1999 Minnesota Statutes

     61B.24 Assessments. 

    Subdivision 1.    Purpose.  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 or subaccount, at the 
 times and for the amounts as the board finds necessary. 
 Assessments are due not less than 30 days after prior written 
 notice to the member insurers and accrue interest on and after 
 the due date at the then applicable rate determined under 
 section 549.09, subdivision 1, paragraph (c). 

    Subd. 2.    Classes of assessments.  There are two 
 classes of assessments, as follows: 

    (1) class A assessments must be made for the purpose of 
 meeting administrative and legal costs and other expenses and 
 examinations conducted under the authority of section 61B.27. 
 Class A assessments may be made whether or not related to a 
 particular impaired or insolvent insurer; and 

    (2) class B assessments must be made to the extent 
 necessary to carry out the powers and duties of the association 
 under section 61B.23 with regard to an impaired or an insolvent 
 insurer. 

    Subd. 3.    Formula for determination.  (a) The amount 
 of a class A assessment shall be determined by the board and may 
 be made on a pro rata or nonpro rata basis.  If pro rata, the 
 board may provide that it be credited against future class B 
 assessments.  A nonpro rata assessment shall not exceed $500 per 
 member insurer in any one calendar year. 

    (b) The amount of any class B assessment must be allocated 
 for assessment purposes among the accounts or subaccounts 
 pursuant to an allocation formula which may be based on the 
 premiums or reserves of the impaired or insolvent insurer or any 
 other standard considered by the board in its sole discretion as 
 being fair and reasonable under the circumstances. 

    (c) Class B assessments against member insurers for each 
 subaccount or account must be in the proportion that the average 
 annual premiums received on business in this state by each 
 assessed member insurer on policies or contracts covered by each 
 subaccount or account for the three most recent calendar years 
 for which information is available preceding the calendar year 
 in which the insurer became impaired or insolvent, as the case 
 may be, bears to the average annual premiums received on 
 business in this state by all assessed member insurers on 
 policies or contracts covered by that subaccount or account for 
 those same calendar years.  If the impaired insurer becomes 
 insolvent, the date of impairment must be used to determine the 
 assessment.  Premiums for purposes of calculating average annual 
 premium for calendar years prior to 1993 shall be determined in 
 accordance with Minnesota Statutes 1992, sections 61B.01 to 
 61B.16.  

    (d) Assessments for funds to meet the requirements of the 
 association with respect to an impaired or insolvent insurer 
 must not be made until necessary to implement the purposes of 
 sections 61B.18 to 61B.32.  Classification of assessments under 
 subdivision 2 and computation of assessments under this 
 subdivision must be made with a reasonable degree of accuracy, 
 recognizing that exact determinations may not always be possible.

    Subd. 4.    Abatement or deferment.  The association may 
 abate or defer, in whole or in part, the assessment of a member 
 insurer if, in the opinion of the board, payment of the 
 assessment would endanger the ability of the member insurer to 
 fulfill its contractual obligations.  In the event an assessment 
 against a member insurer is abated, or deferred in whole or in 
 part, the amount by which the assessment is abated or deferred 
 may be assessed against the other member insurers in a manner 
 consistent with the basis for assessments as provided in this 
 section. 

    Subd. 5.    Maximum assessment.  (a) The total of all 
 assessments upon a member insurer for the life and annuity 
 account and for each subaccount of the life and annuity account 
 shall not in any one calendar year exceed two percent of that 
 member insurer's average annual premiums as calculated in 
 subdivision 3, paragraph (c), on policies or contracts covered 
 by that account or subaccount.  If two or more assessments are 
 made with respect to insurers that become impaired or insolvent 
 in different calendar years, average annual premiums for 
 purposes of the assessment percentage limitation are based upon 
 the higher of the three-year averages calculated under 
 subdivision 3, paragraph (c).  If an impaired insurer becomes 
 insolvent, the date of impairment must be used to determine the 
 assessment.  In addition, if the board of directors determines 
 that a one percent assessment for any subaccount of the life and 
 annuity account in any one calendar year will not provide an 
 amount sufficient to carry out the responsibilities of the 
 association, then pursuant to subdivision 3, the board of 
 directors shall make a one percent assessment for the affected 
 subaccount or subaccounts and assess the remaining necessary 
 amount against all three subaccounts on a pro rata basis; 
 provided that if the maximum annual two percent assessment limit 
 would be exceeded in a subaccount by the assessment, then the 
 other subaccounts will be assessed for the balance of any 
 remaining necessary amount up to the maximum annual two percent 
 limit in those other subaccounts. 

    (b) The total of all assessments upon a member insurer for 
 the health account shall not in any one calendar year exceed two 
 percent of that member insurer's average annual premiums as 
 calculated under subdivision 3, paragraph (c), on policies or 
 contracts covered by that account.  If two or more assessments 
 are made with respect to insurers that become impaired or 
 insolvent in different calendar years, average annual premiums 
 for purposes of the assessment percentage limitation is based 
 upon the higher of the three-year averages calculated under 
 subdivision 3, paragraph (c). 

    (c) If the maximum assessment for an account, together with 
 the other assets of the association in that account, does not 
 provide in any one calendar year in that account an amount 
 sufficient to carry out the responsibilities of the association, 
 the necessary additional funds must be assessed as soon as 
 permitted by sections 61B.18 to 61B.32. 

    (d) The board may adopt general principles in the plan of 
 operation for allocating funds among claims, whether relating to 
 one or more impaired or insolvent insurers, when the maximum 
 assessment will be insufficient to cover anticipated claims. 

    (e) If assessments under this section are inadequate to pay 
 all obligations of the impaired insurer that are or become due 
 and owing, then the association shall prepare a plan approved by 
 the commissioner for prioritization of payments.  If the 
 association adopts general principles in the plan of operations, 
 the association shall use the general principles in preparing 
 the plan required under this paragraph.  No formerly impaired or 
 insolvent insurer may be reinstated until all payments of or on 
 account of the insurer's contractual obligations by the guaranty 
 association, along with all expenses thereof and interest on all 
 such payments and expenses, shall have been repaid to the 
 guaranty association or a plan of repayment by the insurer shall 
 have been approved by the commissioner. 

    Subd. 6.    Refund.  The board may, 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 or subaccount, the amount by which the assets of 
 the account or subaccount 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 or subaccount, 
 including assets accruing from assignment, subrogation, net 
 realized gains, and income from investments.  A reasonable 
 amount may be retained in any account or subaccount to provide 
 funds for the continuing expenses of the association and for 
 future losses. 

    Subd. 7.    Premium rates and dividends.  A member 
 insurer may, in determining its premium rates and policyowner 
 dividends as to any kind of insurance within the scope of 
 sections 61B.18 to 61B.32, consider the amount reasonably 
 necessary to meet its assessment obligations under sections 
 61B.18 to 61B.32. 

    Subd. 8.    Certificate of contribution.  The 
 association shall issue to each insurer paying an assessment 
 under sections 61B.18 to 61B.32, other than a class A 
 assessment, a certificate of contribution, in a form prescribed 
 by the commissioner, for the amount of the assessment so paid.  
 All outstanding certificates must be of equal dignity and 
 priority without reference to amounts or dates of issue.  A 
 certificate of contribution may be shown by the insurer in its 
 financial statement as an asset in the form and for the amount, 
 if any, and period of time as the commissioner may approve. 

    Subd. 9.    Survival of obligation.  In the event a 
 member insurer engages in any reorganization, including any 
 merger, consolidation, restructuring, incorporation, or 
 reincorporation, the member's obligations under this chapter 
 shall survive the reorganization with respect to assessments for 
 impairments or insolvencies occurring before the date of the 
 reorganization. 

    HIST: 1993 c 319 s 9