Opinion ID: 2625620
Heading Depth: 1
Heading Rank: 5

Heading: Nevada's Insurance Guaranty Association Act and the Association

Text: In 1971, following the majority of other jurisdictions, the Legislature created an insurance guaranty act entitled the Nevada Insurance Guaranty Association Act (NIGA Act). 1971 Nev. Stat., ch. 661, § 21, at 1943; NRS 687A.010. The NIGA Act was codified at NRS Chapter 687A.1971 Nev. Stat., ch. 661, § 21, at 1943. The purpose of the NIGA Act is to provide limited protection for insureds in the event that their insurers become insolvent. NRS 687A.060. The NIGA Act applies to all direct insurance (with exception to certain insurance that is not pertinent to this appeal). See NRS 687A.020. The NIGA Act created the Nevada Insurance Guaranty Association (NIGA). See NRS 687A.040. NIGA is a nonprofit, unincorporated, legal entity that provides insurance benefits to individuals and entities whose insurers have become insolvent. See NRS 687A.040; NRS 687A.060. NIGA's duty is to accept responsibility for obligations existent at the time that an insurance company loses its solvency, meaning NIGA steps into the shoes of the insolvent insurer, as NIGA [s]hall be deemed the insurer to the extent of its obligations on the covered claims and to that extent has any rights, duties and obligations of the insolvent insurer as if the insurer had not become insolvent. NRS 687A.060( l )(b) (emphasis added). Covered claims are unpaid claims that are within the coverage of a policy written by a now insolvent insurance company. NRS 687A.033(1). While the statute defining [c]overed claims generally provides that covered claims are those that are within the policy coverage, the statute specifically prescribes what types of claims are not covered, which, therefore, fall outside the purview of NIGA's duty to pay. Specifically, NRS 687A.033(2) excludes from coverage, in relevant part, [a]n amount that is directly or indirectly due a[n] ... insurer. NRS 687A.033(2)(a). The NIGA Act does not define insurer. NIGA's general fund, from which it pays claims, is supplied by annual assessments of each insurer that is a member of NIGA. See NRS 687A.060; S.B. 74, Bill Summary, 70th Leg. (Nev.1999). In order to transact business within Nevada, all insurers must be members of NIGA and must contribute to the fund. NRS 687A.040; NRS 687A.070(2). The NIGA Act defines these members as persons or entities that [w]rite [] any kind of insurance and are licensed to transact insurance in this state. NRS 687A.037(1), (2).