Arkansas Code of 1987 (2023) › Title 23 - PUBLIC UTILITIES AND REGULATED INDUSTRIES (§§ 23-1-101 — 23-119-105) › Subtitle 3 - INSURANCE (§§ 23-60-101 — 23-103-417) › Chapter 96 - ARKANSAS LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION ACT (§§ 23-96-101 — 23-96-121) › Section 23-96-110 - Powers and duties of association

(a)
In addition to the rights and powers elsewhere in this chapter, the Arkansas Life and Health Insurance Guaranty Association may:
(1)
Enter into such contracts as are necessary or proper to carry out this chapter;
(2)
Sue or be sued, including taking any legal actions necessary or proper to recover any unpaid assessments under §
23-96-115
and to settle claims or potential claims against it;
(3)
(A)
Borrow money to effect the purposes of this chapter.
(B)
Any notes or other evidence of indebtedness of the Arkansas Life and Health Insurance Guaranty Association not in default shall be legal investments for domestic member insurers and may be carried as admitted assets;
(4)
Employ or retain such persons as are necessary or appropriate to handle the financial transactions of the Arkansas Life and Health Insurance Guaranty Association and to perform such other functions as become necessary or proper under this chapter;
(5)
Take such legal action as may be necessary or appropriate to avoid or recover payment of improper claims;
(6)
(A)
Exercise, for the purpose of this chapter and to the extent approved by the Insurance Commissioner, the powers of a domestic life insurer, health insurer, or health maintenance organization.
(B)
The Arkansas Life and Health Insurance Guaranty Association shall not issue policies or contracts other than those issued to perform its obligations under this chapter;
(7)
Organize itself as a corporation or in other legal form permitted by the laws of this state;
(8)
Request information from a person seeking coverage from the Arkansas Life and Health Insurance Guaranty Association in order to aid the Arkansas Life and Health Insurance Guaranty Association in determining its obligations under this chapter with respect to the person, and the person shall promptly comply with the request;
(9)
Unless prohibited by law, according to the terms and conditions of the policy or contract, file for actuarially justified rate or premium increases for any policy or contract for which the Arkansas Life and Health Insurance Guaranty Association provides coverage under this chapter; and
(10)
Take other necessary or appropriate action to discharge its duties and obligations under this chapter or to exercise its powers under this chapter.
(b)
The Arkansas Life and Health Insurance Guaranty Association may render assistance and advice to the commissioner, upon his or her request, concerning rehabilitation, payment of claims, continuance of coverage, or the performance of other contractual obligations of any impaired insurer or insolvent insurer.
(c)
(1)
(A)
The Arkansas Life and Health Insurance Guaranty Association shall have standing to appear or intervene before any court or agency in this state with jurisdiction over an impaired insurer or insolvent insurer concerning which the Arkansas Life and Health Insurance Guaranty Association is or may become obligated under this chapter or with jurisdiction over any person or property against whom the Arkansas Life and Health Insurance Guaranty Association may have rights through subrogation or otherwise.
(B)
Provided, at its option, the Arkansas Life and Health Insurance Guaranty Association may appear solely for the purpose of receiving copies of all pleadings and notices and attending hearings without otherwise becoming a party to the proceeding.
(C)
Standing under this subdivision (c)(1) extends to all matters germane to the powers and duties of the Arkansas Life and Health Insurance Guaranty Association, including without limitation proposals for reinsuring, reissuing, modifying, or guaranteeing the policies or contracts of the impaired insurer or insolvent insurer and the determination of the policies or contracts and contractual obligations.
(2)
The Arkansas Life and Health Insurance Guaranty Association shall also have the right to appear or intervene before a court or agency in another state with jurisdiction over an impaired insurer or insolvent insurer for which the Arkansas Life and Health Insurance Guaranty Association is or may become obligated or with jurisdiction over any person or property against whom the Arkansas Life and Health Insurance Guaranty Association may have rights through subrogation or otherwise.
(d)
To further the purposes and administer the powers and duties of the Arkansas Life and Health Insurance Guaranty Association, the Arkansas Life and Health Insurance Guaranty Association may join an organization of one (1) or more other state associations of similar purposes.
(e)
(1)
(A)
Records shall be kept of all meetings of the Board of Directors of the Arkansas Life and Health Insurance Guaranty Association to discuss the activities of the Arkansas Life and Health Insurance Guaranty Association in carrying out its powers and duties under §§
23-96-111
-
23-96-114
and
23-96-120
.
(B)
The records of the Arkansas Life and Health Insurance Guaranty Association with respect to an impaired insurer or insolvent insurer shall not be disclosed before the termination of a liquidation, rehabilitation, or conservation proceeding involving the impaired insurer or insolvent insurer, upon the termination of the impairment or insolvency of the member insurer, or upon the order of a court of competent jurisdiction.
(2)
This subsection shall not limit the duty of the Arkansas Life and Health Insurance Guaranty Association to render a report of its activities under §
23-96-109(a)(4)
.
(f)
(1)
(A)
(i)
At any time within one hundred eighty (180) days of the date of the order of liquidation, the Arkansas Life and Health Insurance Guaranty Association may elect to succeed to the rights and obligations of the ceding member insurer that relate to policies, contracts, or annuities covered, in whole or in part, by the Arkansas Life and Health Insurance Guaranty Association, in each case under any one (1) or more reinsurance contracts entered into by the insolvent insurer and its reinsurers and selected by the Arkansas Life and Health Insurance Guaranty Association.
(ii)
Any such assumption shall be effective as of the date of the order of liquidation.
(iii)
The election shall be effected by the Arkansas Life and Health Insurance Guaranty Association or the National Organization of Life and Health Insurance Guaranty Associations on its behalf sending written notice, return receipt requested, to the affected reinsurers.
(B)
To facilitate the earliest practicable decision about whether to assume any of the contracts of reinsurance and in order to protect the financial position of the estate, the receiver and each reinsurer of the ceding member insurer shall make available upon request to the Arkansas Life and Health Insurance Guaranty Association or to the National Organization of Life and Health Insurance Guaranty Associations on its behalf as soon as possible after commencement of formal delinquency proceedings:
(i)
Copies of in-force contracts of reinsurance and all related files and records relevant to the determination of whether such contracts should be assumed; and
(ii)
Notices of any defaults under the reinsurance contracts or any known event or condition which with the passage of time could become a default under the reinsurance contracts.
(C)
This subdivision (f)(1)(C) applies to reinsurance contracts so assumed by the Arkansas Life and Health Insurance Guaranty Association, as follows:
(i)
(a)
The Arkansas Life and Health Insurance Guaranty Association shall be responsible for all unpaid premiums due under the reinsurance contracts for periods both before and after the date of the order of liquidation and shall be responsible for the performance of all other obligations to be performed after the date of the order of liquidation, in each case which relate to policies, contracts, or annuities covered, in whole or in part, by the Arkansas Life and Health Insurance Guaranty Association.
(b)
The Arkansas Life and Health Insurance Guaranty Association may charge policies, contracts, or annuities covered in part by the Arkansas Life and Health Insurance Guaranty Association, through reasonable allocation methods, the costs for reinsurance in excess of the obligations of the Arkansas Life and Health Insurance Guaranty Association and shall provide notice and an accounting of these charges to the liquidator;
(ii)
(a)
The Arkansas Life and Health Insurance Guaranty Association shall be entitled to any amounts payable by the reinsurer under the reinsurance contracts with respect to losses or events that occur in periods after the date of the order of liquidation and that relate to policies, contracts, or annuities covered, in whole or in part, by the Arkansas Life and Health Insurance Guaranty Association.
(b)
Upon receipt of amounts under subdivision (f)(1)(C)(ii)
(a)
of this section, the Arkansas Life and Health Insurance Guaranty Association shall pay to the beneficiary under the policy, contract, or annuity on account of which the amounts were paid a portion of the amount equal to the lesser of:
(1)
The amount received by the Arkansas Life and Health Insurance Guaranty Association; and
(2)
The excess of the amount received by the Arkansas Life and Health Insurance Guaranty Association over the amount equal to the benefits paid by the Arkansas Life and Health Insurance Guaranty Association on account of the policy, contract, or annuity less the retention of the insurer applicable to the loss or event;
(iii)
(a)
Within thirty (30) days following the Arkansas Life and Health Insurance Guaranty Association's election, the election date, the Arkansas Life and Health Insurance Guaranty Association and each reinsurer under contracts assumed by the Arkansas Life and Health Insurance Guaranty Association shall calculate the net balance due to or from the Arkansas Life and Health Insurance Guaranty Association under each reinsurance contract as of the election date with respect to policies, contracts, or annuities covered, in whole or in part, by the Arkansas Life and Health Insurance Guaranty Association, which calculation shall give full credit to all items paid by either the member insurer or its receiver or the reinsurer prior to the election date.
(b)
The reinsurer shall pay the receiver any amounts due for losses or events before the date of the order of liquidation, subject to any set-off for premiums unpaid for periods before the date, and the Arkansas Life and Health Insurance Guaranty Association or reinsurer shall pay any remaining balance due the other, in each case within five (5) days of the completion of the aforementioned calculation.
(c)
Any disputes over the amounts due to either the Arkansas Life and Health Insurance Guaranty Association or the reinsurer shall be resolved by arbitration pursuant to the terms of the affected reinsurance contracts or, if the contract contains no arbitration clause, as otherwise provided by law.
(d)
If the receiver has received any amounts due the Arkansas Life and Health Insurance Guaranty Association pursuant to subdivision (f)(1)(C)(ii) of this section, the receiver shall remit the same to the Arkansas Life and Health Insurance Guaranty Association as promptly as practicable; and
(iv)
If the Arkansas Life and Health Insurance Guaranty Association or receiver, on the Arkansas Life and Health Insurance Guaranty Association's behalf, within sixty (60) days of the election date, pays the unpaid premiums due for periods both before and after the election date that relate to policies, contracts, or annuities covered, in whole or in part, by the Arkansas Life and Health Insurance Guaranty Association, the reinsurer shall not:
(a)
Terminate the reinsurance contracts for failure to pay premium insofar as the reinsurance contracts relate to policies, contracts, or annuities covered, in whole or in part, by the Arkansas Life and Health Insurance Guaranty Association; and
(b)
Set off any unpaid amounts due under other contracts, or unpaid amounts due from parties other than the Arkansas Life and Health Insurance Guaranty Association, against amounts due the Arkansas Life and Health Insurance Guaranty Association.
(2)
(A)
During the period from the date of the order of liquidation until the election date or, if the election date does not occur, until one hundred eighty (180) days after the date of the order of liquidation:
(i)
Neither the Arkansas Life and Health Insurance Guaranty Association nor the reinsurer shall have any rights or obligations under reinsurance contracts that the Arkansas Life and Health Insurance Guaranty Association has the right to assume under subdivision (f)(1) of this section, whether for periods before or after the date of the order of liquidation; and
(ii)
The reinsurer, the receiver, and the Arkansas Life and Health Insurance Guaranty Association shall, to the extent practicable, provide each other data and records reasonably requested.
(B)
When the Arkansas Life and Health Insurance Guaranty Association has elected to assume a reinsurance contract, the parties' rights and obligations shall be governed by subdivision (f)(1) of this section.
(3)
If the Arkansas Life and Health Insurance Guaranty Association does not elect to assume a reinsurance contract by the election date pursuant to subdivision (f)(1) of this section, the Arkansas Life and Health Insurance Guaranty Association shall have no rights or obligations, in each case for periods both before and after the date of the order of liquidation, with respect to the reinsurance contract.
(4)
When policies, contracts, or annuities or covered obligations with respect thereto are transferred to an assuming insurer, reinsurance on the policies, contracts, or annuities may also be transferred by the Arkansas Life and Health Insurance Guaranty Association, in the case of contracts assumed under subdivision (f)(1) of this section, subject to the following:
(A)
Unless the reinsurer and the assuming insurer agree otherwise, the reinsurance contract transferred shall not cover any new policies of insurance, contracts, or annuities in addition to those transferred;
(B)
The obligations described in subdivision (f)(1) of this section shall no longer apply with respect to matters arising after the effective date of the transfer; and
(C)
Notice shall be given in writing, return receipt requested, by the transferring party to the affected reinsurer not less than thirty (30) days before the effective date of the transfer.
(5)
(A)
This subsection shall supersede any state law or affected reinsurance agreement or agreements that provide for or require 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 the insolvent member insurer.
(B)
The receiver, rehabilitator, or liquidator shall remain entitled to any amounts payable by the reinsurer under the reinsurance agreement or agreements with respect to losses or events that occur in periods before the coverage date, subject to applicable setoff provisions.
(6)
Except as otherwise expressly provided under subdivision (f)(1)(C) of this section, this section does not:
(A)
Alter or modify the terms and conditions of the indemnity reinsurance agreements of the insolvent member insurer;
(B)
Abrogate or limit any rights of any reinsurer to claim that it is entitled to rescind a reinsurance agreement;
(C)
Give a policyholder, contract owner, enrollee, certificate holder, or beneficiary an independent cause of action against an indemnity reinsurer that is not otherwise stated in the indemnity reinsurance agreement;
(D)
Give a policyholder or beneficiary an independent cause of action against a reinsurer that is not otherwise stated in the reinsurance contract;
(E)
Limit or affect the Arkansas Life and Health Insurance Guaranty Association's rights as a creditor of the estate against the assets of the estate; or
(F)
Apply to reinsurance agreements covering property or casualty risks.
(g)
The Board of Directors of the Arkansas Life and Health Insurance Guaranty Association shall have discretion and may exercise reasonable business judgment to determine the means by which the Arkansas Life and Health Insurance Guaranty Association is to provide the benefits of this chapter in an economical and efficient manner and may provide additional or alternative coverages and benefits in appropriate situations.
(h)
If the Arkansas Life and Health Insurance Guaranty Association has arranged or offered to provide the benefits of this chapter to a covered person under a plan or arrangement that fulfills the Arkansas Life and Health Insurance Guaranty Association's obligations under this chapter, the person shall not be entitled to benefits from the Arkansas Life and Health Insurance Guaranty Association in addition to or other than those provided under the plan or arrangement.
(i)
(1)
Venue in a suit against the Arkansas Life and Health Insurance Guaranty Association arising under this chapter shall be in Pulaski County.
(2)
The Arkansas Life and Health Insurance Guaranty Association shall not be required to give an appeal bond in an appeal that relates to a cause of action arising under this chapter.
Amended by Act 2019, No. 520,§ 2, eff. 7/24/2019.
Amended by Act 2013, No. 456,§ 4, eff. 8/16/2013.
Acts 1989, No. 444, §§ 8, 14; 1997, No. 950, § 1; 2001, No. 1603, § 57; 2001, No. 1604, § 121.