257 
subrogation recoverable on covered claims obliga-
tions to the extent paid by the Corporation. 
(2) INVESTIGATE AND PAY CLAIMS.—The Cor-
poration shall investigate claims brought against the 
Corporation and adjust, compromise, settle and pay 
covered claims to the extent of the Corporation’s ob-
ligations. The Corporation shall pay claims in any 
order that it determines reasonable, including the 
payment of claims as they are received from the 
claimants or in groups or categories of claims. The 
Corporation may review settlements, releases and 
adjustments to which the insolvent National Prop-
erty/Casualty Insurer or its insured were parties to 
determine the extent to which the settlements, re-
leases and judgments may be properly contested. 
The Corporation shall have the right to appoint or 
substitute and to direct legal counsel retained under 
liability insurance policies for the defense of covered 
claims. 
(c) OTHER CORPORATION POWERS.—In addition to 
the rights and powers provided elsewhere in this title, the 
Corporation may— 
(1) enter into such contracts as are necessary 
or proper to carry out the provisions and purposes 
of this title; 
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258 
(2) sue or be sued, including taking any legal 
actions necessary or proper to recover any unpaid 
assessments under section 607 and to settle claims 
or potential claims against the Corporation; 
(3) borrow money to effect the purposes of this 
title and any notes or other evidence of indebtedness 
of the Corporation not in default shall be legal in-
vestments for National Insurers and may be carried 
as assets; 
(4) employ or retain such persons as are nec-
essary or appropriate to handle the financial trans-
actions of the Corporation and to perform such 
other functions as become necessary or proper under 
this title; 
(5) take such legal action as may be necessary 
or appropriate to avoid or recover payment of im-
proper claims; 
(6) exercise, for the purposes of this title and 
to the extent approved by the Commissioner, the 
powers of a National Insurer, except that the Cor-
poration may not issue insurance policies or annuity 
contracts other than those issued to provide the pro-
tections under this title; 
(7) request information from a person seeking 
protection under this title in order to aid the Cor-
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259 
poration in determining its obligations under this 
title with respect to the person, and the person shall 
promptly comply with the request; and 
(8) take other necessary or appropriate action 
to discharge the Corporation’s duties and obligations 
under this title or to exercise the Corporation’s pow-
ers under this title. 
SEC. 607. SUBROGATION. 
(a) IN GENERAL.—Persons receiving benefits or pay-
ments for claims under this title shall be deemed to have 
assigned their rights under, and any causes of action 
against any person for losses arising under, resulting 
from, or otherwise relating to, their covered policies to the 
Corporation, and the Corporation shall have a claim by 
way of subrogation to the rights of such persons against 
the assets of the National Insurer, to the extent of the 
benefits received or claims paid because of this title. The 
Corporation shall also have the right to require an assign-
ment to the Corporation of such rights and cause of action 
by any payee, policyowner, beneficiary, insured, or annu-
itant as a condition precedent to the receipt of any right 
or benefits conferred by this title upon the person. 
(b) COMMON LAW RIGHTS.—In addition to sub-
section (a), the Corporation shall have all common law 
rights of subrogation and any other equitable or legal rem-
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260 
edy that would have been available to the National Insurer 
or policyowner, beneficiary, or payee of an insurance policy 
with respect to the policy. 
(c) PRIORITY.—The priority of the subrogation rights 
of the Corporation against the assets of a National Insurer 
shall be governed by the regulations issued by the Com-
missioner pursuant to section 554. 
(d) RESULT IF FOUND INVALID OR INEFFECTIVE.— 
If the preceding provisions of this section are invalid or 
ineffective with respect to any person or claim for any rea-
son, the amount payable under this title with respect to 
the related benefits or payments under this title shall be 
reduced by the amount realized by any other person with 
respect to the person or claim that is attributable to the 
insurance policies (or portion of the insurance policies) 
covered by this title. 
(e) PAYMENT OF PORTION.—If benefits or payments 
have been provided under this title with respect to a cov-
ered obligation and a person recovers amounts as to which 
the Corporation has rights as described in the preceding 
subsections, the person shall pay to the Corporation the 
portion of the recovery attributable to the insurance poli-
cies (or portion of the insurance policies) covered by this 
title. 
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261 
SEC. 608. ASSESSMENTS. 
(a) ASSESSMENTS BY CORPORATION AUTHORIZED.— 
For the purpose of providing the funds necessary to pro-
vide the benefits or payments under this title, the Corpora-
tion shall be authorized to assess National Insurers doing 
business in nonqualified States separately for each ac-
count, at such time and for such amounts as the board 
of directors of the Corporation finds necessary, in accord-
ance with the provisions of this section. 
(b) CLASSES OF ASSESSMENTS.—The Corporation 
shall impose 3 classes of assessments as follows: 
(1) 
GENERAL
ADMINISTRATIVE
ASSESS-
MENTS.— 
(A) IN GENERAL.—Each National Insurer 
that is a member of the Corporation shall be 
assessed an amount necessary to cover the gen-
eral administrative and legal costs of the Cor-
poration, other than the costs specified in para-
graphs (2) and (3). 
(B) AMOUNT.—In setting the amount of 
the assessment under subparagraph (A), the 
Corporation shall divide such administrative 
and legal expenses equally among all members 
of the Corporation. 
(C) DEPOSIT.—The amount collected pur-
suant to this paragraph shall be deposited, in 
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262 
equal amounts, in the 5 accounts established 
pursuant to section 603(f). 
(2) PROPERTY/CASUALTY ASSESSMENTS.— 
(A) 
IN
GENERAL.—The 
Corporation 
shall— 
(i) allocate claims paid and expenses 
incurred among the workers’ compensation 
account, the automobile insurance account, 
or the other property/casualty account; and 
(ii) assess National Property/Casualty 
Insurers that are members of the Corpora-
tion separately for each account described 
in clause (i) the amounts necessary to pay 
the obligations of the Corporation under 
section 605 and the expenses of handling 
such claims. 
(B) AMOUNT.—The assessment established 
under subparagraph (A)(ii) for a National 
Property/Casualty 
Insurer 
shall 
equal 
an 
amount that bears the same ratio to the total 
amount of claims and expenses allocated to an 
account pursuant to subparagraph (A)(i) as the 
premiums received by such National Property/ 
Casualty Insurer on the kind of insurance in 
the account in nonqualified States during the 
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263 
calendar year preceding the assessment bears to 
the premiums received by all assessed National 
Property/Casualty Insurers on the kind of in-
surance in the account in nonqualified States 
during the year preceding the assessment. 
(C) DEPOSIT.—The assessments received 
pursuant to this paragraph shall be deposited in 
the workers’ compensation account, the auto-
mobile insurance account, or the other property/ 
casualty account, as appropriate. 
(3) LIFE AND ANNUITY ASSESSMENTS.— 
(A) 
IN
GENERAL.—The 
Corporation 
shall— 
(i) allocate benefits paid and expenses 
incurred among the life insurance account 
and the annuity account; and 
(ii) assess National Life Insurers that 
are members of the Corporation separately 
for each account described in clause (i) the 
amounts necessary to pay the obligations 
of the Corporation under section 604 and 
the expenses of handling such benefits. 
(B) AMOUNT.—The assessment established 
under subparagraph (A)(ii) for a National Life 
Insurer shall equal an amount that bears the 
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264 
same ratio to the total of benefits and expenses 
allocated to an account pursuant to subpara-
graph (A)(i) as the premiums received by such 
National Life Insurer on the kind of insurance 
in the account in nonqualified States during the 
calendar year preceding the assessment bears to 
the premiums received by all assessed National 
Life Insurers on the kind of insurance in the 
account in nonqualified States during the year 
preceding the assessment. 
(C) DEPOSIT.—The assessments received 
pursuant to this paragraph shall be deposited in 
the life insurance account or the annuity ac-
count, as appropriate. 
(c) NOTICE AND IMPOSITION OF ASSESSMENTS.— 
(1) WRITTEN
NOTICE
REQUIRED.—The Cor-
poration shall provide each National Insurer a writ-
ten notice of an assessment, and assessments shall 
be payable not less than 30 days after such notice. 
(2) LATE
PAYMENT.—National Insurers that 
fail to pay an assessment when due shall be subject 
to an interest charge on the assessment, as set by 
the Corporation. 
(3) ASSESSMENTS
NOT
MADE
UNTIL
NEED-
ED.—The Corporation shall not impose an assess-
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265 
ment described in paragraph (2) or (3) of subsection 
(b) until such funds are needed. 
(4) MAXIMUM ASSESSMENT.— 
(A) IN GENERAL.—The Corporation may 
not assess a National Insurer in any year on 
any account an amount greater than 2 percent 
of the Insurer’s net direct written premiums for 
the calendar year preceding the assessment on 
the kind of insurance in the account. 
(B) INSUFFICIENT
AMOUNT
IN
LIFE
IN-
SURANCE ACCOUNT OR ANNUITY ACCOUNT.— 
(i) INSUFFICIENT
AMOUNT
IN
LIFE 
INSURANCE
ACCOUNT.—If the maximum 
assessment in any year does not provide an 
amount sufficient to make all necessary 
payments from the life insurance account, 
the Corporation may assess the annuity ac-
count for the necessary additional amount. 
(ii) INSUFFICIENT AMOUNT IN ANNU-
ITY
ACCOUNT.—If the maximum assess-
ment in any year does not provide an 
amount sufficient to make all necessary 
payments from the annuity account, the 
Corporation may assess the life insurance 
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266 
account 
for 
the 
necessary 
additional 
amount. 
(C) INSUFFICIENT AMOUNT IN WORKERS’ 
COMPENSATION ACCOUNT, AUTOMOBILE INSUR-
ANCE
ACCOUNT, OR
OTHER
PROPERTY/CAS-
UALTY INSURANCE ACCOUNT.— 
(i) INSUFFICIENT AMOUNT IN WORK-
ERS’ 
COMPENSATION
ACCOUNT.—If the 
maximum assessment in any year does not 
provide an amount sufficient to make all 
necessary payments from the workers’ 
compensation account, the Corporation 
may assess the automobile insurance ac-
count or the other property/casualty insur-
ance account, or both, for the necessary 
additional amount. 
(ii) INSUFFICIENT AMOUNT IN AUTO-
MOBILE
INSURANCE
ACCOUNT.—If the 
maximum assessment in any year does not 
provide an amount sufficient to make all 
necessary payments from the automobile 
insurance account, the Corporation may 
assess the workers’ compensation account 
or the other property/casualty insurance 
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267 
account, or both, for the necessary addi-
tional amount. 
(iii) INSUFFICIENT AMOUNT IN OTHER 
PROPERTY/CASUALTY
INSURANCE
AC-
COUNT.—If the maximum assessment in 
any year does not provide an amount suffi-
cient to make all necessary payments from 
the other property/casualty insurance ac-
count, the Corporation may assess the 
workers’ compensation account or the 
automobile insurance account, or both, for 
the necessary additional amount. 
(d) ABATED
OR DEFERRED ASSESSMENTS.—The 
board of directors of the Corporation may abate or defer, 
in whole or in part, the assessment of a National Insurer 
if, in the opinion of the board, payment of the assessment 
would endanger the ability of the National Insurer to ful-
fill the Insurer’s contractual obligations. In the event an 
assessment against a National Insurer is abated or de-
ferred, in whole or in part, the amount by which the as-
sessment is abated or deferred may be assessed against 
the other National Insurers doing business in non-quali-
fied States, in a manner consistent with the basis for as-
sessments set forth in this section. Once the conditions 
that caused a deferral have been removed or rectified, the 
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