02-031 C.M.R. ch. 440, § II-5 - Termination of Membership by Insolvency

A. Pool obligations. In the event any member company shall be adjudicated insolvent, membership of such company in the Pool shall be deemed terminated at the time of such adjudication of insolvency.

The Pool shall have the option, after the insolvency, to:

(1) pay to the trustee, receiver, liquidator, rehabilitator or other appropriate representative, all sums for which such insolvent company shall have become liable upon risks to to which are reinsured by the Pool, less all sums which are the obligation of the insolvent company as a former member of the Pool. including, but not limited to, an appropriate percentage of all assessments against the insolvent member and all unearned premium distributions, and also less all unearned premium, outstanding ceded premium and unearned servicing carrier allowances retained by the insolvent company; or

(2) terminate the obligation of the Pool to such insolvent company to pay through such insolvent company or its representative losses and expenses for which the insolvent company shall have become liable upon risks to which these Rules apply. If this option is exercised, the Board shall make arrangements with the plan manager pursuant to which all risks which have been assigned to and are being serviced by such insolvent member shall be reassigned for servicing. In lieu of being paid through the insolvent company or its representative, such payments shall be made through the member or members assigned to service the risks of the insolvent company; the Board shall have authority to make proper provision, and upon such terms as it shall deem appropriate, for payment of the expenses of servicing of such reassigned risks. Payment -made on account of such risks, including expenses for the servicing thereof, shall be apportioned ratably among the remaining members of the Pool in accordance with the method provided for the apportioning of assessments.

B. Obligations to Pool. The outstanding liability to the Pool of any insolvent member, except for the portion unexpended of any amount of premium retained for servicing by such insolvent member (if a servicing member) shall, in event of such insolvency, be assumed 'by and apportioned among the remaining members of the Pool in the same manner in which liability for assessments is apportioned; and the participation of such insolvent member in the Pool or the funds thereof except as to any refund (if the right to such refund shall have then accrued), shall terminate. No refund shall be made to such insolvent company until all of its liabilities to the Pool and all obligations assumed by the Pool by Virtue of the provisions in this section shall have been fully settled and satisfied. The Pool shall have all the rights allowed to it by law on behalf of the remaining Pool members against the estate of or funds of the insolvent carrier.

C. Restriction on Board participation. No member of the Board representing an insolvent company or any company under the same management or part of the same group, affiliation or common ownership, way vote in any matter related to the insolvency.

D. Liability limited. Nothing in this Section relating to the insolvency of a member company shall increase the liability of the Pool to an amount greater than the liability bad the insolvency not occurred, without the express approval of the Board.

Notes

02-031 C.M.R. ch. 440, § II-5