Vermont § 4179 - Assessments

§ 4179. Assessments

• (a) 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, at such times and for such amounts as the Board finds necessary.
  Assessments shall be due not less than 30 days after prior written notice to the member
  insurers and shall accrue interest at nine percent per annum on and after the due
  date. (b) There shall be two classes of assessments, as follows: (1) Class A assessments shall be authorized and called for the purpose of meeting administrative
  and legal costs and other expenses. Class A assessments may be authorized and called
  whether or not related to a particular impaired or insolvent insurer. (2) Class B assessments shall be authorized and called to the extent necessary to carry
  out the powers and duties of the Association under section 4178 of this chapter with
  regard to an impaired or insolvent insurer. (c)(1) The amount of any Class A assessment shall be determined by the Board and may be authorized
  and called on a pro rata or non-pro rata basis. If pro rata, the Board may provide
  that it be credited against future Class B assessments. (2) The amount of a Class B assessment, except assessments related to long-term care insurance,
  shall be allocated for assessment purposes between the accounts and among the subaccounts
  of the life insurance and annuity account, pursuant to an allocation formula, which
  may be based on the premiums or reserves of the impaired or insolvent insurer or any
  other standard deemed by the Board in its sole discretion as being fair and reasonable
  under the circumstances. (3) The amount of the Class B assessment for long-term care insurance written by the impaired
  or insolvent insurer shall be allocated according to a methodology included in the
  plan of operation and approved by the Commissioner. The methodology shall provide
  for 50 percent of the assessment to be allocated to accident and health member insurers
  and 50 percent to be allocated to life and annuity member insurers. (4) Class B assessments against member insurers for each account and subaccount shall
  be in the proportion that the premiums received on business in this State by each
  assessed member insurer on policies or contracts covered by each account for the three
  most recent calendar years for which information is available preceding the year in
  which the member insurer became insolvent or, in the case of an assessment with respect
  to an impaired insurer, the three most recent calendar years for which information
  is available preceding the year in which the member insurer became impaired, bears
  to premiums received on business in this State for those calendar years by all assessed
  member insurers. (5) Assessments for funds to meet the requirements of the Association with respect to
  an impaired or insolvent insurer shall not be authorized or called until necessary
  to implement the purposes of this chapter. Classification of assessments under subsection
  (b) of this section and computation of assessments under this subsection shall be
  made with a reasonable degree of accuracy, recognizing that exact determinations may
  not always be possible. The Association shall notify each member insurer of its anticipated
  pro rata share of an authorized assessment not yet called within 180 days after the
  assessment is authorized. (d) 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 such assessment is abated or deferred may be assessed against
  the other member insurers in a manner consistent with the basis for assessments set
  forth in this section. Once the conditions that caused a deferral have been removed
  or rectified, the member insurer shall pay all assessments that were deferred pursuant
  to a repayment plan approved by the Association. (e)(1)(A) Subject to the provisions of subdivision (1)(B) of this subsection (e), the total
  of all assessments authorized by the Association with respect to a member insurer
  for each subaccount of the life insurance and annuity account and for the health account
  shall not in one calendar year exceed two percent of that member insurer’s average
  annual premiums received in Vermont on the policies and contracts covered by the subaccount
  or account during the three calendar years preceding the year in which the member
  insurer became an impaired or insolvent insurer. (B) If two or more assessments are authorized in one calendar year with respect to member
  insurers that become impaired or insolvent in different calendar years, the average
  annual premiums for purposes of the aggregate assessment percentage limitation referenced
  in subdivision (1)(A) of this subsection (e) shall be equal and limited to the higher
  of the three-year average annual premiums for the applicable subaccount or account
  as calculated pursuant to this section. (C) If the maximum assessment, together with the other assets of the Association in an
  account, does not provide in one year in either account an amount sufficient to carry
  out the responsibilities of the Association, the necessary additional funds shall
  be assessed as soon thereafter as permitted by this chapter. (2) The Board may provide in the plan of operation a method of 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. (3) If the maximum assessment for a subaccount of the life and annuity account in one
  year does not provide an amount sufficient to carry out the responsibilities of the
  Association, then pursuant to subdivision (c)(2) of this section, the Board shall
  access the other subaccounts of the life and annuity account for the necessary additional
  amount, subject to the maximum stated in subdivision (1) of this subsection. (f) 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 member insurer to that
  account, the amount by which the assets of the account 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, including assets accruing from assignment, subrogation,
  net realized gains, and income from investments. A reasonable amount may be retained
  in any account to provide funds for the continuing expenses of the Association and
  for future losses claims. (g) It shall be proper for any member insurer, in determining its premium rates and policy
  owner dividends as to any kind of insurance or health maintenance organization business
  within the scope of this chapter, to consider the amount reasonably necessary to meet
  its assessment obligations under this chapter. (h) The Association shall issue to each member insurer paying an assessment under this
  chapter, other than a Class A assessment, a certificate of contribution, in a form
  prescribed by the Commissioner, for the amount so paid. All outstanding certificates
  shall be of equal dignity and priority without reference to amounts or dates of issue.
  A certificate of contribution may be shown by the member insurer in its financial
  statement as an asset in such form and for such amount, if any, and period of time
  as the Commissioner may approve. (i)(1) A member insurer that wishes to protest all or part of an assessment shall pay when
  due the full amount of the assessment as set forth in the notice provided by the Association.
  The payment shall be available to meet Association obligations during the pendency
  of the protest or any subsequent appeal. Payment shall be accompanied by a statement
  in writing that the payment is made under protest and setting forth a brief statement
  of the grounds for the protest. (2) Within 60 days following the payment of an assessment under protest by a member insurer,
  the Association shall notify the member insurer in writing of its determination with
  respect to the protest unless the Association notifies the member insurer that additional
  time is required to resolve the issues raised by the protest. (3) Within 30 days after a final decision has been made, the Association shall notify
  the protesting member insurer in writing of that final decision. Within 60 days after
  receipt of notice of the final decision, the protesting member insurer may appeal
  that final action to the Commissioner. (4) In the alternative to rendering a final decision with respect to a protest based on
  a question regarding the assessment base, the Association may refer protests to the
  Commissioner for a final decision, with or without a recommendation from the Association. (5) If the protest or appeal on the assessment is upheld, the amount paid in error or
  excess shall be returned to the member insurer. Interest on a refund due a protesting
  member insurer shall be paid at the rate actually earned by the Association. (j) The Association may request information of member insurers in order to aid in the
  exercise of its power under this section and member insurers shall promptly comply
  with a request. (Added 2023, No. 32, § 9, eff. July 1, 2023.)