Citations Affected: IC 5-10; IC 20-5; IC 21-2; IC 27-6; IC 27-9.
Synopsis: School corporation insurance and property and casualty
guaranty association. Provides for a school corporation employee
health insurance pilot project. Sets forth provisions allowing school
corporations to enter into interlocal agreements to establish a
cooperative risk management program to provide for coverage of
certain risks of the school corporations. Amends various provisions of
the property and casualty insurance guaranty association law,
including: (1) definitions; (2) board membership; (3) association
obligations; (4) assessments; and (5) exhaustion of insurance policy
Effective: Upon passage; July 1, 2004.
January 12, 2004, read first time and referred to Committee on Insurance and Financial
January 29, 2004, amended, reported favorably _ Do Pass.
February 3, 2004, read second time, amended, ordered engrossed.
February 4, 2004, engrossed. Read third time, passed. Yeas 49, nays 0.
A BILL FOR AN ACT to amend the Indiana Code concerning
SECTION 1. IC 5-10-8-2.8 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2004]: Sec. 2.8. (a) As used in this section, "pilot project" refers
to the school corporation health benefit pilot project established by
the state personnel department under subsection (d).
(b) As used in this section, "state employee health plan" means:
(1) the self-insurance program established by the state personnel department under section 7(b) of this chapter; or
(2) a contract with a prepaid health care delivery plan entered into by the state personnel department under section 7(c) of this chapter.
(c) Notwithstanding any other provision of this chapter to the contrary, and notwithstanding IC 20-5-2-2(14), a school corporation may:
(1) apply to participate in the pilot project; and
(2) if chosen by the department of insurance, participate in the pilot project.
(d) The state personnel department, in cooperation with the department of insurance, shall develop and implement a school corporation health benefit pilot project. The pilot project:
(1) must enable ten (10) school corporations that:
(A) apply for participation in the project; and
(B) are chosen by the department of insurance;
to provide coverage of health care services for active and retired employees of the school corporation under a state employee health plan that covers active state employees and is chosen by the school corporation; and
(2) must be established not later than January 1, 2005.
(e) The pilot project must do the following:
(1) Specify participation requirements, including minimum participation and contribution requirements, and an application process for school corporations that wish to apply.
(2) Provide for the department of insurance to choose ten (10) eligible school corporations for participation in the project.
(3) Provide for enrollment of the active and retired employees of the participating school corporations in a state employee health plan not later than June 30, 2005.
(4) Provide for coverage of the active and retired employees of the participating school corporations under the state employee health plan until a date not earlier than June 30, 2010, and not later than December 31, 2010.
(5) Require the state personnel department to provide to the legislative council in an electronic format under IC 5-14-6:
(A) an annual report not later than July 1 of each year; and
(B) a final report, including aggregate information, not later than July 1, 2011;
concerning the effect of the participation in the state employee health plan by the active and retired employees of the school corporation employees, including the effect on premium rates, costs to the state and to the school corporations, and any other information determined relevant by the legislative council.
(6) Conclude insurance coverage not later than December 31, 2010.
(f) A school corporation that participates in the pilot project under this section shall provide for payment of the premium for the coverage as provided in section 2.6 of this chapter. The state shall not pay any part of the premium for the coverage. The administrator of the state employee health plan described in
subsection (b)(1) shall not pay any part of the administrative cost
or other costs of the coverage.
(g) The state personnel department may adopt rules under IC 4-22-2 to implement this section.
(h) This section expires December 31, 2011.
SECTION 2. IC 20-5-2-2, AS AMENDED BY P.L.286-2001, SECTION 5, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 2. In carrying out the school purposes of each school corporation, its governing body acting on its behalf shall have the following specific powers:
(1) In the name of the school corporation, to sue and be sued and to enter into contracts in matters permitted by applicable law.
(2) To take charge of, manage, and conduct the educational affairs of the school corporation and to establish, locate, and provide the necessary schools, school libraries, other libraries where permitted by law, other buildings, facilities, property, and equipment therefor.
(2.5) To appropriate from the general fund an amount, not to exceed the greater of three thousand dollars ($3,000) per budget year or one dollar ($1) per pupil, not to exceed twelve thousand five hundred dollars ($12,500), based upon the school corporation's previous year's average daily membership (as defined in IC 21-3-1.6-1.1) for the purpose of promoting the best interests of the school corporation by:
(A) the purchase of meals, decorations, memorabilia, or awards;
(B) provision for expenses incurred in interviewing job applicants; or
(C) developing relations with other governmental units.
(3) To acquire, construct, erect, maintain, hold, and to contract for such construction, erection, or maintenance of such real estate, real estate improvements, or any interest in either, as the governing body deems necessary for school purposes, including but not limited to buildings, parts of buildings, additions to buildings, rooms, gymnasiums, auditoriums, playgrounds, playing and athletic fields, facilities for physical training, buildings for administrative, office, warehouse, repair activities, or housing of school owned buses, landscaping, walks, drives, parking areas, roadways, easements and facilities for power, sewer, water, roadway, access, storm and surface water, drinking water, gas, electricity, other utilities and similar purposes, by purchase, either outright for cash (or under conditional sales or purchases money
contracts providing for a retention of a security interest by seller
until payment is made or by notes where such contract, security
retention, or note is permitted by applicable law), by exchange, by
gift, by devise, by eminent domain, by lease with or without
option to purchase, or by lease under IC 21-5-10, IC 21-5-11, or
IC 21-5-12. To repair, remodel, remove, or demolish any such real
estate, real estate improvements, or interest in either, as the
governing body deems necessary for school purposes, and to
contract therefor. To provide for energy conservation measures
through utility energy efficiency programs or under a guaranteed
energy savings contract as described in IC 36-1-12.5.
(4) To acquire such personal property or any interest therein as the governing body deems necessary for school purposes, including but not limited to buses, motor vehicles, equipment, apparatus, appliances, books, furniture, and supplies, either by outright purchase for cash, or under conditional sales or purchase money contracts providing for a security interest by the seller until payment is made or by notes where such contract, security, retention, or note is permitted by applicable law, by gift, by devise, by loan, or by lease with or without option to purchase and to repair, remodel, remove, relocate, and demolish such personal property. All purchases and contracts delineated under the powers given under subdivision (3) and this subdivision shall be subject solely to applicable law relating to purchases and contracting by municipal corporations in general and to the supervisory control of agencies of the state as provided in section 3 of this chapter.
(5) To sell or exchange any of such real or personal property or interest therein, which in the opinion of the governing body is not necessary for school purposes, in accordance with IC 20-5-5, to demolish or otherwise dispose of such property if, in the opinion of the governing body, it is not necessary for school purposes and is worthless, and to pay the expenses for such demolition or disposition.
(6) To lease any school property for a rental which the governing body deems reasonable or to permit the free use of school property for:
(A) civic or public purposes; or
(B) the operation of a school age child care program for children aged five (5) through fourteen (14) years that operates before or after the school day, or both, and during periods when school is not in session;
if the property is not needed for school purposes. Under this
subdivision, the governing body may enter into a long term lease
with a nonprofit corporation, community service organization, or
other governmental entity, if the corporation, organization, or
other governmental entity will use the property to be leased for
civic or public purposes or for a school age child care program.
However, if the property subject to a long term lease is being paid
for from money in the school corporation's debt service fund, then
all proceeds from the long term lease shall be deposited in that
school corporation's debt service fund so long as the property has
not been paid for. The governing body may, at its option, use the
procedure specified in IC 36-1-11-10 in leasing property under
(7) To employ, contract for, and discharge superintendents, supervisors, principals, teachers, librarians, athletic coaches (whether or not they are otherwise employed by the school corporation and whether or not they are licensed under IC 20-6.1-3), business managers, superintendents of buildings and grounds, janitors, engineers, architects, physicians, dentists, nurses, accountants, teacher aides performing noninstructional duties, educational and other professional consultants, data processing and computer service for school purposes, including but not limited to the making of schedules, the keeping and analyzing of grades and other student data, the keeping and preparing of warrants, payroll, and similar data where approved by the state board of accounts as provided below, and such other personnel or services, all as the governing body considers necessary for school purposes. To fix and pay the salaries and compensation of such persons and such services. To classify such persons or services and to adopt schedules of salaries or compensation. To determine the number of such persons or the amount of services thus employed or contracted for. To determine the nature and extent of their duties. The compensation, terms of employment, and discharge of teachers shall, however, be subject to and governed by the laws relating to employment, contracting, compensation, and discharge of teachers. The compensation, terms of employment, and discharge of bus drivers shall be subject to and shall be governed by any laws relating to employment, contracting, compensation, and discharge of bus drivers. The forms and procedures relating to the use of computer and data processing equipment in handling the financial affairs of such school corporation shall be submitted to the state board of accounts for approval to the end that such services shall be used
by the school corporation when the governing body determines
that it is in the best interests of the school corporation while at the
same time providing reasonable accountability for the funds
(8) Notwithstanding the appropriation limitation in subdivision (2.5), when the governing body by resolution deems a trip by an employee of the school corporation or by a member of the governing body to be in the interest of the school corporation, including but not limited to attending meetings, conferences, or examining equipment, buildings, and installation in other areas, to permit such employee to be absent in connection with such trip without any loss in pay and to refund to such employee or to such member
his reasonable hotel and board bills and necessary
transportation expenses. To pay teaching personnel for time spent
in sponsoring and working with school related trips or activities.
(9) To transport children to and from school, when in the opinion of the governing body such transportation is necessary, including but not limited to considerations for the safety of such children and without regard to the distance they live from the school, such transportation to be otherwise in accordance with the laws applicable thereto.
(10) To provide a lunch program for a part or all of the students attending the schools of the school corporation, including but not limited to the establishment of kitchens, kitchen facilities, kitchen equipment, lunch rooms, the hiring of the necessary personnel to operate such program, and the purchase of any material and supplies therefor, charging students for the operational costs of such lunch program, fixing the price per meal or per food item. To operate such lunch program as an extracurricular activity, subject to the supervision of the governing body. To participate in any surplus commodity or lunch aid program.
(11) To purchase textbooks, to furnish them without cost or to rent them to students, to participate in any textbook aid program, all in accordance with applicable law.
(12) To accept students transferred from other school corporations and to transfer students to other school corporations in accordance with applicable law.
(13) To levy taxes, to make budgets, to appropriate funds, and to disburse the money of the school corporation in accordance with the laws applicable thereto. To borrow money against current tax collections and otherwise to borrow money, in accordance with IC 20-5-4.
liability, cost, or damage in connection therewith, including but
not limited to the payment of any legal fees, except where such
liability, cost, or damage is predicated on or arises out of the bad
faith of such member or employee, or is a claim or judgment
his the member's or employee's malfeasance in office
(17) To prepare, make, enforce, amend, or repeal rules, regulations, and procedures for the government and management of the schools, property, facilities, and activities of the school corporation, its agents, employees, and pupils and for the operation of its governing body, which rules, regulations, and procedures may be designated by any appropriate title such as "policy handbook", "bylaws", or "rules and regulations".
(18) To ratify and approve any action taken by any member of the governing body, any officer of the governing body, or by any employee of the school corporation after such action is taken, if such action could have been approved in advance, and in connection therewith to pay any expense or compensation permitted under IC 20-5-1 through IC 20-5-6 or any other law.
(19) To exercise any other power and make any expenditure in carrying out its general powers and purposes provided in this chapter or in carrying out the powers delineated in this section which is reasonable from a business or educational standpoint in carrying out school purposes of the school corporation, including but not limited to the acquisition of property or the employment or contracting for services, even though such power or expenditure shall not be specifically set out herein. The specific powers set out in this section shall not be construed to limit the general grant of powers provided in this chapter except where a limitation is set out in IC 20-5-1 through IC 20-5-6 by specific language or by reference to other law.
SECTION 3. IC 20-5-2.7 IS ADDED TO THE INDIANA CODE AS NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]:
Chapter 2.7. Cooperative Risk Management Programs
Sec. 1. As used in this chapter, "aggregate insurance coverage" means the coverage provided by an insurance contract that:
(1) is purchased by a cooperative program; and
(2) provides excess coverage if the aggregate amount of claims submitted by member school corporations and payable by the self-insurance fund exceeds the total amount of self-insured risk retained by the members in a fiscal year.
Sec. 2. As used in this chapter, "commissioner" means the insurance commissioner appointed under IC 27-1-1-2.
Sec. 3. As used in this chapter, "cooperative program" means a cooperative risk management program established under this chapter.
Sec. 4. As used in this chapter, "member" refers to a school corporation that enters into an interlocal agreement with another school corporation to establish a cooperative program.
Sec. 5. As used in this chapter, "self-insurance fund" means an actuarially sound fund established by a cooperative program as a reserve to cover self-insured risk retained by the members for losses covered under this chapter and to pay premiums for aggregate insurance coverage and specific insurance coverage required under this chapter.
Sec. 6. As used in this chapter, "specific insurance coverage" means the coverage provided by one (1) or more insurance contracts that:
(1) are purchased by a cooperative program; and
(2) provide excess coverage for a part of a specific claim that exceeds the amount covered by the self-insurance fund.
Sec. 7. (a) Two (2) or more school corporations may enter into an interlocal agreement under IC 36-1-7 to establish a cooperative risk management program through which the school corporations agree to maintain a program of joint self-insurance to cover certain retained risks and to jointly purchase aggregate insurance coverage and specific insurance coverage, including the following:
(1) Casualty insurance, including general and professional liability coverage and student accident insurance.
(2) Property insurance.
(3) Automobile insurance, including motor vehicle liability insurance coverage and security for motor vehicles owned or operated, and protection against other liability and loss associated with the ownership of motor vehicles.
(4) Surety and fidelity insurance coverage.
(5) Umbrella and excess insurance coverage.
(6) Worker's compensation coverage.
(b) A cooperative program established under this chapter is a separate legal entity with the power to:
(1) sue and be sued;
(2) make contracts; and
(3) hold and dispose of real and personal property.
Sec. 8. A cooperative program established under this chapter is
subject to regulation by the department of insurance created by
Sec. 9. (a) A cooperative program shall:
(1) establish a self-insurance fund with an aggregate limit on the total amount of self-insured risk retained by the members in a fiscal year; and
(2) maintain aggregate insurance coverage and specific insurance coverage.
(b) A self-insurance fund established under subsection (a) must be funded at the beginning of each fiscal year by a contribution from each member in an amount that reflects the member's share of self-insured risk and other costs of the cooperative program.
(c) Annual contributions to the self-insurance fund under subsection (b) must be:
(1) determined using generally accepted actuarial standards;
(2) set to fund at least one hundred percent (100%) of the self-insured risk retained by the members in a fiscal year plus the other costs of the cooperative program, including premiums for aggregate insurance coverage and specific insurance coverage; and
(3) approved by the commissioner.
Sec. 10. (a) An interlocal agreement entered into under section 7 of this chapter must:
(1) establish the cooperative program as a separate legal entity; and
(2) specify the organization, composition, and powers of the governing authority of the cooperative program as required by IC 36-1-7-3.
(b) The governing authority of the cooperative program shall adopt bylaws concerning the following:
(1) A financial plan setting forth in general terms:
(A) the types of risks covered under the cooperative program;
(B) the aggregate limit on the total amount of self-insured risk retained by the cooperative program in a fiscal year;
(C) the minimum amount of specific insurance coverage and aggregate insurance coverage that must be maintained by the cooperative program; and
(D) the procedure for determining each member's annual contribution to the self-insurance fund.
(2) A plan of management that provides for:
(A) the responsibility of the governing authority with
(i) maintaining the amount of reserves in the self-insurance fund;
(ii) disposing of surpluses; and
(iii) administering the cooperative program in the event of termination;
(B) the basis on which new members may be admitted to, and existing members may leave, the cooperative program, including a provision specifying that an existing member may not leave the cooperative program unless the member's departure is specifically approved by the commissioner; and
(C) other provisions necessary or desirable for the operation of the cooperative program.
(c) The following must be submitted to and approved by the commissioner before a cooperative program may commence operations:
(1) The interlocal agreement described in subsection (a).
(2) The bylaws described in subsection (b).
(3) The form and purchase by the cooperative program of any insurance contracts, including contracts for aggregate insurance coverage and specific insurance coverage.
(4) An accounting, based on generally accepted actuarial standards, of sufficient reserves committed before commencement of operations to pay obligations of the cooperative program.
(5) Each coverage document form to be issued by the cooperative program.
(6) Any other information determined necessary by the commissioner.
(d) If the commissioner does not disapprove the information submitted under subsection (c) earlier than thirty (30) days after the information is submitted, the information is considered approved.
Sec. 11. (a) A cooperative program shall have an annual audit performed by an independent certified public accounting firm according to guidelines established by the state board of accounts.
(b) Not later than one hundred eighty (180) calendar days after the close of a cooperative program's fiscal year, the cooperative program must furnish the cooperative program's members with audited financial statements certified by an independent certified public accounting firm.
(3) filed under subsection (b), approved by the commissioner, and at the end of the period determined by the commissioner under subsection (c) the cooperative program is not in compliance with this chapter;
the commissioner may grant additional time to comply, or the commissioner may suspend, limit, or terminate the authority of the cooperative program to do business in this state.
(e) A cooperative program is subject to IC 27-9.
(f) A cooperative program shall be considered a member insurer for purposes of IC 27-6-8.
Sec. 15. (a) Motor vehicle coverage provided by a cooperative program must provide the ability for a member to respond in damages for liability arising out of the ownership, maintenance, or use of a motor vehicle in amounts at least equal to the amounts required under IC 9-25-4.
(b) A member that participates in the motor vehicle coverage provided by a cooperative program is considered to meet the financial responsibility requirements set forth in IC 9-25-4, and an application for a certificate of self-insurance under IC 9-25-4-11 is not required.
Sec. 16. Information regarding the:
(1) portion of funds; or
(2) liability reserve;
established by a cooperative program to satisfy a specific claim or cause of action is confidential and is not subject to subpoena or order to produce, except in a supplementary or an ancillary proceeding to enforce a judgment. This section does not prohibit the commissioner from obtaining the information described in this section.
Sec. 17. The department of insurance may adopt rules under IC 4-22-2 to implement this chapter.
SECTION 4. IC 21-2-5.6-2 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 2. The self-insurance fund may be used to provide monies for the following purposes:
(1) the payment of any judgment rendered against the school corporation, or rendered against any officer or employee of the school corporation for which the school corporation is liable under IC 34-13-2, IC 34-13-3, or IC 34-13-4 (or IC 34-4-16.5, IC 34-4-16.6, or IC 34-4-16.7 before their repeal);
(2) the payment of any claim or settlement for which the school
corporation is liable pursuant to IC 34-13-2, IC 34-13-3, or
IC 34-13-4 (or IC 34-4-16.5, IC 34-4-16.6, or IC 34-4-16.7 before
(3) the payment of any premium, management fee, claim, or settlement for which the school corporation is liable pursuant to any federal or state statute including but not limited to payments pursuant to IC 22-3 and IC 22-4;
(4) the payment of any settlement or claim for which insurance coverage is permitted under IC 20-5-2-2(14); or
(5) the payment of a contribution to the self-insurance fund of a cooperative risk management program under IC 20-5-2.7-9.
SECTION 5. IC 27-6-8-3 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 3. (a) This chapter applies to all kinds of direct insurance except:
(1) life, annuity, health, or disability insurance;
(2) mortgage guaranty, financial guaranty, or other forms of insurance offering protection against investment risks;
(3) fidelity or surety bonds, or any other bonding obligations;
(4) credit insurance, vendors' single interest insurance, or collateral protection insurance or similar insurance with the primary purpose of protecting the interests of a creditor arising out of a creditor-debtor transaction;
(5) warranty or service contract insurance;
(6) title insurance;
(7) ocean marine insurance;
(8) a transaction between a person or an affiliate of a person and an insurer or an affiliate of an insurer that involves the transfer of investment or credit risk without a transfer of insurance risk;
(9) insurance provided by or guaranteed by a government entity; and
(10) insurance written on a retroactive basis to cover known losses for which a claim has already been made and the claim is known to the insurer at the time the insurance is bound.
(b) This chapter applies to coverage provided under a cooperative program established under IC 20-5-2.7. For purposes of this chapter, a cooperative program is considered to be a member insurer.
SECTION 6. IC 27-6-8-4, AS AMENDED BY P.L.129-2003, SECTION 12, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2004]: Sec. 4. As used in this chapter, unless otherwise provided:
(1) The term "account" means any one (1) of the three (3)
accounts created by section 5 of this chapter.
(2) The term "association" means the Indiana Insurance Guaranty Association created by section 5 of this chapter.
(3) The term "commissioner" means the commissioner of insurance of this state.
(4) The term "covered claim" means
an unpaid a claim that has
not been paid from any source and which arises out of and is
within the coverage and not in excess of the applicable limits of
an insurance policy to which this chapter applies issued by an
insurer, if the insurer becomes an insolvent insurer after the
effective date (January 1, 1972) of this chapter and (a) the
claimant or insured is a resident of this state at the time of the
insured event or (b) the property from which the claim arises is
permanently located in this state. "Covered claim" shall be limited
as provided in section 7 of this chapter, and shall not include (1)
any amount due any reinsurer, insurer, insurance pool, or
underwriting association, as subrogation recoveries or otherwise.
However, a claim for any such amount, asserted against a person
insured under a policy issued by an insurer which has become an
insolvent insurer, which if it were not a claim by or for the benefit
of a reinsurer, insurer, insurance pool or underwriting association,
would be a "covered claim" may be filed directly with the receiver
or liquidator of the insolvent insurer, but in no event may any
such claim be asserted in any legal action against the insured of
such insolvent insurer; nor (2) any supplementary obligation
including but not limited to adjustment fees and expenses,
attorney fees and expenses, court costs, interest and bond
premiums, whether arising as a policy benefit or otherwise, prior
to the appointment of a liquidator; nor (3) any unpaid claim that
is not both filed within one (1) year after an order of liquidation
and permitted to share in liquidation distributions under
IC 27-9-3-33 if the insolvent insurer is a domestic insurer or in
accordance with the applicable provisions of the law of the state
of domicile if the insolvent insurer is not a domestic insurer; nor
(4) any claim by a person whose net worth at the time an insured
event occurred was more than five million dollars ($5,000,000);
nor (5) a claim against a person insured by an insolvent insurer if
the person's net worth at the time an insured event occurred was
more than fifty twenty-five million dollars ($50,000,000);
($25,000,000); nor (6) any claim by a person who directly or
indirectly controls, is controlled, or is under common control with
an insolvent insurer on December 31 of the year before the order
of liquidation. All covered claims filed in the liquidation
proceedings shall be referred immediately to the association by
the liquidator for processing as provided in this chapter.
(5) The term "insolvent insurer" means (a) a member insurer holding a valid certificate of authority to transact insurance in this state either at the time the policy was issued or when the insured event occurred and (b) against whom a final order of liquidation, with a finding of insolvency, to which there is no further right of appeal, has been entered by a court of competent jurisdiction in the company's state of domicile. "Insolvent insurer" shall not be construed to mean an insurer with respect to which an order, decree, judgment or finding of insolvency whether preliminary or temporary in nature or order to rehabilitation or conservation has been issued by any court of competent jurisdiction prior to January 1, 1972 or which is adjudicated to have been insolvent prior to that date.
(6) The term "member insurer" means any person who is licensed or holds a certificate of authority under IC 27-1-6-18 or IC 27-1-17-1 to transact in Indiana any kind of insurance for which coverage is provided under section 3 of this chapter, including the exchange of reciprocal or inter-insurance contracts. The term includes any insurer whose license or certificate of authority to transact such insurance in Indiana may have been suspended, revoked, not renewed, or voluntarily surrendered. A "member insurer" does not include farm mutual insurance companies organized and operating pursuant to IC 27-5.1 other than a company to which IC 27-5.1-2-6 applies.
(7) The term "net direct written premiums" means direct gross premiums written in this state on insurance policies to which this chapter applies, less return premiums thereon and dividends paid or credited to policyholders on such direct business. "Net direct premiums written" does not include premiums on contracts between insurers or reinsurers.
(8) The term "person" means an individual
liability company, partnership, reciprocal or inter-insurance
exchange, association, or voluntary organization. or a legal
entity, including a governmental entity.
(9) The term "self-insurer" means a person that covers the person's liability through a qualified individual or group self-insurance program or another formal program created for the specific purpose of covering liabilities typically covered by insurance.
persons ordinary and necessary services for the production of income
in lieu of those services the claimant would have performed for himself
had he 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.
(2) 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.
(ii) 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. An obligation of
the association to defend an insured on a covered claim ceases upon
the association's payment, by settlement releasing the insured or on
a judgement, of an amount equal to the lesser of the association's
covered claim obligation limit or the applicable policy limit or
upon the association's tender of an amount equal to the lesser of
the association's covered claim obligation or the applicable policy
limit to a claimant under this chapter.
(iii) 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 paragraph (i) of this subsection 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
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. of net direct written
premium in the preceding calendar year on the kinds of insurance
in the account. A member insurer may not be assessed in a year on
an account an amount greater than one percent (1%) of the
member insurer's net direct written premiums in Indiana for the
preceding calendar year on the kinds of insurance in the account.
However, the assessment to each member insurer in the account
must initially be based on the written premium of each member
insurer as shown in the latest year's annual financial statement on
file with the commissioner. The initial assessment must be adjusted
by applying the same rate of assessment as initially used to each
member insurer's written premium as shown on the annual
statement for the year preceding the year of the assessment. The
difference between the initial assessment and the adjusted
assessment must be charged or credited to each member insurer by
the association as soon as practical after the filing of the annual
statements of the member insurers with the commissioner for the
year on which the adjusted assessment is based. In the case of an
insurer that is a member insurer when the initial assessment is
made and that pays the initial assessment, but is not a member
insurer at the time of the adjusted assessment by reason of the
insurer's insolvency or withdrawal from the state and surrender of
the insurer's certificate of authority, credit resulting from the
adjustment accruing to the insurer must be refunded to the insurer
by the association.
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. Unless otherwise authorized under this section, 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 described in
this paragraph (iii) for the 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.
(iv) 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.
(v) Notify such persons as the commissioner directs under IC 27-6-8-9(b)(i).
(vi) 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.
(vii) 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.
(viii) 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.
the person's right under the policy. Any amount payable on a covered
claim under this chapter shall be reduced by the amount of recovery
under regardless of whether the insurance policy is issued by a
member insurer, is the kind of insurance to which this chapter
applies under section 3 of this chapter, or provides first party or
third party coverage that arises from the same facts, injury, or loss
that gives rise to a covered claim against the association, shall
exhaust all coverage under the insurance policy before filing a
claim against the association. An amount payable on a covered
claim under this chapter must be reduced by the full applicable
limits stated in the insurance policy and the association must
receive a full credit for the stated limits, or if there are no
applicable limits, the amount payable on the covered claim must be
reduced by the total recovery. The liability of a person insured
under an insurance policy of an insolvent insurer that includes an
amount payable on a covered claim under this chapter shall be
reduced by the same amount by which the association's amount
payable on a covered claim is reduced under this section.
(c) Notwithstanding subsection (b), a claim under an insurance policy that provides liability coverage to a person who may be:
(1) jointly and severally liable; or
(2) a joint tortfeasor;
with the person covered under a policy of an insolvent insurer is considered to be a claim arising from the same facts, injury, or loss that gave rise to the covered claim against the association and a person is not required to exhaust any right under the policy of an insolvent insurer.
(b) (d) Any person having a claim which may be recovered under
more than one (1) insurance guaranty association or its equivalent shall
seek recovery first from the association of the place of residence of the
insured except that if it is a first party claim for damage to property
with a permanent location, the person shall seek recovery first from the
association of the location of the property, and if it is a worker's
compensation claim, the person shall seek recovery first from the
association of the residence of the claimant. Any recovery under this
chapter shall be reduced by the amount of recovery from any other
insurance guaranty association or its equivalent.
SECTION 10. IC 27-9-1-1, AS AMENDED BY P.L.5-2000, SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 1. Proceedings under this article apply to the following:
(1) All insurers who are doing, or who have done, insurance
business in Indiana, and against whom claims arising from that
business may exist.
(2) All insurers who purport to do insurance business in Indiana.
(3) All insurers who have insureds resident in Indiana.
(4) All other persons organized or in the process of organizing with the intent to do an insurance business in Indiana.
(5) All nonprofit service plans, fraternal benefit societies, and beneficial societies.
(6) All title insurance companies.
(7) All health maintenance organizations under IC 27-13.
(8) All multiple employer welfare arrangements under IC 27-1-34.
(9) All limited service health maintenance organizations under IC 27-13-34.
(10) All mutual insurance holding companies under IC 27-14.
(11) All cooperative programs established under IC 20-5-2.7.
SECTION 11. An emergency is declared for this act.