N.H. Rev. Stat. § 404-D:8

Current through Chapter 381 of the 2024 Legislative Session

Section 404-D:8 - Powers and Duties of the Association

In addition to the powers and duties enumerated in other sections of this chapter:

I.If a domestic insurer is an impaired insurer, the association may, prior to an order of liquidation or rehabilitation, and subject to any fair and equitable conditions imposed by the association and approved by the impaired insurer and the commissioner:

(a) Guarantee or reinsure, or cause to be guaranteed, assumed, or reinsured, all the covered policies of the impaired insurer; provided, however, if the commissioner finds that certain contractual obligations of the covered policies are not fair and equitable, then the association may, subject to the approval of the commissioner, only guarantee, assume or reinsure such contractual obligations of the covered policies on conditions which are fair and equitable;

(b) Provide such monies, pledges, notes, guarantees, or other means as are proper to effectuate subparagraph (a), and assure payment of the appropriate contractual obligations of the impaired insurer pending action under subparagraph (a);

(c) Loan money to the impaired insurer.

II.If a foreign or alien insurer is an impaired insurer, the association may prior to an order of liquidation, rehabilitation or conservation, with respect to the covered policies of residents and subject to any fair and equitable conditions imposed by the association and approved by the impaired insurer and the commissioner:

(a) Guarantee or reinsure, or cause to be guaranteed, assumed, or reinsured, the impaired insurer's covered policies of residents; provided, however, if the commissioner finds that certain contractual obligations of the covered policies are not fair and equitable, then the association may, subject to the approval of the commissioner, only guarantee, assume or reinsure such contractual obligations of the covered policies on conditions which are fair and equitable;

(b) Provide such monies, pledges, notes, guarantees or other means as are proper to effectuate subparagraph (a), and assure payment of the impaired insurer's appropriate contractual obligations to residents pending action under subparagraph (a);

(c) Loan money to the impaired insurer.

III.If a domestic insurer is an impaired insurer under an order of liquidation or rehabilitation, the association shall, subject to the approval of the commissioner:

(a) Guarantee, assume, or reinsure, or cause to be guaranteed, assumed or reinsured the covered policies of the impaired insurer; provided, however, if the commissioner finds that certain contractual obligations of the covered policies are not fair and equitable, then the association may, subject to the approval of the commissioner, only guarantee, assume or reinsure such contractual obligations of the covered policies on conditions which are fair and equitable;

(b) Assure payment of the appropriate contractual obligations of the impaired insurer; and

(c) Provide such monies, pledges, notes, guarantees, or other means as are reasonably necessary to discharge such duties. If the association fails to act within a reasonable period of time, the commissioner shall have the powers and duties of the association under this chapter with respect to such domestic impaired insurer.

IV.If a foreign or alien insurer is an impaired insurer under an order of liquidation, rehabilitation, or conservation, the association shall, subject to the approval of the commissioner:

(a) Guarantee, assume, or reinsure or cause to be guaranteed, assumed, or reinsured the covered policies of residents; provided, however, if the commissioner finds that certain contractual obligations of the covered policies are not fair and equitable, then the association may, subject to the approval of the commissioner, only guarantee, assume or reinsure contractual obligations of the covered policies on conditions which are fair and equitable;

(b) Assure payment of the appropriate contractual obligations of the impaired insurer to residents; and

(a) In carrying out its duties under paragraphs III and IV, the association may request that there be imposed policy liens, contract liens, moratoriums on payments, or other similar means and such liens, moratoriums, or similar means may be imposed if the commissioner:

(1) Finds that the amounts which can be assessed under this chapter are less than the amounts needed to assure full and prompt performance of the impaired insurer's contractual obligations, or that the economic or financial conditions as they affect member insurers are sufficiently adverse to render the imposition of policy or contract liens, moratoriums or similar means to be in the public interest, or that the imposition of policy or contract liens, moratoriums or similar means is fair and equitable, and

(2) Approves the specific policy liens, contract liens, moratoriums, or similar means to be used.

(b) Before being obligated under paragraphs III and IV the association may request that there be imposed temporary moratoriums or liens on payments of cash values and policy loans and such temporary moratoriums and liens may be imposed if they are approved by the commissioner.

VI.The association shall have no liability under this paragraph for any covered policy of a foreign or alien insurer whose domiciliary jurisdiction or state of entry provides by statute or regulation for residents of this state protection substantially similar to that provided by this chapter for residents of other states.

VII.The association may render assistance and advice to the commissioner, upon his request, concerning rehabilitation, payment of claims, continuations of coverage, or the performance of other contractual obligations of any impaired insurer.

VIII.The association shall have standing to appear before any court in this state with jurisdiction over an impaired insurer concerning which the association is or may become obligated under this chapter. Such standing shall extend to all matters germane to the powers and duties of the association, including, but not limited to, proposals for reinsuring or guaranteeing the covered policies of the impaired insurer and the determination of the covered policies and contractual obligations.

IX.Assignment of rights occurs when:

(a) Any person receiving benefits under this chapter shall be deemed to have assigned his rights under the covered policy to the association to the extent of the benefits received because of this chapter whether the benefits are payments of contractual obligations or continuation of coverage. The association may require an assignment to it of such rights by any payee, policy or contract owner, beneficiary, insured or annuitant as a condition precedent to the receipt of any rights or benefits conferred by this chapter upon such person. The association shall be subrogated to these rights against the assets of any impaired insurer.

(b) The subrogation rights of the association under this paragraph shall have the same priority against the assets of the impaired insurer as that possessed by the person entitled to receive benefits under this chapter.

X.The contractual obligations of the impaired insurer for which the association becomes or may become liable shall be as great as but no greater than the contractual obligations of the impaired insurer would have been in the absence of the impairment, except for such contractual obligations of the impaired insurer which the commissioner finds are not fair and equitable, for which the association will become liable only on conditions determined by the commissioner to be fair and equitable, including without limitation, the imposition of policy or contract liens, moratoriums or similar means which the commissioner determines to be fair and equitable. In no event shall the aggregate liability of the association exceed $100,000 in cash values, or $300,000 for all benefits, including cash values, with respect to any one life.

XI.The association may:

(a) Enter into such contracts as are necessary or proper to carry out the provisions and purposes of this chapter.

(b) Sue or be sued, including taking any legal actions necessary or proper for recovery of any unpaid assessments under RSA 404-D:9.

(c) Borrow money to effect the purposes of this chapter. Any notes or other evidence of indebtedness of the association not in default shall be legal investments for domestic insurers and may be carried as admitted assets.

(d) Employ or retain such persons as are necessary to handle the financial transactions of the association, and to perform such other functions as become necessary or proper under this chapter.

(e) Negotiate and contract with any liquidator, rehabilitator, conservator, or ancillary receiver to carry out the powers and duties of the association.

(f) Take such legal action as may be necessary to avoid payment of improper claims.

(g) Exercise, for the purposes of this chapter and to the extent approved by the commissioner, the powers of a domestic life or health insurer, but in no case may the association issue insurance policies or annuity contracts other than those issued to perform the contractual obligations of the impaired insurer.

RSA 404-D:8

1971, 509:1. 1979, 440:2, eff. June 25, 1979.