§ 27-34.3-9 - Assessments. - Rhode Island Statutes

SECTION 27-34.3-9

   § 27-34.3-9  Assessments. – (a) For the purpose of providing the funds necessary to carry out the powersand duties of the association, the board of directors shall assess the memberinsurers, separately for each account, at such time and for such amounts as theboard finds necessary. Assessments shall be due not less than thirty (30) daysafter prior written notice to the member insurers and shall accrue interest atnine percent (9%) per annum on and after the due date.

   (b) There shall be two (2) classes of assessments, as follows:

   (1) Class A assessments shall be authorized and called forthe purpose of meeting administrative and legal costs and other expenses. ClassA assessments may be authorized and called whether or not related to aparticular impaired or insolvent insurer.

   (2) Class B assessments shall be authorized and called to theextent necessary to carry out the powers and duties of the association under§ 27-34.3-8 with regard to an impaired or an insolvent insurer.

   (c) The amount of any Class A assessment shall be determinedby the board and may be authorized and called on a pro rata or non-pro ratabasis. If pro rata, the board may provide that it be credited against futureClass B assessments. The total of all non-pro rata assessment shall not exceedthree hundred dollars ($300) per member insurer in any one calendar year. Theamount of any Class B assessment shall be allocated for assessment purposesamong the accounts pursuant to an allocation formula that may be based on thepremiums or reserves of the impaired or insolvent insurer or any other standarddeemed by the board in its sole discretion as being fair and reasonable underthe circumstances.

   (2) Class B assessments against member insurers for eachaccount and subaccount shall be in the proportion that the premiums received onbusiness in this state by each assessed member insurer or policies or contractscovered by each account for the three (3) most recent calendar years for whichinformation is available preceding the year in which the insurer becameinsolvent, (or, in the case of an assessment with respect to an impairedinsurer, the three (3) most recent calendar years for which information isavailable preceding the year in which the insurer became impaired) bears topremiums received on business in this state for such calendar years by allassessed member insurers.

   (3) Assessments for funds to meet the requirements of theAssociation with respect to an impaired or insolvent insurer shall not beauthorized or called until necessary to implement the purposes of this chapter.Classification of assessments under subsection (b) of this section andcomputation of assessments under this subsection shall be made with areasonable degree of accuracy, recognizing that exact determinations may notalways be possible. The association shall notify each member insurer of itsanticipated pro rata share of an authorized assessment not yet called withinone hundred eighty (180) days after the assessment is authorized.

   (d) 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 ofthe assessment would endanger the ability of the member insurer to fulfill itscontractual obligations. In the event an assessment against a member insurer isabated, or deferred in whole or in part, the amount by which the assessment isabated or deferred may be assessed against the other member insurers in amanner consistent with the basis for assessments set forth in this section.Once the conditions which have caused a deferral have been removed orrectified, the member insurer shall pay all assessments that were deferredpursuant to a repayment plan approved by the association.

   (e) Subject to the provisions of subparagraph (ii) of thisparagraph, the total of all assessments authorized by the association withrespect to a member insurer for each subaccount of the life insurance andannuity account and for the health account shall not in any one calendar yearexceed three percent (3%) of that member insurer's average annual premiumsreceived in this state on the policies and contracts covered by the subaccountor account during the three (3) calendar years preceding the year in which theinsurer became an impaired or insolvent insurer.

   (ii) If two (2) or more assessments are authorized in onecalendar year with respect to insurers that become impaired or insolvent indifferent calendar years, the average annual premiums for purposes of theaggregate assessment percentage limitation referenced in subparagraph (i) ofthis paragraph shall be equal and limited to the higher of the three (3) yearaverage annual premiums for the applicable subaccount or account as calculatedpursuant to this section.

   (iii) If the maximum assessment, together with the otherassets of the association in any account, does not provide in any one year ineither account an amount sufficient to carry out the responsibilities of theassociation, the necessary additional funds shall be assessed as soon afterthis as permitted by this chapter.

   (2) The board may provide in the plan of operation a methodof allocating funds among claims, whether relating to one or more impaired orinsolvent insurers, when the maximum assessment will be insufficient to coveranticipated claims.

   (3) If the maximum assessment for a subaccount of the lifeand annuity account in any one year does not provide an amount sufficient tocarry out the responsibilities of the association, then pursuant to subdivision(c)(2) of this section, the board shall assess the other subaccounts of thelife and annuity account for the necessary additional amount, subject to themaximum stated in subdivision (1) of this subsection.

   (f) The board may, by an equitable method as established inthe plan of operation, refund to member insurers, in proportion to thecontribution of each insurer to that account, the amount by which the assets ofthe account exceed the amount the board finds is necessary to carry out duringthe coming year the obligations of the association with regard to that account,including assets accruing from assignment, subrogation, net realized gains andincome from investments. A reasonable amount may be retained in any account toprovide funds for the continuing expenses of the association and for futureclaims.

   (g) It shall be proper for any member insurer, in determiningits premium rates and policy owner dividends as to any kind of insurance withinthe scope of this chapter, to consider the amount reasonably necessary to meetits assessment obligations under this chapter.

   (h) The association shall issue to each insurer paying anassessment under this chapter, other than Class A assessment, a certificate ofcontribution, in a form prescribed by the commissioner, for the amount of theassessment so paid. All outstanding certificates shall be of equal dignity andpriority without reference to amounts or dates of issue. A certificate ofcontribution may be shown by the insurer in its financial statement as an assetin such form and for such amount, if any, and period of time as thecommissioner may approve.

   (i) A member insurer that wishes to protest all or part of anassessment shall pay when due the full amount of the assessment as set forth inthe notice provided by the association. The payment shall be available to meetassociation obligations during the pendency of the protest or any subsequentappeal. Payment shall be accompanied by a statement in writing that the paymentis made under protest and setting forth a brief statement of the grounds forthe protest.

   (2) Within sixty (60) days following the payment of anassessment under protest by a member insurer, the association shall notify themember insurer in writing of its determination with respect to the protestunless the association notifies the member insurer that additional time isrequired to resolve the issues raised by the protest.

   (3) Within thirty (30) days after a final decision has beenmade, the association shall notify the protesting member insurer in writing ofthat final decision. Within sixty (60) days of receipt of notice of the finaldecision, the protesting member insurer may appeal that final action to thecommissioner.

   (4) In the alternative to rendering a final decision withrespect to a protest based on a question regarding the assessment base, theassociation may refer the protest to the commissioner for a final decision,with or without a recommendation from the association.

   (5) If the protest or appeal on the assessment is upheld, theamount paid in error or excess shall be returned to the member company.Interest on a refund due a protesting member shall be paid at the rate actuallyearned by the association.

   (j) The association may request information of memberinsurers in order to aid in the exercise of its power under this section andmember insurers shall promptly comply with a request.