An Act To Terminate Payments to the Maine Workers Compensation Residual Market Pool from the Maine Insurance Guaranty Association
Maine Legislature, Session 122, LD 0097
Committee: Insurance and Financial Services
Sponsors: MAYO, PERRY, MILLS, SULLIVAN
Amends: 24-A MRSA §4435, 24-A MRSA §4438

Legislative Document 
No. 97 
S.P.39 
In Senate, January 11,2005 
An Act To Terminate Payments to the Maine Workers' 
Compensation Residual Market Pool from the Maine Insurance 
Guaranty Association 
(EMERGENCY) 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
Presented by Senator MAYO of Sagadahoc. 
Cosponsored by Representative PERRY of Calais and 
Senators: MILLS of Somerset, SULLIVAN of York. 
Printed on recycled paper 
JOY J. O'BRIEN 
Secretary of the Senate 
Emergency preamble. Whereas, acts of the Legislature do not 
become effective until 90 days after adjournment unless enacted 
as emergencies; and 
Whereas, part of the Maine Workers' 
Compensation Residual 
Market Pool funding crisis resolution in 1995 required the Maine 
Insurance Guaranty Authority to make quarterly payments to the 
pool to make it solvent; and 
Whereas, the Maine 
Workers' 
Compensation Residual 
Market 
Pool 
is financially 
solvent 
and 
no 
longer 
needs 
the 
Maine 
Insurance Guaranty Authority payments to meet its obligations; and 
Whereas, the Maine 
Insurance 
Guaranty Authority payments 
create the need to assess other lines of insurance, including 
homeowner's and auto insurance, 
thereby burdening those lines 
with an additional $8,000,000 a year in unnecessary costs to 
consumers; and 
Whereas, in the judgment of the Legislature, these facts 
create an emergency within the meaning of the Constitution of 
Maine 
and 
require 
the 
following 
legislation 
as 
immediately 
necessary for the preservation of the public peace, health and 
safety; now, therefore, 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 24·A MRSA §2393, sub·§3, as enacted by PL 1995, c. 
289, §11, is amended to read: 
3. 
Payments by Maine Insurance Guaranty Association. 
The 
association shall 
pay 
to 
the 
pool 
$1,538,039 
on 
or 
before 
February 15th, May 15th, August 15th, and November 15th of each 
year for 4Q ~ consecutive calendar quarters beginning August 15, 
1996. 
A. 
Each payment made by the association to the pool under 
this subsection is treated as a covered claim pursuant to 
section 4435, 
subsection 4, 
except that any provision or 
authority 
for 
the 
association to 
seek 
reimbursement 
or 
recoupment 
from any source other than by assessments to 
association member insurers does not apply. 
This section 
does 
not 
limit or 
impair 
a 
member 
insurer's 
right 
to 
recoupment under section 4447. 
B. 
The quarterly payments by the association to the pool as 
required by this subsection must be made regardless of the 
financial condition or actual or projected cash requirements 
of the pool. 
Page l-LR0326(1) 
Sec. 2. 24-A MRSA §4435, sub-§5, as amended by PL 2001, c. 
478, §6 and affected by §11, is further amended to read: 
5. 
insurer: 
Insolvent insurer. 
"Insolvent insurer" means a member 
A. 
Authorized to transact insurance in this State either at 
the time the policy was issued or when the insured event 
occurred; and 
B. 
Against whom 
a 
final order of liquidation has been 
entered with a finding of insolvency by a court of competent 
jurisdiction. 
Effective July 1, 1995, the workers' compensation residual market 
pool, as created by the Bureau of Insurance Rules, Chapter 440, 
is deemed an insolvent insurer. 
Effective January 1, 
2Q05, 
the workers' 
compensation residual 
market pool, as created by the Bureau of Insurance Rules, Chapter 
440, is no longer deemed an insolvent insurer. 
Sec. 3. 24-A MRSA §4438. sub-§l, 1JA-l, as enacted by PL 1995, 
c. 289, §14, is amended to read: 
A-I. 
Pay to the workers' compensation residual market pool 
the sum of $1,538,039 on or before February 15th, May 15th, 
August 15th and November 15th of each year beginning August 
15, 
1996 
and 
continuing for 
4Q 
~ consecutive calendar 
quarters. 
Each payment made under this paragraph must be 
treated as the payment of a covered claim, except that the 
association 
may not seek reimbursement or recoupment from 
any source other than by assessments to member insurers. 
Member insurers are allowed to recognize assessments made 
pursuant to this paragraph in rates and premiums as provided 
in section 4447; 
Sec. 4. Retroactivity clause. 
This Act applies retroactively to 
January 1, 2005. 
Emergency clause. 
In view of the emergency cited in the 
preamble, this Act takes effect when approved. 
SUMMARY 
This bill terminates the ')bli(j'ation of the Maine Insurance 
4R 
Guaranty 
Association 
~o 
P~y the 
Maine 
Workers' 
ComDensation 
Residual Market Pool quarter 1;-
l'CI'.-ments, 
since the 12.>! 
l'2.ymellt 
was November 15, 200<!, 
These jJClyments were add ina $8, ,iiJC, 000 ill 
costs to lines of insurance other than workers' 
compensation 
through the "spillover" insolvency assessment mechanism at a time 
when the residual market pool was solvent.