for which the sum of the member
insurer's assessable life insurance premiums and annuity premiums is
equal to or greater than the member insurer's total assessable health
insurance premiums, including assessable health maintenance
organization premiums and excluding assessable premiums written for
disability insurance and long term care insurance. For purposes of this
subsection, "accident and health insurance member insurer" means a
member insurer that is not a life insurance and annuity member insurer.
For purposes of this subsection, assessable premiums must be
measured within Indiana.
(f) Class B assessments against member insurers for each account
and subaccount with respect to an impaired insurer or insolvent insurer
must be allocated among the assessed member insurers in the
proportion that the premiums received in Indiana by each assessed
member insurer on policies and contracts covered by the account or
subaccount during the assessment base year for the impaired insurer or
insolvent insurer bears to premiums received in Indiana by all assessed
members on policies and contracts covered by the same account or
subaccount during the same assessment base year.
(g) Assessments for funds to meet the requirements of the
association with respect to an impaired insurer or insolvent insurer
must not be authorized or called until necessary to implement the
purposes of this chapter. Classification of assessments under subsection
(b) and computation of assessments under subsections (c), (d), (e), and
(f) must be made with a reasonable degree of accuracy, recognizing
that exact determinations are not always possible. The association shall
notify each member insurer of the member insurer's anticipated share
of an assessment that has been authorized but not yet called not more
than one hundred eighty (180) days after the assessment is authorized.
(h) The association may abate or defer, in whole or in part, the
assessment of a member insurer if, in the opinion of the board, payment
of the assessment would endanger the ability of the member insurer to
fulfill its policy and contract obligations. In the event an assessment
against a member insurer is abated or deferred in whole or in part, the
amount by which the assessment is abated or deferred may be assessed
against the other member insurers in a manner consistent with the basis
for assessments set forth in this section. Once the conditions that
caused a deferral have been removed or rectified, the member insurer
shall pay assessments that were deferred under a repayment plan
approved by the association.
(i) Subject to subsection (j), the total of all assessments authorized
by the association in one (1) calendar year against a member insurer for
a given subaccount of the life insurance and annuity account or for the
health account with respect to any single assessment base year must not
exceed two percent (2%) of the member insurer's premiums received
in Indiana on the policies and contracts covered by the subaccount or
account during the applicable assessment base year.
(j) If two (2) or more assessments are authorized in one (1) calendar
year with respect to impaired insurers or insolvent insurers having
different assessment base years, the annual premium used for purposes
of determining the aggregate assessment percentage limitation
referenced in subsection (i) must be equal to the higher of the annual
premiums for the applicable subaccount or account as calculated under
this section.
(k) If the maximum assessment, together with other assets of the
association in an account, does not provide in one (1) year in the
account an amount sufficient to carry out the responsibilities of the
association, additional funds must be assessed as soon as permitted by
this chapter.
(l) The board may provide in the plan of operation a method of or
procedure for allocating funds among claims relating to one (1) or more
impaired insurers or insolvent insurers when the maximum assessment
is insufficient to cover anticipated claims.
(m) If the maximum assessment for a subaccount of the life
insurance and annuity account in one (1) year does not provide an
amount sufficient to carry out the responsibilities of the association, the
board shall, under subsection (f), access the other subaccounts of the
life insurance and annuity account for the necessary additional amount,
subject to the maximum stated in subsections (i) and (j).
(n) The board may, by an equitable method or procedure as
established in the plan of operation, refund to member insurers, in
proportion to the contribution of each member insurer to the account,
the amount by which the assets of the account exceed the amount the
board determines is necessary to carry out the obligations of the
association with regard to the account, including assets accruing from
assignment, subrogation, net realized gains, and income from
investments. A reasonable amount may be retained in an account to
provide funds for the continuing expenses of the association and for the
future discharge of the association's obligations.
(o) It is proper for a member insurer, in determining its premium
rates and policyowner dividends as to any type of insurance within the
scope of this chapter, to consider the amount reasonably necessary to
meet its assessment obligations under this chapter.
(p) The association shall issue to each member insurer paying an
assessment under this chapter, other than a Class A assessment, a
certificate of contribution, in a form prescribed by the commissioner,
for the amount of the assessment paid. All outstanding certificates are
of equal dignity and priority without reference to amounts or dates of
issue. A certificate of contribution may be shown by the member
insurer in its financial statement as an asset in the form and for the
amount and period of time as the commissioner may approve.
As added by Acts 1978, P.L.129, SEC.3. Amended by
P.L.16-1984, SEC.17; P.L.166-1986, SEC.2; P.L.130-1994, SEC.45;
P.L.116-1994, SEC.63; P.L.193-2006, SEC.18; P.L.208-2018,
SEC.19.