A. A Member's participation in the Pool shall
be deemed terminated in the event a Member becomes insolvent. As used herein,
"insolvent" means being the subject of receivership, conservatorship,
rehabilitation, liquidation, or similar proceedings, whether voluntary or
involuntary, in any jurisdiction.
B. If, at the time of a Member's insolvency,
the insolvent Member's account in the Pool reflects a net balance due to the
Pool and the liquidator or receiver of the insolvent Member does not have
sufficient funds available to make a final adjustment of the account, the
insolvent Member's share of undistributed surpluses and/or uncollected deficits
for each policy year for which the insolvent Member was a participant in the
Pool shall be reallocated to the remaining Members as if the insolvent Member
had not been a participant in the Pool for such policy years.
C. In the event a Servicing Carrier becomes
insolvent, the Pool Administrator shall have the option to:
1. pay to the receiver, conservator,
rehabilitator, liquidator or other appropriate representative of the insolvent
Servicing Carrier the losses and expenses for which the Pool is liable under
the Reinsurance Agreement(s); or:
2. subject to the approval of the receiver,
conservator, rehabilitator, liquidator or other representative, and subject to
the approval of any court having jurisdiction over the proceedings, assume the
policy obligations of the insolvent Servicing Carrier for policies written
pursuant to the Plan and reinsured by the Pool.
If the latter option is exercised, the Pool Administrator
shall make arrangements to have all policies that have been assigned to and are
being serviced by the insolvent Servicing Carrier reassigned to another
Servicing Carrier for servicing. The successor Servicing Carrier shall assume
all the duties and obligations of the insolvent Servicing Carrier and shall be
entitled to the reinsurance provided by the Pool. Payment made on account of
such policies, including expenses for the servicing thereof, shall be
reimbursed by the Pool and apportioned to the policy years for which such
policies were originally issued.
3. All amounts due to an insolvent Servicing
Carrier from the Pool as a result of the reinsurance provided to such Servicing
Carrier and all amounts due from an insolvent Servicing Carrier as a member
shall be merged into one account and deemed mutual debits and credits which the
Pool may offset.
4. The Pool shall
have all the rights allowed by law against the estate or funds of an insolvent
Member for recovery of amounts which have been absorbed by the other. Members
of the Pool as herein provided. The Pool Administrator may assert and enforce
such rights on behalf of the Pool.
5. Anything in this Article to the contrary
notwithstanding, the Commissioner may, in the event such action is in his
judgment feasible and desirable, and in a manner equitable to all Members,
elect not to terminate the participation of an insolvent Member and permit such
Member to continue its participation in the Pool upon such conditions as he may
prescribe and subject in all respects to these Articles and the rules and
procedures applicable to the Pool and the Plan.
