GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1997

S	1 

SENATE BILL 1036

Short Title:  Insurance Guaranty Assoc. Amendments.     	(Public)

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Sponsors: Senator Kerr.

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Referred to:  Pensions & Retirement and Insurance.

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April 21, 1997

A BILL TO BE ENTITLED
AN ACT TO AMEND THE INSURANCE GUARANTY ASSOCIATION ACT TO CONTROL LOSSES INCURRED BY THE NORTH CAROLINA INSURANCE GUARANTY ASSOCIATION.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 58-48-20(4) reads as rewritten:
"(4)	'Covered claim' means an unpaid claim, including one of unearned premiums, which is in excess of fifty dollars ($50.00) and arises out of and is within the coverage and not in excess of the applicable limits of an insurance policy to which this Article applies as issued by an insurer, if such insurer becomes an insolvent insurer after the effective date of this Article and (i) the claimant or insured is a resident of this State at the time of the insured event; or (ii) the property from which the claim arises is permanently located in this State.  'Covered claim' shall not include any first-party claim by an insured whose net worth exceeds fifty million dollars ($50,000,000) as of December 31 of the year next preceding the date the insurer becomes an insolvent insurer, provided that an insured's net worth on such date shall be deemed to include the aggregate net worth of the insured and all of its subsidiaries as calculated on a consolidated basis; any amount awarded as punitive or exemplary damages; sought as a return of premium under any retrospective rating plan; or due any reinsurer, insurer, insurance pool, or underwriting association, as subrogation or contribution recoveries or otherwise."
Section 2.  G.S. 58-48-35(a)(1) reads as rewritten:
"(a)	The Association shall:
(1)	Be obligated to the extent of the covered claims existing prior to the determination of insolvency and arising within 30 days after the determination of insolvency, or before the policy expiration date if less than 30 days after the determination, or before the insured replaces the policy or causes its cancellation, if he does so within 30 days of the determination. This obligation includes only the amount of each covered claim that is in excess of fifty dollars ($50.00) and is less than three hundred thousand dollars ($300,000).  The Association's obligation shall not extend beyond six hundred thousand dollars ($600,000) per covered claim combined with the loss adjustment expenses allocated to that claim.  However, the Association shall pay the full amount of a covered claim for benefits under a workers' compensation insurance coverage, and shall pay an amount not exceeding ten thousand dollars ($10,000) per policy for a covered claim for the return of unearned premium. The Association has no obligation to pay a claimant's covered claim, except a claimant's workers' compensation claim, if:
a.	The insured had primary coverage at the time of the loss with a solvent insurer equal to or in excess of three hundred thousand dollars ($300,000) and applicable to the claimant's loss; or
b.	The insured's coverage is written subject to a self-insured retention equal to or in excess of three hundred thousand dollars ($300,000).
	If the primary coverage or the self-insured retention is less than three hundred thousand dollars ($300,000), the Association's obligation to the claimant is reduced by the coverage and the retention. The Association shall pay the full amount of a covered claim for benefits under a workers' compensation insurance coverage to a claimant notwithstanding any self-insured retention, but the Association has the right to recover the amount of the self-insured retention from the employer.
	In no event shall the Association be obligated to a policyholder or claimant in an amount in excess of the obligation of the insolvent insurer under the policy from which the claim arises. Notwithstanding any other provision of this Article, a covered claim shall not include any claim filed with the Association after the final date set by the court for the filing of claims against the liquidator or receiver of an insolvent insurer."
Section 3.  This act becomes effective October 1, 1997, and applies to insurer insolvencies occurring on or after that date.