An Act To Amend the Maine Life and Health Insurance Guaranty Association Act
Maine Legislature, Session 122, LD 0933
Committee Amendment CA_A_H621 (House)
Amends: 24-A MRSA §4603, 24-A MRSA §4604, 24-A MRSA §4605, 24-A MRSA §4605-A, 24-A MRSA §4611, 24-A MRSA §4619, 36 MRSA §2

AMENDMENT ·A" to H.P. 652, L.D. 933, Bill, "An 
the 
Maine 
Life 
and Health 
Insurance 
Guaranty 
Association Act" 
Amend the bill by striking out everything after the enacting 
clause and inserting in its place the following: 
. Sec. 1. 24-A MRSA §§4601 and 4602, as enacted by PL 1983, c. 
846, are amended to read: 
§4601. Short title 
This chapter sha** may be known and cited as the Maine Life 
and Health Insurance Guaranty Association Act. 
§4602. Purpose 
The purpose of this chapter, subject to certain limitations, 
is to maintain public confidence in the promises of insurers by 
providing 
a 
mechanism for protecting policyholders, 
insureds, 
beneficiaries, annuitants, payees and assignees of life insurance 
policies, 
health 
insurance 
policies, 
annuity 
contracts 
and 
supplemental contracts against failure in the performance of fair 
and equitable contractual obligations due to the impairment or 
insolvency of 
the 
member 
insurer 
issuing these policies or 
contracts. To provide this protection: 
1. 
Creation of association. An association of insurers is 
created to enable the guaranty of payment of benefits and of 
continuation of coverages as limited by this chapter; 
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2. 
Assessment of members. Members of the association are 
subject to assessment to provide funds to carry out the purpose 
of this chapter; and 
3. 
Assistance 
to 
superintendent. 
The 
association 
is 
authorized 
to 
assist 
the 
superintendent, 
in 
the 
prescribed 
manner, in the detection and prevention of insurer impairments 
and insolvencies. 
Sec. 2. 24-A MRSA §4603, as amended by PL 1989, c. 751, §§8 
to 10, is further amended to read: 
§4603. Scope 
1. 
Application. This chapter sha**-a~~*y applies to direct 
nongroup life 
insurance policies, 
health 
insurance policies, 
annuity contracts and contracts supplemental to life and health 
insurance 
policies 
and 
annuity 
contracts 
issaea--ay--~er6eBs 
aQ~herisee-~e-~~a£~a£~-~~~~~~~~~~~-a~-aay-~ime and to 
certificates under direct group life insurance policies, health 
insurance policies and annuity contracts, except as limited by 
this chapter. For the purposes of this chapter, annuity contracts 
and certificates under group annuity contracts include allocated 
funding 
agreements, 
structured 
settlement 
annuities 
and 
any 
immediate or deferred annuity contracts. 
I-A. 
Persons covered. 
This chapter 
sha**-~reviee provides 
coverage for the policies and contracts specified in subsection 1: 
A. 
To any person, regardless of where the person resides, 
except for a nonresident certificate holder under a group 
policy or contract, 
who is the beneficiary, 
assignee or 
payee of a person covered under paragraph B; aBe 
B. 
To 
any person who 
owns, or is a certificate holder 
under, a policy or contract specified in subsection 1 eFr-iB 
~he-€ase-~~-~~~~~~~~~~~r~~-a-~eFs9a-whe 
is--~~~--~~~-~~F--aBe, other 
than 
a 
structured 
settlement annuity, who: 
(1) 
Is a resident; or 
(2) 
Is not a resident, if all the following conditions 
are met: 
{.i}.i..el 
The insurer that issued the policy or 
contract is domiciled in this State; 
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COMMITTEE AMENDMENT ,A" to H.P. 652, L.D. 933 
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The insurer 
certificate of authority 
person resides; 
never held 
a 
license or 
in the state in which the 
tiiit i..Ql 
The state in which the person resides 
has an association similar to the Maine Life and 
Health Insurance Guaranty Association; and 
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The person is not eligible for coverage 
by the association in that stateT; and 
C. 
To 
any 
person 
who 
is 
a 
payee 
under 
a 
structured 
settfement annuity, or to a beneficiary or beneficiaries of 
a payee if the payee is deceased, if the payee: 
(1) 
Is a resident. regardless of where the contract 
owner resides; or 
(2) 
Is not a resident. if all of the conditions of 
either division (a) or (b) are met: 
(a) 
The 
contract 
owner 
of 
the 
structured 
settlement annuity is a resident; or 
(b) 
The 
contract 
owner 
of 
the 
structured 
settlement annuity is not a resident, but: 
(i) 
The insurer that issued the structured 
settlement annuity is domiciled in this State; 
(ii) 
The state in which the contract owner 
resides has 
an association similar to the 
association created by this chapter; and 
(iii) 
The 
payee 
or 
beneficiary 
and 
the 
contract owner are not 
eligible for coverage 
by the association of the state in which the 
payee Qr contract owner resides. 
This chapter does not provide coverage to a person who is a 
payee or beneficiary of a contract owner who is a resident 
of this State if the payee or beneficiary is afforded any 
coverage by a similar association of another state. 
This chapter is intended to provide coverage to a person who is a 
resident, 
and, 
in special circumstances 
as 
provided by this 
section, to a person who is not a resident. 
In order to avoid 
duplicate coverage, 
if a 
person who 
would otherwise receive 
coverage under this chapter is provided coverage under the laws 
of any other state, that person may not be provided coverage 
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under 
this 
chapter. 
In 
determining 
the 
application of 
the 
provisions of this subsection in a situation in which a person 
could be covered by the association of more than one state, 
whether as an owner, payee, beneficiary or assignee, this chapter 
must be construed in conjunction with other state laws to result 
in coverage by only one association. 
2. 
Exceptions. This chapter saall does not apply to: 
A. 
That portion of a 
vaFiaale--J:.4.f~-iBsQFaBee--o-r---vaFiaale 
aBBQity policy or contract not guaranteed by an insurer; 
B. 
Any sQea policies or contracts, or any part of these 
policies or contracts, under which the risk is borne by the 
policyholder; 
C. 
Any 
sQeh-~4€y--o-r--~a~FaG~-eF-~~~-~~~--a&&am&G-ay 
she-4mpa4~~4--~~--~~~-a contract of reinsurance, other 
than reinsurance for which assumption certificates have been 
issued; 
D. 
Any sQea policy or contract issued by assessment mutuals 
and nonprofit hospital and medical service plans; aBa 
E. 
Any portion of a policy or contract to the extent that 
the rate of interest on which it is based, or similar factor 
determined by use of an index or other external reference 
stated in the policy or contract employed in calculating 
returns or changes in value: 
(1) 
Averaged over a period of 4 years before the date 
on which the asseeia~ieR-~~~~~~~~&-Fespeet 
~e--t:he--~..,i-O¥--e-£--eeBt:Faet member insurer becomes an 
impaired insurer or becomes an insolvent insurer under 
this chapter, whichever is earlier, exceeds a rate of 
interest determined by subtracting 2 percentage points 
from Moody's Corporate Bond Yield Average averaged over 
the same 4-year period or for a lesser period if the 
policy or contract was issued less than 4 years before 
the asseeiat:iea-aeeame-eali~atea member insurer becomes 
an impaired insurer or becomes an insolvent insurer, 
whichever is earlier; and 
(2) 
A~teF 
On 
or 
after 
the 
date 
on 
which 
the 
asseeiatieB--h~€eme5--~4~~-~~~-~~--~--tae 
peliey--o-r---eeBtFaet member insurer becomes an impaired 
insurer or 
becomes 
an insolvent insurer under 
this 
chapter, 
whichever is earlier, 
exceeds 
the rate of 
interest determined by subtracting 3 percentage points 
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from 
Moody's 
Corporate 
Bond Yield 
Average 
as 
most 
recently availableTL 
F. 
Any 
portion of a policy or contract issued to a plan or 
program of 
an employer, 
association or other person to 
provide life, health or, annuity benefits to its employees, 
members or others, to the extent that the plan or program is 
self-funded or 
uninsured, 
including but 
not 
limited 
to 
benefits payable by an employer, association or other person 
under: 
(1) 
A multiple employer welfare arrangement as defined 
in 29 United States Code, Section 1144; 
(2) 
A minimum premium group insurance plan: 
(3) 
A stop loss group insurance plan: or 
(4) 
An administrative-services-only contract: 
G. 
Any portion of a policy or contract to the extent that 
it provides for: 
(1) 
Dividends or experience rating credits: 
(2) 
Voting rights; or 
(3) 
Payment of any fees or allowances to any person, 
1nclyding the policy or contract owner, in connection 
with the seryice to or admin1stration of the policy or 
contract: 
H. 
Any policy or contract issued in this State by a member 
insurer at a time when it was not licensed or did not have a 
certificate of authority to issue the policy or contract in 
this State; 
I. 
Any portion of a policy or contract to the extent that 
the assessments required by section 4609 with respect to the 
policy or contract are preempted by federal or state law; 
J. 
Any obligation that does not arise under the express 
written terms 
of 
the policy or contract issued by the 
insurer to the contract owner or policy owner, 
including 
without limitation: 
(1) 
Claims based on marketing materials; 
(2) 
Claims based on side letters, riders or other 
documents 
that were 
issued by 
the 
insurer without 
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meeting 
applicable 
policy 
form 
filing 
or 
approval 
requirements; 
(3) 
Misrepresentations of or regarding policy benefits; 
(4) 
Extra-contractual claims; or 
(5) 
Claims 
for 
penalties 
or 
consequential 
or 
incidental damages: 
K. 
Any contractual agreement that establishes the member 
insurer's obligations to provide a 
book value accounting 
guaranty for defined contribution benefit plan participants 
by reference to a portfolio of assets that is owned by the 
bene~it plan 
or 
its 
trustee, 
neither 
of 
which 
is 
an 
affiliate of the member insurer; 
L. Any unallocated annuity contract; and 
M. 
Any portion of a policy or contract to the extent it 
provides 
for interest or other changes in value to be 
determined 
by 
the 
use 
of 
an 
index 
or 
other 
external 
reference stated in the policy or contract, but that have 
not been credited to the policy or contract, or as to which 
the 
policy or 
contract 
owner's 
rights 
are 
subject 
to 
forfeiture, as of the date the member insurer becomes an 
impaired insurer or becomes an insolvent insurer under this 
chapter, whichever is earlier. 
If a policy's or contract's 
interest or changes in value are credited less frequently 
than annually, then for purposes of determining the values 
that have been credited and are not subject to forfeiture 
under 
this paragraph, 
the interest or 
change 
in value 
determined by using the procedures defined in the policy or 
contract will be credited as if the contractual date of 
crediting interest or 
changing values 
was 
the 
date 
of 
impairment or insolvency, whichever is earlier, and will not 
be subject to forfeiture. 
3. Benefits; limitations of coverage. The benefits that the 
association may become obligated to cover may not exceed the 
least of: 
A. 
The contractual obligations for which the insurer is 
liable or would have been liable if it were not an impaired 
or insolvent insurer; 
B. 
With respect to one life, regardless of the number of 
policies or contracts: 
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(1) 
Three hundred thousand dollars in life insurance 
death benefits, but not more than $100,000 in net cash 
surrender 
and 
net 
cash withdrawal 
values 
for 
life 
insurance; 
(2) 
The following limits for health insurance benefits: 
(a) Three hundred thousand dollars for coverages 
not 
defined 
as 
disability 
insurance 
or 
basic 
hospital, medical and surgical insurance or major 
medical 
insurance, 
including 
any 
net 
cash 
surrender and net cash withdrawal values; 
(b) 
Three hundred thousand dollars for disability 
and long-term care insurance; or 
(c) 
Five 
hundred 
thousand 
dollars 
for 
basic 
hospital, medical and surgical insurance or major 
medical insurance; or 
(3) 
One hundred thousand dollars in the present value 
of annuity benefits, including net cash surrender and 
net cash withdrawal values; or 
C. 
With respect to each payee of a structured settlement 
annuity, or beneficiary or beneficiaries of the payee if 
deceased, $100,000 in present value annuity benefits, in the 
aggregate, 
inclu~ing net 
cash 
surrender 
and 
net 
cash 
withdrawal values. 
4. 
Maximum 
obligation 
in 
benefits. 
Notwithstanding 
subsection 3, the association is not in any event obligated to 
cover more than: 
A. 
An aggregate of $300,000 in benefits with respect to any 
one 
life 
under 
subsection 
3, 
paragraph 
B 
except with 
respect to benefits for basic hospital, medical and surgical 
insyrance and major medical insyrance under subsection 3, 
paragraph B, subparagraph (2), in which case the aggregate 
liability of the association may not exceed $500,000 with 
respect to anyone individual; or 
B. 
Five million dollars in benefits, regardless of the 
number of policies and contracts held by the owner, with 
respect to one owner of multiple nongroup policies of life 
insurance, whether the policy owner is an individual, firm, 
corporation or other person, and whether the persons insured 
are officers, managers, employees or other persons. 
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5. 
Subrogation and assignment rights. 
The limitations set 
forth in subsections 3 and 4 are limitations on the benefits for 
which the association is obligated before taking into account 
either its subrogation and assignment rights or the extent to 
which those benefits could be provided out of the assets of the 
impaired or insolvent insurer attributable to covered policies. 
The costs of the association' s obligations under this chapter may 
be met by the use of assets attributable to covered policies or 
reimbursed to the association pursuant to its subrogation and 
assignment rights. 
6. Material economic benefits; contractual obligations. 
In 
performing its obligations to provide coverage 
under 
section 
4608, 
the association is not required to guarantee, 
assume, 
reinsure 
or 
perform, 
or 
cause 
to 
be 
guaranteed, 
assumed, 
reinsured 
or 
performed, 
the 
contractual 
obligations 
of 
the 
insolvent or impaired insurer under a covered policy or contract 
that do not materially affect the economic values or economic 
benefits of the covered policy or contract. 
Sec. 3. 24-A MRSA §4604, as enacted by PL 1983, c. 846, is 
amended to read: 
§4604. Construction 
This chapter saa~~ ~ 
be ~iBeFa~~y construed to effect the 
purpose under section 4602 waa,ea--sba-J..J:---€-Elf1-s-t.-i-t.'a-t.e--&&--aa.-d--aaa 
~QiQe-~e-ia~e~p~e~a~iea. 
Sec. 4. 24-A MRSA §4605, as amended by PL 2001, c. 44, §1l 
and affected by §14, is repealed. 
Sec. 5. 24-A MRSA §4605-A is enacted to read: 
§4605-A. 
Definitions 
As 
used in this 
chapter, 
unless 
the 
context 
otherwise 
indicates. the following terms have the following meanings. 
1. Account. 
"Account" means anyone of the 
accounts 
created under section 4606. 
2. 
Association. 
"Association" 
means 
the Maine 
Life and 
Health Insurance Guaranty Association created under section 4606. 
3. 
Authorized 
assessment. 
"Authorized 
assessment" 
or 
"authorized" when used in the context of assessments means that a 
resolution by the board of directors of the association has been 
passed whereby an assessment will be called immediately or in the 
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future from member insurers for a specified amount: an assessment 
is authorized when the resolution is passed. 
4. Benefit plan. 
"Benefit plan" means a specific employee, 
union or association of natural persons benefit plan. 
5. 
Board of directors. 
"Board of directors" means the 
board of directors of the association. 
6. -Called assessment. 
"Called assessment" or "called" when 
used in the context of assessments means that a notice has been 
issued by the association to member insurers requiring that an 
authorized assessment be paid within the time frame set forth 
within the 
notic~: an authorized assessment becomes 
a 
called 
assessment when notice is mailed by the association to member 
insurers. 
7. 
Contractual obligation. 
"Contractual obligation" means 
an obligation under a policy or contract or certificate under a 
group policy or contract. or portion thereof. for which coverage 
is provided under section 4603. 
8. 
Covered pOlicy. 
"Covered policy" means 
a policy or 
contract or portion of a policy or contract for which coverage is 
provided under section 4603. 
9. 
Extra-contractual claims. 
"Extra-contractual 
claims" 
includes. 
for 
example. 
claims 
relating to bad faith in the 
payment of claims. punitive or exemplary damages or attorney's 
fees and costs. 
10. 
Impaired insurer. 
"Impaired insurer" means a member 
insurer that. after the effective date of this section. is not an 
insolvent insurer and is placed under an order of rehabilitation 
or conservation by a court of competent jurisdiction. 
11. 
Insolvent insurer. 
"Insolvent insurer" means a member 
insurer that. after the effective date of this section. is placed 
under 
an 
order 
of 
liquidation 
by 
a 
court 
of 
competent 
jurisdiction with a finding of insolvency. 
12. 
Member insurer. 
"Member insurer" means an insurer that 
is licensed or that holds a certificate of authority to transact 
in this State any 
kind of 
insurance for 
which 
coverage is 
provided under section 4603 and includes an insurer whose license 
or 
certificate 
of 
authority 
in 
this 
State 
may 
have 
been 
suspended. 
revoked, 
not renewed or voluntarily withdrawn. 
but 
does not include: 
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A. 
A hospital or medical service organization, 
whether 
profit or nonprofit; 
B. 
A health maintenance organization; 
C. 
A fraternal benefit society; 
D. 
A mandatory state pooling plan; 
E. 
A mutual 
assessment 
company 
or 
other 
person 
that 
operates on an assessment basis; 
F. 
An insurance exchange; 
G. 
An 
organization that 
has 
a 
certificate or 
license 
limited to the issuance of charitable gift annuities under 
this Title; or 
H. 
An 
entity similar to 
any of those listed in this 
subsection. 
1.3. 
Moody' s 
Corporate 
Bond 
Yield 
Average. 
"Moody's 
Corporate 
Bond 
Yield 
Ayerage" 
means 
the 
monthly 
average 
corporates as published by Moody' s Investors Seryice, Inc., or 
any successor to that index. 
1.4. 
Owner. 
"Owner" with respect to a policy or contract 
and "policy owner" and "contract owner" mean the person who· is 
identified as the legal owner under the terms of the policy or 
contract or who h 
otherwise vested with legal title to the 
policy or 
contract 
through 
a 
valid 
assignment 
completed in 
accordance with the terms of the policy or contract and properly 
recorded as the owner on the books of the insurer. 
"Owner, " 
"contract owner" and "policy owner" do not include persons with a 
mere beneficial interest in a policy or contract. 
15. 
Person. 
"Person" 
means 
an individuaL 
corporation, 
limited liability company, partnership, association, governmental 
bogy or entity or voluntary organization. 
1.6. 
Premiums. 
"Premiums" means amounts or considerations 
by whatever name calleg received on covered policies or contracts 
less returneg premiums, 
considerations 
and deposits 
and less 
dividengs and experience credits. 
"Premiums" does not include 
amounts or considerations receiveg for policies or contracts or 
for the portions of policies or contracts for which coverage is 
not provideg under section 4603, except that assessable premiums 
may not be reguceg on account of the provisions of section 4603 
relating to interest limitations and relating to limitations with 
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respect to 
one 
individual, 
one participant and one 
contract 
owner. 
"Premiums" does not include: 
A. 
Premiums on an unallocated annuity contract; or 
B. 
With 
respect to multiple nongroup policies of life 
insurance owned by one owner, whether the policy owner is an 
individuaL firm, corporation or other person, and whether 
the persons insured are officers, managers, 
employees or 
other persons, premiums in excess of $5,000,000 with respect 
to these policies or contracts, regardless of the number of 
policies or contracts held by the owner. 
17. 
Principal place of business. 
"Principal 
place 
of 
business" has the following meaning. 
A. 
"Principal place of business" of a plan sponsor or a 
person other than a natural person means the single state in 
which the natural persons who 
establish policy for 
the 
direction, control and coordination of the operations of the 
entity 
as 
a 
whole 
primarily 
exercise 
that 
function, 
determined by the association in its reasonable judgment by 
considering the following factors: 
(1) 
The 
state in which the primary executive 
and 
administrative headguarters of the entity is located; 
(2) 
The state in which the principal office of the 
chief executive officer of the entity is located; 
(3) 
The state in which the board of directors of the 
entity or similar governing body of the entity conducts 
the majority of its meetings; 
(4) 
The state in which the executive or management 
committee of the board of directors of the entity or 
similar 
governing 
body of 
the entity conducts 
the 
majority of its meetings; 
(5) 
The state from which the management of the overall 
operations of the entity is directed; and 
(6) 
In 
the 
case 
of 
a 
benefit plan sponsored 
by 
affiliated 
companies 
compr~s~ng 
a 
consolidated 
corporation, the state in -which the holding company or 
controlling 
affiliate 
has 
its 
principal 
place 
of 
business as determined using the factors listed in 
subparagraphs (1) to (5). 
However, in the case of a 
plan sponsor, if more than 50'l-o of the participants in 
the benefit plan are employed in a single state, that 
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state is deemed to be the principal place of business 
of the plan sponsor. 
B. 
The principal place of business of a plan sponsor of a 
benefit plan is deemed to be the principal place of business 
of the association, committee, joint board of trustees or 
other similar group of representatives of the parties who 
establish or maintain the benefit plan, which, in lieu of a 
specific or clear 
designation of 
a 
principal place 
of 
business, is deemed to be the principal place of business of 
the employer or employee organization that has the largest 
investment in the benefit plan in question. 
18. 
Receivership court. 
"Receivership court" means 
the 
court 
in 
the 
impaired 
or 
insolvent 
insurer's 
state 
having 
jurisdiction over the conservation, rehabilitation or liquidation 
of the insurer. 
19. 
Resident. 
"Resident" 
means 
a 
person 
to 
whom 
a 
contractual obligation is owed and who resides in this State on 
the date of entry of a court order that determines a 
member 
insurer 
to 
be 
an 
impaired 
insurer 
or 
a 
court order 
that 
determines a member insurer to be an insolvent insurer, whichever 
occurs first. 
A person may be a resident of only one state, 
which in the case of a person other than a natural person is its 
principal place of business. 
Citizens of the United States that 
are either residents of foreign countries or residents of United 
States possessions, territories or protectorates that do not have 
an association similar to the association created by this chapter 
are deemed residents of the state of domicile of the insurer that 
issued the policies or contracts. 
20. 
Structured settlement annuity. 
"Structured settlement 
annuity" means an annuity purchased in order to fund periodic 
payments for a plaintiff or other claimant in payment for or with 
respect to personal injury suffered by the plaintiff or other 
claimant. 
21. 
State. 
"State" 
means 
a 
state, 
the 
District 
of 
Columbia, Puerto Rico or a United States possession, territory or 
protectorate. 
22. 
Supplemental contract. "Supplemental contract" means a 
written agreement entered into for the distribution of proceeds 
under a life, health or annuity policy or contract. 
23. 
Unallocated 
annuity 
contract. 
"Unallocated 
annui ty 
contract" means an annuity contract or group annuity certificate 
that is not issued to and owned by an individual, except to the 
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COMMITTEE AMENDMENT ~" to H.P. 652, L.D. 933 
extent of any annuity benefits guaranteed to an individual by an 
insurer under the contract or certificate. 
Sec. 6. 24-A MRSA §§4606, 4607 and 4608, as enacted by PL 
1983, c. 846, are amended to read: 
§4606. Creation of the association 
1. 
Creation. There is created a nonprofit legal entity to 
be 
known 
as 
the 
Maine 
Life 
and 
Health 
Insurance 
Guaranty 
Association. All member insurers 6Ra** ~ 
be and remain members 
of the association as a condition of their authority to transact 
insurance in this State. 
The 
association shall 
perform its 
functions under the plan of operation established and approved 
under section 4610 and shall exercise its powers through a board 
of directors established under section 4607. 
For purposes of 
administration and assessment, the association shall maintain 3 
accounts: 
A. 
The health insurance account; 
B. 
The life insurance account; and 
C. 
The 
annuity 
account, 
which 
must 
include 
annuity 
contracts owned by a governmental retirement plan or its 
trustee established under Section 401. 
Section 403(b) 
or 
Section 457 of the United States Internal Revenue Code. 
2. 
Supervision of association. The association 6Ral-l--€eH'le 
is under the 
immediate superv1s1on of the superintendent and 
6Rall-se ~ subject to the applicable provisions of the insurance 
laws of this State. 
Meetings or records of the association may 
be 
open to 
the 
public 
upon majority vote of the 
board of 
directors of the association. 
§4607. Board of directors 
1. 
Membership. The board of directors of the association 
saa;!,;!, mJ.1..ll consist of not less than 5 nor more than 9 members 
representing member insurers serving terms as established in the 
plan of operation pursuant to section 4610. The members of the 
board sRal-],.-se are selected by member insurers subject to the 
approval of the superintendent. Vacancies on the board sRa** must 
be filled for the remaining period of the term in the manner 
described in the plan of operation. To select the initial board 
of 
directors 
and 
initially 
organize 
the 
association, 
the 
superintendent shall give notice to all member insurers of the 
time 
and place of the organizational meeting. 
In determining 
voting rights at the organizational meeting each member insurer 
SRal-l--se is entitled to one vote in person or by proxy. If the 
Page l3-LR2060(2) 
COMMITTEE AMENDMENT 
(tf 
1s' 
~ 
COMMITTEE AMENDMENT A " 
to H.P. 652, L.D. 933 
board of directors is not selected within 60 days after notice of 
the organizational meeting, the superintendent may appoint the 
initial members. 
2. 
Appointments; 
representation of member 
insurers. 
In 
approving selections or in appointing members to the board, the 
superintendent shall consider, 
among other things, whether all 
member insurers are fairly represented. 
3. 
Reimbursement. Members of the board may be reimbursed 
from the assets of the association for expenses incurred by them 
as members of the board of directors, but members of the board 
sRa;!,;!, ~ not otherwise be compensated by the association for 
their services. 
§4608. Povers and duties of the association 
In addition to the powers and duties enumerated in other 
sections of this chapter: 
1. 
Impaired insurer; association action. If a 
aemes~ie 
member insurer is an impaired insurer, the association may, 
~~ie~ 
~e-a-~~~a~-~~-~--~~~~~~-~aa&~~~~a~i&&r-aRa subject to 
any fair and equitable conditions imposed by the association that 
do not impair the contractual obligations of the impaired insurer 
and 
that 
are 
approved 
by 
~Re--...i-mpai-i:-eQ---j,..&su-l'e-t'---aRa 
the 
superintendentT-em~ley-aRy-e~-a;!,;!,-e~-~Re-~e;!,;!,ewiR~-ae~ieRs: 
A. 
Guarantee, 
assume 
or 
reinsure, 
guaranteed, assumed or reinsured all the 
the impaired insurer; or 
or 
cause 
to 
be 
covered policies of 
money, 
pledges, 
loans, 
notes, 
as 
are 
proper 
to effectuate 
payment 
of 
the 
appropriate 
the 
impaired 
insurer 
pending 
B. 
Provide 
such 
meReys 
guarantees or other 
means 
paragraph 
A 
and 
assure 
contractual obligations of 
action under paragraph At-9~~ 
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COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT ,)\ .. to H.P. 652, L.D. 933 
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elellles~;i,e-illlpai~eel-iB6~tetT 
3-A.. 
Impaired and insolvent insurer: association action. 
If a member insurer is an insolvent insurer, the association may, 
in its discretion, either: 
A. Take the following actions: 
(1) 
Guarantee, 
asSume 
or 
reinsure or 
cause 
to 
be 
guaranteed, 
assumed 
or 
reinsured 
the 
policies 
or 
contracts of the insolvent insurer, or assure payment 
of 
the 
contractual 
obligations 
of 
the 
insolvent 
insurer; and 
(2) Provide money, pledges, loans, notes, guarantees or 
other 
means 
reasonably 
necessary 
to 
discharge 
the 
association's duties; or 
B. 
Provide benefits and coverages in accordance with this 
paragraph. 
COMMITTEE AMENDMENT 
~ 
~ 
c:::: 
COMMITTEE AMENDMENT ,A " to H.P. 652, L.D. 933 
(1) 
With respect to life and health insurance policies 
and annuities, the association shall assure payment of 
benefits for premiums identical to the premiums and 
benefits, 
except 
for 
terms 
of 
conversion 
and 
renewability, that would have been payable under the 
policies or contracts of the insolvent insurer, for 
claims incurred: 
(a) 
With respect to group policies and contracts. 
not later than the earlier of the next renewal 
date under those policies or contracts or 45 days, 
but in no event less than 30 days, after the date 
on which the association becomes obligated with 
respect to the policies and contracts; and 
(b) 
With respect to nongroup policies, contracts 
and annuities, not later than the earlier of the 
next renewal date if any under the policies or 
contracts and one year, but in no event less than 
days, after the date on which the association 
becomes obligated with respect to the policies or 
contracts. 
(2) 
The association shall make diligent efforts to 
provide all known insureds or annuitants for nongroup 
policies and contracts, or group policy owners with 
respect to 
group 
policies 
and 
contracts, 
days' 
notice of the termination of the benefits provided. 
(3) 
With respect to nongroup life and health insurance 
policies and annuities covered by the association, the 
association shall make available to each known insured 
or annuitant, or owner if other than the insured or 
annuitant, and, with respect to an individual formerly 
insured or formerly an annuitant under a group policy 
who is not eligible for replacement group coverage, 
make 
available substitute coverage 
on 
an individual 
basis in accordance with the provisions of subparagraph 
(4) , if the insureds or annuitants had aright under 
law or the terminated policy or annuity to convert 
coverage 
to 
individual 
coverage 
or 
to continue 
an 
individual policy or annuity in force until a specified 
age or for a specified time, during which the insurer 
had 
no 
right unilaterally to 
make 
changes 
in 
any 
provision of the policy or annuity or had a right only 
to make changes in premium by class. 
(4) 
In providing substitute coverage, the association 
may offer either to reissue the terminated coverage or 
COMMITTEE AMENDMENT 
..... 
B 
COMMITTEE AMENDMENT )\ .. to H.P. 652, L.D. 933 
to issue an alternative policy in accordance with the 
following: 
(a) 
Alternative 
or 
reissued policies must 
be 
offered without reguiring evidence of insurability 
and may not provide for 
any waiting period or 
exclusion that would not have applied under the 
terminated policy; 
(b) 
The association may reinsure any alternative 
or reissued policy; 
(c) 
Alternative 
policies 
adopted 
by 
the 
association are subj ect to the approval of the 
superintendent and the receivership court. 
The 
association 
may 
adopt 
alternative 
policies 
of 
various types for future issuance without regard 
to any particular impairment or insolvency; 
(d) 
Alternative policies must contain at least 
the minimum statutory provisions reguired in this 
State 
and 
provide 
benefits 
that 
are 
not 
unreasonable in relation to the premium charged. 
The 
association 
shall 
set 
the 
premium 
in 
accordance with a table of rates that it adopts. 
The premium must reflect the amount of insurance 
to be provided and the age and class of risk of 
each insured, but may not reflect any changes in 
the health of 
the 
insured after 
the original 
policy was last underwritten; and 
(e) 
Any 
alternative 
policy 
issued 
by 
the 
association 
must 
prbvide 
coverage 
of 
a 
type 
similar 
to 
that 
of 
the 
policy 
issued 
by 
the 
impaired or insolvent insurer, 
as determined by 
the association. 
(5) 
If the association elects to reissue terminated 
coverage at a premium rate different from that charged 
under the terminated policy, the premium must be set by 
the 
association 
in 
accordance 
with 
the 
amount 
of 
insurance provided and the 
age 
and class of risk, 
subject to 
approval 
of 
the 
superintendent 
and 
the 
receivership court. 
(6) 
The 
association's 
obligations with 
respect 
to 
coverage under any policy of the impaired or insolvent 
insurer or under any reissued or alternative policy 
must 
cease 
on 
the date 
the 
coverage or policy is 
COMMITTEE AMENDMENT 
~ 
~ 
tlt:! 
COMMITTEE AMENDMENT "A" to H.P. 652, L.D. 933 
replaced by another similar policy by the policy owner, 
the insured or the association. 
(7) 
When proceeding under this paragraph with respect 
to a 
policy or contract carrying guaranteed minimum 
interest 
rates, 
the 
association 
shall 
assure 
the 
payment or crediting of a rate of interest consistent 
with section 4603. 
(8)-
Nonpayment of premiums within 31 days after the 
date 
reguired 
under 
the 
terms 
of 
any 
guaranteed, 
assumed, alternative or reissued policy or contract or 
substitute 
coverage 
terminates 
the 
association's 
obligations under the policy or coverage under this 
chapter with respect to the policy or coverage, except 
wj.th respect to any claims incurred or any net cash 
surrender value that may be due in accordance with the 
provisions of this chapter. 
(9) 
Premiums due for coverage after entry of an order 
of liguidation of an insolvent insurer belong to and 
are payable at the direction of the association, and 
the association is liable for unearned premiums due to 
policy or contract owners arising after the entry of 
the order. 
(10) 
The protection provided by this chapter does not 
apply 
when 
any 
guaranty protection is provided to 
residents of this State by the laws of the domiciliary 
state or jurisdiction of the impaired or insolvent 
insurer other than this State. 
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COMMITTEE AMENDMENT 
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5-A. 
Policy 
liens; 
contract 
liens; 
moratoriums 
on 
pa,ments. In carrying out its duties under subsection 3-A, the 
association may: 
A. 
Subject to approval by a court in this State, impose 
permanent policy or contract liens in connection with a 
guarantee, 
assumPtion 
or 
reinsurance 
agreement, 
if 
the 
association finds that the amounts that can be assessed 
under this chapter are less than the amounts 
needed to 
assure full 
and prompt performance of the association's 
duties under this chapter or that the economic or financial 
conditions as they affect member insurers are sufficiently 
adverse to render the imposition of such permanent policy or 
contract liens to be in the public interest; and 
B. 
Subject to approval by a court in this State, impose 
temporary moratoriums or liens on payments of cash values 
and policy loans or on any other right to withdraw funds 
held in conjunction with policies or contracts, in addition 
to any contractual provisions for deferral of cash or policy 
loan value. 
In addition, 
in the event of 
a 
temporary 
moratorium or moratorium charge imposed by the receivership 
court on payment of cash values or policy loans or on any 
other right to withdraw funds 
held in conjunction with 
COMMITTEE AMENDMENT 
e~ 
ff,"lo... 
~# 
~ 
COMMITTEE AMENDMENT 'A" to H,P. 652, L.D. 933 
policies or contracts, out of the assets of the impaired or 
insolvent insurer, the association may defer the payment of 
cash values, policy loans or other rights by the association 
for 
the period of 
the 
moratorium 
or 
moratorium 
charge 
imposed by the receivership court, except for claims covered 
by the association to be paid in accordance with a hardship 
procedure established by the liquidator or rehabilitator and 
approved by the receiverShip court. 
6. 
Association liability. The association shall-have ~ 
no 
liability under this section for any covered policy of a foreign 
or alien insurer whose domiciliary jurisdiction or state of entry 
provides 
by 
statute for 
residents 
of 
this 
State protection 
substantially similar to that provided 
by this chapter 
for 
residents of other states. 
6-A. 
Failure to act. If the association fails to act within 
a reasonable period of time with respect to an insolvent insurer, 
as provided in subsection 3-A, the superintendent has the powers 
and duties of the association under this chapter with respect to 
the insolvent insurer. 
6-B. 
Retention of deposit; final order of liquidation or 
rehabilitation plan. 
A deposit in this State, held pursuant to 
law 
or 
required 
by 
the 
superintendent 
for 
the 
benefit 
of 
creditors, 
including policy 
owners, 
not 
turned over 
to 
the 
domiciliary liquidator 
upon 
the entry of 
a 
final 
order 
of 
liquidation or 
order 
approving 
a 
rehabilitation plan 
of 
an 
insurer 
domiciled in this 
State or 
in 
a 
reciprocal 
state, 
pursuant to this Title must be promptly paid to the association. 
The association is entitled to retain a portion of any amount so 
paid to it equal to the percentage determined by dividing the 
aggregate 
amount 
of 
policy 
owners" 
claims 
related 
to 
that 
insolvency 
for 
which 
the 
association has 
provided statutory 
benefits by the aggregate amount of all policy owners' claims in 
this State related to that insolvency and shall remit to the 
domiciliary receiver the amount so paid to the association and 
not retained pursuant to this subsection. 
Any amount so paid to 
the association less the amount not retained by it must be 
treated as a distribution of estate assets pursuant to chapter 57 
or similar provision of the state of domicile of the impaired or 
insolvent insurer. 
7. 
Assistance and advice to superintendent. The association 
may render assistance and advice to the superintendent, upon his 
the superintendent's request, concerning rehabilitation, payment 
of claims, continuations of coverage or the performance of other 
contractual obligations of any impaired or insolvent insurer. 
COMMITTEE AMENDMENT 
.t'ti$ 
~ 
f::c! 
COMMITTEE AMENDMENT A" to H.P. 652, L.D. 933 
8. 
Standing to appear before court. The association sHall 
Have has standing to appear or intervene before any court or 
agency 
in this State with jurisdiction over 
an 
impaired or 
insolvent insurer concerning which the association is or may 
become obligated under this chapter or with jurisdiction over any 
person or property against whom the association may have rights 
through subrogation or otherwise. 
This 
standing 
shall--e*~eRa 
extends to all matters germane to the powers and duties of the 
association, 
including, 
but 
not 
limited 
to, 
proposals 
for 
reinsur ing, modifying or guaranteeing the covered policies or 
contracts 
and 
contractual 
obligations 
of 
the 
impaired 
or 
insolvent insurer and the determination of the covered policies 
or contracts and contractual obligations. 
The association also 
has the right to appear or intervene before a court or agency in 
another state with jurisdiction oyer an impaired or insolvent 
insurer for which the association is or may become obligated or 
with jurisdiction over any person or property against whom the 
association may have rights through subrogation or otherwise. 
9. 
Subrogation rights. Any person receiving benefits under 
this chapter sHall--se is deemed to have 
assigned His that 
person's rights under, 
and any causes of action against any 
person for losses arising under, 
resulting from or otherwise 
relating to, the covered policy or contract to the association to 
the extent of the benefits received because of this chapter 
whether the benefits are payments of or on account of contractual 
obligations 
9l'L 
continuation 
of 
coverage 
or 
prov~s~on 
of 
substitute or alternative coverages. The association may require 
an assignment to it of these rights and cause of action 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 that person. 
The 
association shal-l--se is subrogated to these rights against the 
assets of any impaired or insolvent insurer. 
The subrogation rights of the association under 
SHall 
!!ill§..t have the same priority against the 
impaired or insolvent insurer as that possessed 
entitled to receive benefits under this chapter. 
this subsection 
assets of the 
by the person 
In addition, 
the association has 
all 
common 
law 
rights 
of 
subrogation and any other equitable or legal remedy that would 
have been available to the impaired or insolvent insurer or 
owner, beneficiary or payee of a policy or contract with respect 
to the policy or contract. including without limitation, in the 
case of a structured settlement annuity, any rights of the owner, 
beneficiary or payee of the annuity, to the extent of benefits 
received pursuant to this chapter, against a person originally or 
by 
succession 
responsible 
for 
the 
losses 
arising 
from 
the 
personal injury relating to the annuity or payment therefor, 
COMMITTEE AMENDMENT 
~!S 
~" 
~ 
C::! 
COMMITTEE AMENDMENT A" to H.P. 652, L.D. 933 
excepting any such person responsible solely by reason of serving 
as an assignee in respect of a qualified assignment under Section 
of the federal Internal Revenue Code. 
If the provisions of this subsection are invalid or ineffective 
with respect to any person or claim for any reason, the amount 
payable by the association with respect to the related covered 
obligations must be reduced by the amount realized by any other 
person with respect to the person or claim that is attributable 
to the policies or portion thereof covered by the association. 
If the association has provided benefits with respect to 
a 
covered obligation and a person recovers amounts as to which the 
association has 
rights 
as described in this subsection, 
the 
person shall pay to the association the portion of the recovery 
attributable to the policies or portion thereof covered by the 
association. 
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11. Other powers. 
The association may: 
A. 
Enter into such contracts as are necessary or proper to 
carry out the provisions and purposes of this chapter; 
B. 
S~e Subject to the provisions of section 4617, sue or be 
sued, including taking any legal actions necessary or proper 
for recovery of any unpaid assessments under section 4609 or 
to settle claims or potential claims against it; 
C. 
Borrow money to effect the purposes of this 
chapter~ 
Any 
notes 
or 
other 
evidence 
of 
indebtedness 
of 
the 
a2sociation 
not 
in 
default 
are 
legal 
investments 
for 
domestic insurers and may be carried as admitted assets; 
D. 
Employ or retain such persons 
appropriate to handle the financial 
association and to perform such other 
necessary or proper under this chapter; 
as are necessary or 
transactions of the 
functions as become 
E. 
Negotiate 
and 
contract 
with 
any 
liquidator, 
rehabilitator, conservator or ancillary receiver to carry 
out the powers and duties of the association; 
COMMITTEE AMENDMENT 
(~ 
([t} 
~ 
COMMITTEE AMENDMENT A 
.. to H.P. 652, L.D. 933 
F. 
Take such legal action as may be necessary to avoid or 
recover payment of improper claims; aBa 
G. 
Exercise, for the purposes of this chapter and to the 
extent approved 
by the superintendent, 
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 insurerTL 
H. 
Organize itself as a corporation or in other legal form 
permitted by the laws of this State; 
I. Reguest information from a person seeking coverage from 
the 
association 
in 
Qrder 
to 
aid 
the 
association 
in 
determining its obligations under this chapter with respect 
to the person, and the person shall promptly comply with the 
reguest; 
J. 
Join 
an 
organization 
of 
one 
or 
more 
other 
state 
associations of similar purposes, to further the purposes 
and administer the powers and duties of the association; and 
K. 
Take necessary or appropriate action to discharge its 
duties and obligations under this chapter or to exercise its 
powers under this chapter. 
12,. 
Reinsurance of obligations: election by association. 
At 
any 
time 
within 
one 
year 
after 
the 
date 
on 
which 
the 
association becomes responsible for the obligations of a member 
insurer, the association may elect to succeed to the rights and 
obligations of the member insurer that accrue on or after the 
coverage date and that relate to contracts covered in whole or in 
part 
by 
the 
association 
under 
anyone 
or 
more 
indemnity 
reinsurance agreements entered into by the member insurer as a 
ceding insurer and selected by the association. 
However, 
the 
association may 
not exercise an election with respect to 
a 
reinsurance 
agreement 
if 
the 
receiver, 
rehabilitator 
or 
liguidator of the member insurer has previously and expressly 
disaffirmed the reinsurance agreement. 
The election is effected 
by a notice to the receiver. rehabilitator or liguidator and to 
the affected reinsurers. 
If the association makes an election, 
the following reguirements apply with respect to the agreements 
selected by the association. 
A. 
For 
contracts covered in whole 
or in part by 
the 
association, the association is responsible for all unpaid 
premiums due under the agreements for periods both before 
and after the coverage date and for the performance of all 
COMMITTEE AMENDMENT 
(fj --
G c: 
COMMITTEE AMENDMENT 'A" to H.P. 652, L.D. 933 
other obligations to be performed after the coverage date. 
The association may charge contracts covered in part by the 
association, 
through 
reasonable 
allocation 
methods, 
the 
costs for reinsurance in excess of the obligations of the 
association. 
B. 
The association is entitled to any amounts payable by 
the reinsurer under the agreements with respect to losses or 
events that occur in periods after the coverage date and 
that relate to contracts covered by the association in whole 
or in part, except that, upon receipt of any such amounts, 
the association is obliged to pay to the beneficiary under 
the policy or contract on account of which the amounts were 
paid 'a portion of the amount equal to the excess of the 
amount received by the association over the benefits paid by 
the association on account of the policy or contract less 
the 
retention 
of 
the 
impaired 
or 
insolvent 
insurer 
applicable to the loss or event. 
C. 
Within 30 days following the association's election, the 
association and each indemnity reinsurer shall calculate the 
net balance due 
to or 
from 
the association under 
each 
reinsurance agreement as of the date of the association's 
election, giving full credit to all items paid by either the 
member insurer or its receiver, rehabilitator or liquidator 
or the indemnity reinsurer during the period between the 
coverage date and the date of the association's election. 
Either the association or indemnity reinsurer shall pay the 
net balance due the other within 5 days of the completion of 
the 
calculation. 
If 
the 
receiver, 
rehabilitator 
or 
liquidator has 
received any amounts 
due 
the association 
pursuant to paragraph 
B, 
the receiver, 
rehabilitator or 
liquidator shall remit them to the association as promptly 
as practicable. 
D. 
If the association, within 60 days of the election, pays 
the premiums 
due for periods both before 
and after the 
coverage 
date that relate to contracts 
covered 
by 
the 
association in whole 
or in part, 
the reinsurer is not 
entitled to terminate the reinsurance agreements insofar as 
the 
agreements 
relate 
to 
contracts 
covered 
by 
the 
association in whole or in part and is not entitled to set 
off any unpaid premium due for periods prior to the coverage 
date against amounts due the association. 
E. 
In the event the association transfers its obligations 
to another insurer and if the association and the other 
insurer agree, the other insurer must succeed to the rights 
and 
obligations 
of 
the 
association 
under 
this 
chapter 
effective as of the date agreed upon by the association and 
COMMITTEE AMENDMENT 
~:j 
1lIt ...... ~ 
~ 
c!. 
COMMITTEE AMENDMENT 'A" to H.P. 652, L.D. 933 
the other insurer and regardless of whether the association 
has made the election referred to in this subsection, except 
that: 
(1) 
The indemnity reinsurance agreements automatically 
terminate 
for 
new 
reinsurance 
unless 
the 
indemnity 
reinsurer and the other insurer agree to the contrary; 
and 
(2) 
The 
obligations 
described 
in this chapter 
no 
longer 
apply 
on 
and 
after the 
date 
the 
indemnity 
reinsurance agreement is transferred to the 3rd-party 
insurer. 
This 
paragraph 
does 
not 
apply if 
the 
association 
has 
previously expressly determined in writing that it will not 
exercise the election. 
F. 
This subsection supersedes the provisions of any law of 
this State or of any affected reinsurance agreement that 
provides 
for 
or 
requires 
any 
payment 
of 
reinsurance 
proceeds, 
on account of losses or events that occur in 
periods after the coverage date, to the receiver, liquidator 
or rehabilitator of an insolvent insurer. 
The receiver, 
rehabilitator or 
liquidator is entitled to 
any 
amounts 
payable by the reinsurer under the reinsurance agreement 
with respect to losses or events that occur in periods prior 
to 
the 
coverage 
date 
subject 
to 
applicable 
set-off 
provisions. 
G. 
Except as otherwise expressly provided, this subsection 
does not alter or modify the terms and conditions of the 
indemnity reinsurance agreements of an insolvent insurer. 
This subsection may not be construed to abrogate or limit 
any rights of any reinsurer to claim that it is entitled to 
rescind a reinsurance agreement. 
This subsection may not be 
construed 
to 
give 
a 
policy 
owner 
or 
beneficiary 
an 
independent cause of action against an indemnity reinsurer 
that is not otherwise set forth in the indemnity reinsurance 
agreement. 
13. Discretion. 
The board of directors of the association 
has discretion and may exercise reasonable business judgment to 
determine the means by which the association is to provide the 
benefits of this chapter in an economical and efficient manner. 
14. 
No 
additional benefits. 
When 
the 
association has 
arranged or offered to provide the benefits of this chapter to a 
covered person under 
a plan or arrangement that fulfills the 
association's obligations under this chapter, the person is not 
COMMITTEE AMENDMENT 
@ 
~. 
<t:) 
t:t 
COMMITTEE AMENDMENT A" to H.P. 652, L.D. 933 
entitled to benefits from the association in addition to or other 
than those provided under the plan or arrangement. 
15. Venue. Venue in a suit against the association arising 
under this chapter is Kennebec County. 
The association may not 
be required to give an appeal bond in an appeal that relates to a 
cause of action arising under this chapter. 
16. Issuance of substitute coverage. 
In carrying out its 
duties in connection with guaranteeing, 
assuming or reinsuring 
policies or contracts under this section, the association may, 
subject 
to approval of the receivership court. issue substitute 
coverage for a policy or contract that provides an interest rate, 
crediting rate or similar factor determined by use of an index or 
other 
external 
reference 
stated in 
the 
policy 
or 
contract 
gmployed in calculating returns or changes in value by issuing an 
alternative policy or contract in accordance with this subsection. 
A. In lieu of the index or other external reference provided 
for in the original policy or contract, 
the altgrnative 
policy or contract must provide for: 
(1) A fixgd interest rate; 
(2) Paymgnt or dividgnds with minimum guarantges; 
or 
(3) 
A differgnt mgthod for calculating intergst or 
changgs in valug. 
B. 
There 
may 
not 
bg 
a 
rgquirement 
for 
gvidence 
of 
insurability, waiting period or other gxclusion that would 
not havg appligd undgr thg rgplaced policy or contract. 
C. The altgrnatiye policy or contract must be substantially 
similar to thg replaced policy or contract in all other 
matgrial tgrms. 
Sec. 7. 24·A MRSA §4609, as amended by PL 1989, c. 751, §12, 
is further amended to read: 
§4609. Assessments 
1. 
Assessments; collection. For the purpose of providing 
the funds necessary to carry out the powers and duties of the 
association, 
the board of directors shall assess 
the 
member 
insurers, separately for each account, at such times and for such 
amounts as the board finds necessary. ~Re-aeate-SRa±±-ee±±ee~-ERe 
assessffieBES-a~~€~--~~~-wFi~~ea-BeEiee-~~~~~&&~-iBSQte~S 
aefeEe-~--~-eQeT Assessments are due not less than 30 days 
COMMITTEE AMENDMENT 
((J5 
''':$: 
'~ 
. .,.4 -
COMMITTEE AMENDMENT A " to H.P. 652, L.D. 933 
after prior written notice to the member insurers and accrue 
interest at 10% annually on and after the due date. 
OI ... ---Glasses -G'f--asSeSSlReBt:.s ... --'l!b:e-r-e---sba:l-d--ae--S--.£-dasses 9f 
assessffieatSr-as-Ee~~ewsT 
AT -- -C-1-a&&--A- as s e s smen-t-s- - sha~~ - -be- -ffiaEie - -f-<H:'- - i;he - -p-u£-po-&e--9 E 
ffieet~a~-~~~~~~4~~~~-aae-e~he£-~~-~~a&&&-aet 
~e*ateEi-te-a-~a~t~e~~a~-~ffi~a~~eEi-~as~~e~T 
gT---~Jass--~-~~~~~~~~--~-d---be--~--~--~he--eHteat 
aeeessa~y--~e--£a~~y--~--~~-~~-~--a~~~&--e~--the 
assee~at~ea-~--seet~ea-~-w~th-~~~-te-~-~ffi~a~~eEi 
Eieffiest~e-~as~~erT 
GT---~Jass--~--~~~~~~--~~--be--~--~--~he--eHteat 
aeeessa~y--~e--£a~~y--~--~~-~~-~--a~~~&--e~--the 
assee~at~ea-~--seet~ea-~-w~th-~~~-i;e-~-~ffi~a~~eEi 
Ee~e~~a-er-a~~eB-~BSQre~T 
gT--~e-~he-~~~-~~~~~~-~~~&-a&~-aeea-assesseEir 
aa-a~~e~~me~~-~-~-~e-that-~~~-~~~ionat~-&ha~-eE 
tae-a~~£a~e-~~~-&e~-fe£~h-4~~~~-~&~~~&~h-saa~* 
ae- as se s se d- -waeB--immedi-at.-e-l-y- -aeeessa~y- -f-<H:'- - i;he - -payment.--e f 
e*a~ffis-~-eH~eBsesT--~-eE-~~-s--assessffieBt-~l~--ae 
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AaY-affieQat:.-Q~aw~-by-~~~-at.~~~-~-~~ae-e~-e~eEi~t 
sha*~--be--eeBS~QereQ-~-~aymeBt-~~~-the-~--~BSQ~e~~s 
ea~~~at~eB-~£ev4QeQ-~e£-4~~~-s-~~r~~--~h&-ffiaHim~-~~ae 
eE-e£eEi.,it:.-e£-¥-e-i~~ assessment:--f.o..F-...eae,A.-aeee'Qa~-sha~~ 
ge-as-Ee~~ews .. 
AeeeQBi; 
bHe 
Hea~th 
AaaQ~ty 
$h4(Hh999 
$heggrggg 
$§ggrggg 
f~}--~he-~-at.4~~~~-ea~aia-a--d4~~-G~~~-E9r 
tae-geBef4~-e~-~~~~~--~~~&~-a&~-te-eHeeea 
tae--~~~~--~4~--t9--~~--~~--~ffiffiea~ate 
ava~~aa~~~i;y-ef-~~~Q~-~~-~~~~-~~~~~-elaim&-aBa 
eHFeases-~~~4~~~~~~-aB-4B~~£e~-~~~-~-that 
aeeeQBtT--~£a~--d~~~~-eFeei~-shaJJ-~~~~-~~-a 
~Qa~~E~eEi--~iBaBeial--~B&~~&~~i&Br--~-~-~J~-ffiay--a 
~Qa*~fiea--f~~~~-~ast~tQt~aa-~~~~i~-e--~a-~-~~Be 
ef-€~eQJ~-~~~-G~-6g%-ef-4~-s-~it1t-G&~~~a~r--±he 
~iae-~--e£ea4~-~~~-~~e¥JQe--~~-~-~@-Gay-~~~-eE 
te~ffiiBatieB-e~-~~-~~~~-&~p&~~&~BG&B~-aBe-i;he 
a66geiatieB---aBEi---sha~~---F~aviEie---fQBaia~---ta---the 
COMMITTEE AMENDMENT 
os -
, 
~ 
COMMITTEE AMENDMENT A " 
to H.P. 652, L.D. 933 
asseeia~iea--wi~hia--eae--aHsiaess--aay--ef--~eeeip~--ef 
ae~iee-~~~-~he-~~~~~-~~-aR--~~~-iasH~e~ 
ia--~ha~-~~&~-~-~-~-~~-£e£~~~R--4eQ~~---Eaeh 
memae~-~~~--~pea-~~~~-~~-~he-~iat-~-shall 
make-~~~~-paymea~-~~--it~-p£epe£~4eBa~e-~~-ef 
~he--ame~a~--aeFFeWeQ--aasea--ea--~he--p~emiHm--EeF--~he 
pFeeeaia~-~~--yeaFr--~£~-~~-ef-~~~-pFeviaea 
feF-~£-~~~~~~-&hall-ae-~~-~~-pF~F-Feview 
aaa--appFe¥al--&y-~~-~-int~--~--~£~-~4me--ef 
eFi~iaa~iea-aRQ-a~-aRy-sHase~~eR~-FeRewalT 
t6t--*f-~he-~~~~~~~~~~~~-~iae-e~-eFeai~T 
a-~--iRsHFeF-~-ea~aiR-~-liRe-~--e~eai~-~~~-a 
~HaliEieQ-f4BaB€ia~-~££~~~~~~~-~-~~~~-1~ae-ef 
eFeai~-~~~~--QiFee~ly-~~-aaG-~~--~-aeBefi~-~--~he 
memaeF---ia&~FeF~&--~--~--~~~~~~--~e---~he 
asseeia~ieR--a-~~~Y-~~-~-~-~e£~~~-~iBe--ef 
eFeai~--a~FeemeR~--pFeviQiR~--~ha~--~he--memaeF--iRsHFeF 
shall-p£eviQe-~~RQ~£~-~~~~~~~-~aGeF-~he-liRe 
eE-~~i~-~it~~-~-aH64Be66--Qay-~~-~~~--ef--a 
wFi~~eR-~~~-~Fem-~£e-~F~&~ad&&~-ef-~-impaiFea 
iRsHFeF-~-Qef4BeQ--~-£e£~~~£-~~-~-Feeeip~-~--a 
wFi~~eR--~&-~~~-~he--a&&eeia~iea-~~--~-QFaWaeWR 
HRaeF-~he-~iRe-~-~~~~---~-~~~~-eFeQi~-a~FeemeRt 
shall-~-&~a~ee~-~~-pF~F-~e~iew-~-app£eva~-~-~he 
sHpeFiR~eRQeRt-~--~he-~~~-ef-~~~~~~-aRQ-~-aay 
sHase~HeRt-£eReWa~"T---l~--sha-1-1--1nG-J..ude..-&~eh-eemmeFeially 
FeaseRaale--~~~~--as--~~--asseeia~ieR--~---~he 
sHpeFiR~eRQeRt---may---aeem---aQvisaaleT---iRelHQiR~---a 
pFevisieR-~hat-~he-~~~~-~~~--~-iFFeVGGa&~-eF-Ee~ 
a--&~a&&G-~-~-~--~4me--aaQ-~~ide&-~~--a--eg-aay 
Re~iee-~~-~&e-~~~i~~~~-~he-~-int~--~aa~ 
~he-~i£e-~~~~-~eFmiaa~eQ-e£-~-~~r--Aay-liRe 
ef-~~~~--~&&~-QRQe£-~~~-paF~Faph-may-~-Feplaeea 
wiEh-~~--liae-~--&~i&-a£Q--~-e~i6~iB~--~~-ef 
eFeai~--sh&~~-~-~~ea£eQ--ay--&a&-~~~~-~£~-a 
sHas~iEH~e--~i&e-~--£~eQ~~--has-~a-~~~-~~--~he 
assessmeRE-pFeviQeQ-feF-iR-~his-paFa~~apB-Bas-aeeR-paiaT 
f&t--~~-~-~iae-ef-~~~--~-ae~-~iveR-~~~¥iGeG-feF 
iR--6Qapa£a~£aph--~~~7--~~-~---~F&F--&hall--ae 
~espeRsiale-~~-~-~~-aa-a66e66meB~-~-~-&&-~ha~ 
memae~~s-~~~~~~~~-eE-~£e-~~~~-maHimHm 
as-6e-t.-.fe£~h-~-f}-~~-s--pa.,r~-aph--wh-ioh-~~~-ae.-paiQ-iR~e 
a-p£e4R6e~VeR€y-a££e££~-~~-~~-aee&aa~r--~HRa6 
iR-~~~-&hall-eR~y-~-~&&G-feE-~~~Yffi&&&-ef 
elaim6-~-eK~£e£--e~-~-4R6e~veR~--ia&&FeF-~~-~aa~ 
aeeeHR~T 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT .t\" to H.P. 652, L.D. 933 
f4t---~1~---ffia~e~ia±6--~--iBEe~ffia~ieB--~~~~--e~ 
eeB6iae~ea-~~~-~~~-pa~a~~aph--&ha~~-~-ma~~~£--eE 
F1:iB±ie-~eee~a ... -
E ... ---G±a66--E--~£€££meR~£--~~--~-~--~--&he--e*~eB~ 
Beee66a~y--~e--£a~~y--~--~~-~~-~-~~~ie&--ef--~Re 
a66eeia~ieB-1:iBae~-61:iB6ee~ieB-g ... 
A. 
Classes of assessments. 
There 
are 
classes 
of 
assessments, as set out in this subsection. 
A. 
Class A as§essments are authorized and called for the 
purpo§e of meeting administrative cost§ and other general 
expenses. 
Clas§ A as§e§sments may be authorized and called 
whether or not related to a particular impaired or insolvent 
insurer. 
B. 
Class B M§e§sments are authorized and called to the 
extent necessary to carry out the powers and duties of the 
as§ociation under section 4608 with regard to an impaired or 
an insolvent in§urer. 
iy---De~e£miDa~ieD--ef--a66es6.eD~6Y--A££€£~~-~~~--Be 
ae~e~ffiiBea-a6-fe±±ew6T 
A ... --~Re-~~~~-~-~~~~~r~~~~~-G~a&&-E-a66e66ffieB~ 
~e~-~&-~-£~~--Be--Qe&e~ffiiaeQ-~-~~-~a~Q'--~Re 
affie1:iB~-e~-a~y-~~a££-~~-~-~~-a&&&&~&&-&ha~~-Be-aiviaea 
affieB~-~he-~~-~-&Re-FFeFeF~4eB-~~-~~-~~&e&~-va±1:ie 
eE-~he-~~~~~~~~-~~-eaeh-a€€e1:iB~-~-~~-~~ai~-iB61:i~e~ 
Bea~6--~-~~-~~~a~--±iaBi±i~ie6-~f-~~-~mpa~~eQ--iB61:i~e~T 
~Ris-FaFa~FapR-£ha~~-~-~~~~~--~-&~-Qe&e~miBa&ieB-aS 
~e-whe~he~-~~~~~~-p~eviQeQ-BY-~~~~--~&~B&&-ef 
~Ri s - ,s.t-at:+ -Gy- - ~Re - .oom..ici~4-ar-y- -j-Q-~i5d-ie-t;.iGn--e f - oil- -~re-iqi%--e ~ 
a±ieB--~~r-~£--e~--~-~--s1:iBs~aB&iallY-~~~~~-~~-~Re 
pFe~ee~ieB-~~~-&Y-~R46-~~--fe~-~€£~Q~~£-~~-e~Re~ 
s~a~es ... 
... --~~a££-~~-Gla&s-G-assess~~~~~&e~-iBs1:i~eFs 
fe~--eaeR--aeee1:iB~--SRa±±--Be--iB--~Re--FFepeF~ieB--~Ra~--~Re 
pFeffiil:iffis-Fe€e4yea-~-~~-~~~~~~~-&y-eaeh-asse66ea 
ffieffiBeF-~~~-~-pe±ieies-~~~~~-eaeh-~~~-~r-~e 
S1:ieR-~~~-~~~~-eB-~~&e&&-4~-~h4s-~~~-~--a±± 
assessea-ffieffiBeF-iBS1:i~eFST 
bT---G~&&-~-~£€£~£--~eF--eaeh-~-~~--b€--ffiaae 
sepaFa~e±Y-~~r-ea£h--&&a~e-~~-WR4€R--~-4~~~-aemes~ie 
iBS1:i~eF-Wa6-a~~h~~~~eQ-~~~~~-~~~~-aBy-~imer-iB 
~Re-~r~r~~-~ha~--~he-~~i~-Fe€e4yea-~&-~~-iB 
COMMITTEE AMENDMENT 
(l":: 
.... 
~ 
~ 
COMMITTEE AMENDMENT "A" to H.P. 652, L.D. 933 
ERaE-~~~-&y-~~-~~~-~R~~~€~-~-pe~4e4e£-~~-9y 
ERe-aeee~B~-~€a~-~~~~~~~~~~-~-a~~-&aeA-SEaEes 
9y--t..Ae---~~~--:i,.n.s.u.r-EH"-.--.!I'-b€--.a~~€-£~ffie.Il.~~--aEJa,iB£~--FAeFAge~ 
iasaFeFs--sRa~~--ge--ia--~Re--pFepeF~iea--EBa~--~Re--pFeFAiHFAs 
Feeeivea-~-B~6~Be££--~-€aeh--&~&-~~~-&y-~-assessea 
FAeFAgeF-~~~-~-pe~ieies-~~~~-eaeR-~~~-~~-Ee 
~Re-~~~am&-~~~-~-B~£~Be6£--iR-~-~~~-~y--all 
assessea-FAeFAgeF-iBsaFeFsT---
~T--Assess~~-~F-~~-~-me€~-~~-~e~~iFeFAeaE6-~-~Be 
asseeiaEiea-w,i~a-~€~~~-~~~~~~-~a&~re-F-&&a~~-Ret..-ge 
FAaae--aRt..i~--~&~Fy-~~--~I~-~-b€--~~pe£€-£--e~--ERis 
eRapEeFT-~~~~~~-~--a6Se66FAeBE6-~F-~~~-6 
aaa-eeFAp~~a~,ieB-~-assess~~~-~~~-~~FaF&-&Aa~~-ge 
FAaae-w~~h-~-p&&~&&&~-aeEJFee-~~-~~-~&~~~~-tRat 
eHaet-aeteFFAiaatiea6-FAay-aet-a~way6-ge-pessi9leT 
3-A. 
Detenmination of assessments. 
Assessments must 
be 
determined as follows: 
A. 
The amount of any Class A assessment. as described in 
subsection 2-A, for each account must be determined by the 
board of directors and may be authorized and called on a pro 
rata or non-pro rata basis. 
The 
amount of any Class B 
assessment, 
as 
described 
in 
subsection 
2-A, 
must 
be 
allocated 
for 
assessment 
purposes 
among 
the 
accounts 
pursuant to an allocation formula that may be based on the 
premiums or reseryes of the impaired or insolvent insurer or 
any other standard determined by the board in its sole 
discretion 
as 
being 
fair 
and 
reasonable 
under 
the 
circumstances. 
This paragraph may not be a factor in the 
determination as to whether the protection provided by laws 
for residents of this State by the domiciliary jurisdiction 
of a foreign or alien insurer is or is not substantially 
similar to the protection provided by this chapter 
for 
residents of other states. 
B. 
Class A assessments, as described in subsection 2-A, 
against member insurers for each account must be in the 
proportion that the premiums received on business in this 
State 
by 
each 
assessed 
member 
insurer 
on policies 
or 
contracts covered by each account 
for the calendar year for 
which information is available preceding the year in which 
the 
insurer 
became 
insolvent 
or, 
in 
the 
case 
of 
an 
assessment with respect to an impaired insurer, the calendar 
year for which information is available preceding the year 
in which the insurer became 
impaired bears to premiums 
received on business in this State for the calendar year by 
all assessed member insurers. 
COMMITTEE AMENDMENT 
(i!:~ 
Q-:~.~ 
,J;~ 
.f:!.~ 
COMMITTEE AMENDMENT ,A " to H.P. 652, L.D. 933 
C. 
Class 
B assessments, 
as described in subsection 2-A, 
against member insurers for each account must be in the 
proportion that the premiums received on business in this 
State 
by 
each 
assessed 
member 
insurer 
on 
policies 
or 
contracts covered by each account for the calendar year for 
which information is available preceding the year in which 
the 
insurer 
became 
insolvent 
or, 
in 
the 
case 
of 
an 
assessment with respect to an impaired insurer, the calendar 
year for which information is available preceding the year 
in which 
the insurer became 
impaired bears to premiums 
received on business in this State for the calendar year by 
all assessed member insurers. 
D. 
Assessments for funds to meet the reguirements of the 
association with respect to an impaired or insolvent insurer 
may not be authorized or called until necessary to implement 
the purposes of this chapter. 
Classification of assessments 
under sub§iection 2-A and computation of assessments under 
this paragraph must be made with a reasonable degree of 
accuracy, 
recognizing 
that exact determinations 
may 
not 
always be possible. 
4. 
Abatement or deferral of assessments. The association 
may abate or defer, in whole or in part, the assessment of a 
member insurer if, in the opinion of the board of directors, 
payment of the assessment would endanger the ability of the 
member insurer to fulfill its contractual obligations. Once the 
conditions that cau§ied a deferral have been removed or rectified, 
the member insurer shall pay all assessments that were deferred 
pursuant to a 
repayment plan approved by the auociation. The 
total of all assessments upon a member insurer for each account 
saa~~ mAY not in anyone calendar year exceed 2~ of the insurer's 
premiums in this State on the policies covered by the account. 
5. 
Additional assessment for abatements or deferrals. 
In 
the event an assessment against a member insurer is abated or 
deferred, in whole or in part, because of the limitations set 
forth in subsection 4, the amount by which the assessment is 
abated or deferred 
saa~~ must be assessed against the other 
member 
insurers 
in 
a 
manner 
consistent with the basis 
for 
assessments set forth in this section. 
6. 
Refunds. 
The board of directors may, 
Sl:lB:feet--t-o--tae 
F~eiBse~veBey-~~~~~~~~~-&~-seetieB-~-~~-~T 
Fa~a~~aFa-PT by an equitable method as established in the plan of 
operation, 
refund 
to 
member 
insurers, 
in proportion to 
the 
contribution of each insurer to that account, the amount by which 
the assets of the account exceed the amount the board finds is 
necessary to carry out during the coming year the obligations of 
the association with regard to that account, including assets 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT t4" to H.P. 652, L.D. 933 
accruing from net realized gains and income from investments. A 
reasonable amount may be retained in any account to provide funds 
for the continuing expenses of the association and for future 
losses if refunds are impractical. 
7. 
Consideration of assessments in determining premium 
rates and dividends. It sba~~-Be is proper for any member insurer 
in determining its premium rates and policyowner dividends as to 
any kind of insurance within the scope of this chapter, 
to 
consider the amount reasonably necessary to meet its assessment 
obligations under this chapter. 
8. 
Assessment 
shortfalls. 
If 
the 
maximum 
assessment, 
together with the other assets of the association in any account, 
does not provide in anyone year in anyone account an amount 
sufficient to make all necessary payments from that account, the 
shortfall sba;!.;!. I!!1l.£t be assessed as an obligation of the other 
accounts of the association. 
Each member insurer's assessment 
sba** mY£t be in the proportion that its premium for the calendar 
year preceding the assessment on the kinds of insurance in the 
accounts to be assessed bears to the total premium of all member 
insurers for the same calendar year on the kinds of insurance in 
those 
accounts. 
The 
total of 
asseS$ments 
against 
a 
member 
insurer for shortfalls under this section and section 4440 in any 
one 
calendar year 
sba;!.;!. 
~ not 
exceed 
2% 
of that 
member 
insurer's premiums in this State or for policies covered by the 
account. 
Wi~biB-~--Qay&-~~~--&~-~~Q-~~-Qi~ee~e£6-~~-te 
*evy-aR-assess~-~--&&~&-S~BseetieBT-~£e-~~-~-&~-BeaFe 
e€--QiFeeteF&--&&a~~-~~~-~~-~~~-~--~£e--je4R~--s~aReiB~ 
eeffiffii~tee-ef-~£e-~~~~e-~~-~-~~~~~F-BaB*ia~-aBe 
iBs~FaBee-~~~~-~ha~--~-a~~~~i~~ieR--&a&-~~-~e-~~-tbat 
assessffieBtT--~he-Re~ifi~a~ieR-~~-~~~~~~~-aaG-ffi~&t-iBe*~ee 
tbe-~e~a;!.-ame~R~-~.g....-be- assessed--aqa-H1-s-t:--eaeh---aeGG-a-at:--aae-tae-Baffie 
e~-tbe-aeee~BE-Ee-wbieb-tbe-assessee-€~Bes-wi;!.;!'-Be-eFeeiteeT 
9. 
Certificate of contribution. The association shall issue 
to each insurer paying an assessment under this chapter, other 
than a Class A assessment. a certificate of contribution, in a 
form prescribed by the superintendent. for the amount of the 
assessment so paid. 
All outstanding certificates are of egual 
dignity and priority without reference to amounts or dates of 
issue. 
Sec. 8. 24-A MRSA §4611, sub-§l, " A and C, as enacted by PL 
1983, c. 846, are amended to read: 
A. 
Notify the board of directors of the existence of an 
impaired insurer not later than 3 days after a determination 
of impairment or insolvency is made or be the superintendent 
has received the notice of impairment or insolvency; 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT ~ 
" to H.P. 652, L.D. 933 
C. 
When an impairment is QeelaFeer-~aFsaaB~-s9-seesi9B-4eQ9 
determined, 
as defined in section 4605-A, 
subsection 
9T 
~aFa~Fa~s--g 10, 
and 
the 
amount 
of 
the 
impairment 
is 
determined, serve a demand upon the impaired insurer to make 
good the impairment within a reasonable time. Notice 9f to 
the impaired insurer ssall-€9R6Sisase constitutes notice to 
its shareholders, if any. 
The failure of the insurer to 
promptly comply with the demand ssall does not excuse the 
association from the performance of its powers and duties 
under this chapter; and 
Sec. 9. 24·A MRSA §4611, sub·§3, as enacted by PL 1983, c. 
846, is amended to read: 
3. 
Appeal of actions of board of directors or association. 
Any final action of the board of directors or the association may 
be appealed to the superintendent by any member insurer if such 
appeal is taken within 30 days of the action being appealed. Any 
final action or order of the superintendent shall-se is subject 
to judicial review pursuant to chapter 3. 
Sec. 10. 24·A MRSA §4612, as enacted by PL 1983, c. 846, is 
repealed. 
Sec. 11. 24·A MRSA §4612·A is enacted to read: 
§4612-A. 
Prevention of impainments and insolvencies 
To 
aid 
in 
the 
detection 
and 
prevention 
of 
insurer 
impairments and insolvencies. the following provisions apply. 
1. Action Ai superintendent. 
The superintendent shall: 
A. 
Notify the insurance 
commissioners of all the other 
states. territories of the United States and the District of 
Colwnbia. within 30 days following the action taken or the 
date the action occurs, when the superintendent takes any of 
the following actions against a member insurer: 
(1) Revokes a license; 
(2) Suspends a license; or 
(3) 
Makes 
a 
formal 
order 
that 
the 
member 
insurer 
restrict 
its 
premiwn 
writing. 
obtain 
additional 
contributions 
to 
surplus, 
withdraw 
from 
the 
State. 
reinsure all or any part of its business or increase 
capi tal. surplus or any other account for the security 
of policy owners or creditors. 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT 'A" to H.P. 652, L.D. 933 
B. Report to the board of directors when the superintendent 
has taken any of the actions set forth in paragraph A or has 
received 
a 
report 
from 
any other 
insurance commissioner 
indicating that any such action has been taken in another 
state. 
The report to the board of directors must contain 
all significant details of the action taken or the report 
received from another commissioner. 
C. Report to the board of directors when the superintendent 
has reasonable cause to believe from an examination, whether 
completed or in process, of any member insurer that the 
insurer may be an impaired or insolvent insurer. 
D. 
Furnish 
to 
the 
board 
of 
directors 
the 
National 
Association of Insurance Commissioners Insurance Regulatory 
Information System ratios 
and listings of 
companies 
not 
included in the ratios. The board may use the information 
contained 
therein 
in 
carrying 
out 
its 
duties 
and 
responsibilities under this section. 
The report and the 
information contained therein must be kept confidential by 
the 
board 
until 
such 
time 
as 
made 
public 
by 
the 
superintendent or other lawful authority. 
2. Advice and reconnendations. The superintendent may seek 
the 
advice 
and 
recommendations 
of 
the 
board 
of 
directors 
concerning any matter affecting the duties and responsibilities 
of the superintendent regarding the financial condition of member 
insurers and companies seeking admission to transact insurance 
business in this State. 
3. Action by board of directors. 
The board of directors, 
upon majority ballot vote, shall: 
A. Notify the superintendent of any information indicating 
any member insurer may be an impaired or insolvent insurer: 
B. 
Make reports and recommendations to the superintendent 
upon 
any 
matter 
germane 
to 
the 
solvency, 
liquidation, 
rehabilitation or conservation of 
any member 
insurer or 
germane to the solvency of any company seeking to do an 
insurance 
business 
in 
this 
State. 
These 
reports 
and 
recommendations 
must 
be 
treated as 
confidential 
by 
the 
superintendent: and 
C. 
Make 
recommendations 
to 
the 
superintendent 
for 
the 
detection and prevention of insurer insolvencies. 
Sec. 12. 24-A MRSA §§4614 and 4617, as enacted by PL 1983, c. 
846, are amended to read: 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT ,A .. to H.P. 652, L.D. 933 
§4614. Miscellaneous provisions 
1. 
Liability for 
unpaid assessments of insureds of an 
impaired insurer. Nothing in this chapter may be construed to 
reduce the liability for unpaid assessments of the insureds of an 
impaired 
insurer 
operating 
under 
a 
plan 
with 
assessment 
liability. 
2. 
Records. Records ssa*l must be kept of all negotiations 
and meetings in which the association or its representatives are 
involved to discuss the activities of the association in carrying 
out its powers and duties under section 4608. 
Records of the 
negotiations or meetings ssall ~ 
be made public only upon the 
termination of 
a 
liquidation, 
rehabilitation or 
conservation 
proceeding involving the impaired or insolvent insurer, upon the 
termination of the impairment of the insurer, or upon the order 
of a court of competent jurisdiction. Nothing in this subsection 
limits the duty of the association to render a report of its 
activities under section 4615. 
3. 
Association 
deemed 
to 
be 
creditor of 
impaired 
or 
insolvent 
insurer. 
For 
the 
purpose 
of 
carrying 
out 
its 
obligations under this 
chapter, 
the association ssal*--ee is 
deemed to be a creditor of the impaired insurer to the extent of 
assets attributable to covered policies reduced by any amounts to 
which the association is entitled as subrogee pursuant to section 
4608, 
subsection 
9. 
All 
assets 
of 
the 
impaired 
insurer 
attributable to covered policies ssall mY..§..!;, be used to continue 
all covered policies and pay all contractual obligations of the 
impaired insurer as required by this chapter. Assets attributable 
to covered policies, 
as used in this subsection, 
are to be 
construed 
as 
that proportion of 
the 
assets wsies ~ 
the 
reserves that should have been established for these policies 
bear to the reserve that should have been established for all 
policies of insurance written by the impaired insurer. 
As 
creditors 
of 
the 
impaired 
or 
insolvent 
insurer, 
the 
association 
and 
other 
similar 
associations 
are entitled to 
receive a disbursement of assets out of the marshaled assets, 
from time to time as the assets become available to reimburse it, 
as a credit against contractual obligations under this chapter. 
If 
the 
liquidator 
has 
not, 
within 
days 
of 
a 
final 
determination of insolvency of an insurer by the receivership 
court, made an application to the court for the approval of a 
proposal to disburse assets out of marshaled assets to guaranty 
associations having obligations because of the inSOlvency, then 
the 
association 
is 
entitled 
to 
make 
application 
to 
the 
receivership court for approval of its own proposal to disburse 
these assets. 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT )\ " to H.P. 652, L.D. 933 
4. 
Factors 
considered 
in 
distributinq 
assets. 
distributing 
assets, 
the 
following 
factors 
shall 
must 
considered. 
In 
be 
A. 
Prior 
to 
the 
termination 
of 
any 
liquidation, 
rehabilitation or conservation proceeding, 
the court may 
take into consideration the contributions of the respective 
parties, 
including the association, 
the 
shareholders 
and 
policy owners of the impaired or insolvent insurer and any 
other 
party with 
a 
bona 
fide 
interest, 
in 
making 
an 
equitable 
distribution 
of 
the 
ownership 
rights 
of 
the 
impaired or insolvent insurer. 
In such 
a 
determination, 
consideration shall must be given to the welfare of the 
pelieyheleeFs policy owners of the continuing or successor 
insurer. 
B. 
No distribution to stockholders, if any, of an impaired 
or insolvent insurer shall mgy be made until and unless the 
total amount of assessments levied by the association with 
respect to the insurer have been fully recovered by the 
association. 
5y--~~~-~~-p~ae~ieey-~~-~~~-Be-~~~~~-~RfaiF 
~Faee-~~~~~~-~-aRY-~~~~-ffia~e-~~-~-aRy-~-~~-~he 
pFe~ee~ieR-affeFeee-By-~his-ehap~eF-iR-~he-sale-ef-iRs~FaReeT 
6. 
Recovery procedure; provisions. The recovery procedure 
shall ~ 
provide that: 
A. 
If an order for liquidation or rehabilitation of an 
insurer 
domiciled 
in this State has 
been entered, 
the 
receiver appointed under that order shall-have has a right 
to recover on behalf of the insurer, from any affiliate that 
controlled it, the amount of distributions, other than stock 
dividends paid by the insurer on its capital stock, made at 
any time during the 
years preceding the petition for 
liquidation or rehabilitation subject to the limitations of 
paragraphs B to D; 
B. 
No 
s~eh-e4vieeRes-6hal~ distribution may be recoverable 
if the insurer shows that when paid the distribution was 
lawful and reasonable and that the insurer did not know and 
could not reasonably have known that the distribution might 
adversely affect the ability of the insurer to fulfill its 
contractual obligations; 
C. 
Any person who 
was 
an affiliate that controlled the 
insurer at the time the distributions were paid shall-Be is 
liable up to the amount of distributions -~-
the person 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT 'A" to H.P. 652, L.D. 933 
received. Any person who 
the insurer at the time 
sha1-1--se is liable up to 
the 
person 
would 
have 
immediately. If 2 or more 
the 
same 
distributions 
severally liable; 
was an affiliate that controlled 
the distributions were declared 
the amount of distributions -£€-
received if they 
had 
been paid 
persons are liable with respect to 
they 
shall--ae 
are 
jointly and 
D. 
The maximum amount recoverable under this section sha±± 
ae is the amount needed in excess of all other available 
assets of the impaired or insolvent insurer to pay the 
contractual obligations of the impaired or insolvent insurer 
on a fair and equitable basis; and 
E. 
If any person liable under paragraph C is insolvent, all 
its affiliates that controlled it at the time the EliviEle:aEl 
distribution was paid ssa,l,l--ae ~ jointly and severally 
liable for any resulting deficiency in the amount recovered 
from the insolvent affiliate. 
§4617. IlIRDunity 
There sha1-1--ae ~ no liability on the part of and no cause 
of action of 
any nature shall ~ arise against any member 
insurer or its agents or employees, the association or its agents 
or employees, 
memae~&-9i the board of directors or any member of 
the board or 
the superintendent or his the superintendent's 
representatives, for any ae~~ea-take:a act or omission by them in 
the performance of their powers and duties under this chapter. 
Immunity extends to the participation in any organization of one 
or more other state associations of similar purposes and to any 
such organization and its agents or employees. 
Sec. 13. 24-A MRSA §4619, as enacted by PL 1989, c. 751, §13, 
is repealed. 
Sec. 14. 24-A MRSA §§4620 and 4621 are enacted to read: 
§4620. Prohibited advertisement of association in insurance sales 
A person, including an insurer or an agent or affiliate of 
an insurer, 
may not make, 
publish, 
disseminate, circulate or 
place before the public or cause directly or indirectly to be 
made, published, disseminated, circulated or placed before the 
public in any newspaper, magazine or publication or in the form 
of a notice, circular, pamphlet. letter or poster or over any 
radio station or television station or in any other way any 
advertisement. announcement or statement. written or oral, that 
uses the existence of the association for the purpose of sales r 
solicitation or inducement to purchases of any form of 
insurance 
COMMITTEE AMENDMENT 
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....... 
COMMITTEE AMENDMENT A" to H.P. 652, L.D. 933 
covered by this chapter. 
This section does not apply to the 
Maine Life and Health Insurance Guaranty Association or any other 
entity that does not sell or solicit insurance. 
§4621. Credits for assessments paid; tax offsets 
1. Credit allowed. A member insurer may offset against its 
premium tax liability to this State an assessment described in 
section 
4609. 
subsection 
2-A. 
paragraph 
B 
and 
for 
which 
a 
certificate under section 4609. subsection 9 is issued. to the 
extent of 2040 of the amount of the assessment for each of the 5 
calendar years following the year in which the assessment was 
paid. 
In the event a member insurer ceases doing business. all 
uncredited assessments may be credited against its premium tax 
liability for the year it ceases doing business. 
2. Refunds. Any sums that are acquired by refund. pursuant 
to ses;tion 4602. subsection 6. 
from the association by member 
insurers. 
and that have been offset against premium taxes as 
provided in subsection 1. must be recaptured in such manner as 
required 
by 
the 
State 
Tax 
Assessor 
under 
Title 
36. 
The 
association shall notify the superintendent and the State Tax 
Assessor that refunds have been made. The association also shall 
provide the State Tax Assessor with a list of all members who 
were issued refunds and the dates and amounts of such refunds. 
3. Aaplication. This section applies to assessments paid to 
the association by a member insurer on or after January I. 2005. 
Sec. IS. 36 MRSA §2S30 is enacted to read: 
§2530. Maine Life and Health Insurance Guaranty Association credit 
A taxpayer is allowed a credit against the tax otherwise due 
under this chapter as determined under Title 24-A, section 4621. 
Sec. 16. Application. This Act does not apply to 
that 
is 
insolvent 
or 
unable 
to 
fulfill 
its 
obligations on the effective date of this Act.' 
SUMMARY 
any insurer 
contractual 
This amendment replaces the bill, which is a concept draft 
pursuant to Joint Rule 208. Under current law, the Maine Life and 
Health Insurance Guaranty Association Act, "the Act," provides a 
mechanism to provide payment of benefits and continuation of 
coverage under an individual life or health insurance policy or 
annuity contract and under certificates of group coverage when an 
insurance 
company 
doing 
business 
in 
this 
State 
becomes 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT 'A" to H.P. 652, L.D. 933 
financially impaired or insolvent. 
The 
amendment updates and 
revises the current law in conformance with the model act from 
the National Association of Insurance Commissioners. 
The amendment does the following. 
1. 
It clarifies that the Act provides protection to persons 
covered under both individual and group life and health policies 
and annuity contracts. 
2. 
It establishes the conditions under which persons who 
are payees or beneficiaries under a structured settlement annuity 
are eligible for coverage. 
3. 
It clarifies that nonresidents may be covered under the 
Act in certain circumstances. 
4. 
It adds 
certain exceptions, 
including policies 
and 
contracts issued to a self-insured or uninsured plan, policies 
and contracts issued by a member insurer at a time when that 
insurer was not licensed in this State and unallocated annuity 
contracts. 
5. 
It establishes that the limits for coverage provided by 
the association may not exceed the lesser of the contractual 
obligations of the impaired or insolvent insurer under the policy 
or $300,000 
for life insurance death benefits, 
$300,000 
for 
disability, 
long-term care insurance or other limited benefit 
heal th insurance, $500,000 for health insurance and $100,000 in 
the present value of annuity benefits. 
6. 
It allows meetings and records of the association to be 
open to the public upon majority vote of the association's board 
of directors. 
7. 
It establishes the powers of the association to take 
action following an insolvency of a 
member insurer to either 
provide payment of benefits or continue coverage for persons 
covered under a policy or contract of the insolvent insurer. The 
amendment also provides the conditions under which substitute 
coverage through an alternative policy or reissued policy may be 
extended to covered persons. 
8. 
It permits the association to request policy liens or 
moratoriums on payments from a court. 
9. 
It gives the Superintendent of Insurance the powers and 
duties of the association in the event the association fails to 
take action with respect to an impaired or insolvent insurer in a 
timely manner. 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT ~ " to H.P. 652, L.D. 933 
10. 
It clarifies the standing of the association to appear 
before any court or agency in this State in an action relating to 
an impaired or insolvent insurer or matters germane to the powers 
and duties of the association. 
11. 
It clarifies the subrogation rights of the association. 
12. 
It permits the association to elect within one year of 
the date the association becomes responsible for obligations of a 
member insurer to succeed to the rights and obligations of that 
impaired or insolvent insurer through reinsurance agreements. 
13. 
It establishes the authority of the association to make 
classes of assessment: 
Class A assessments to support the 
administrative costs of the association and Class B assessments 
to carry out the powers and duties of the association with regard 
to a particular impairment or insolvency of a member insurer. The 
amendment also provides the method for determining the amount of 
any Class A or Class B assessment. 
14. 
It requires the Superintendent of Insurance to notify 
other 
insurance 
commissioners 
and 
the 
association 
when 
the 
superintendent revokes or suspends the license or authority of a 
member insurer or makes a formal order relating to that member 
insurer. The amendment also requires the superintendent to report 
to the association if an exami~ation of a member insurer results 
in reasonable cause to believe that a 
member insurer may be 
impaired or insolvent. 
15. 
It requires the 
the board of directors, 
information indicating 
a 
insolvent 
and 
to 
make 
association, upon a majority vote of 
to notify the superintendent of any 
member 
insurer 
may 
be 
impaired or 
reports 
and 
recommendations 
to 
the 
matters germane to the solvency of a 
superintendent 
member insurer. 
upon any 
16. 
It repeals the requirement that the association make 
annual reports to the Legislature and removes the requirement 
that the association notify the Legislature when the association 
has voted to levy an assessment because of a shortfall in the 
amount of money needed by the association to meet its payment 
obligations. 
17. 
It prohibits 
insurers, 
insurance 
agents 
and 
other 
persons from using the existence of the guaranty association in 
the advertising, sale or solicitation of insurance covered under 
the chapter. 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT ·A .. to H.P. 652, L.D. 933 
18. 
It permits 
a 
member insurer to offset against its 
premium tax liability any Class B assessments paid by the member 
insurer because of an insolvency. 
The provision allows a member 
insurer to offset 20% of the assessment in each of the 5 years 
following 
the 
assessment. 
The 
amendment 
requires 
that 
any 
refunded assessments that have been offset must be recaptured as 
required 
by 
the 
State 
Tax 
Assessor 
and 
also 
requires 
the 
association to notify the Superintendent of Insurance and the 
State Tax Assessor regarding the issuance of refunds. The premium 
offset provision applies to assessments paid to the association 
by a member insurer on or after January 1, 2005. 
19. 
The amendment makes clear the changes to current law do 
not apply to any insurer that is insolvent or unable to meet its 
contractual 
obligations 
at 
the 
time 
the 
changes 
become 
effective. 
FISCAL NOTE REQUIRED 
(See attached) 
COMMITTEE AMENDMENT 
Approved: 05/20105 :;:t;t?ac:.. 
LD933 
2060(02) 
An Act To Amend the Maine Life and Health Insurance Guaranty Association Act 
Fiscal Note for Bill as Amended by Committee Amendment 'A" 
Committee: Insurance and Financial Services 
Fiscal Note Required: Yes 
Fiscal Note 
Minor cost increase - Other Special Revenue Funds 
Fiscal Detail and Notes 
Any additional costs to the Bureau of Insurance in the Department of Professional and Financial Regulation can be 
absorbed by the bureau utilizing existing budgetary resources. 
LR2060(2) - Fiscal Note - Page 1 of 1