KRS 304.36-010 Title
304.36-010. Title
This subtitle may be cited as the Kentucky Insurance Guaranty Association Act.
Effective: June 16, 1972
History: Created 1972 Ky. Acts ch. 137, sec. 1, effective June 16, 1972.
Kentucky Insurance Guaranty Association
KRS tit. XXV, ch. 304, subtit. 36
in effectKRS 304.36-020 Purpose of subtitle
304.36-020. Purpose of subtitle
The purpose of this subtitle is to provide a mechanism for the payment of covered claims under certain insurance policies to avoid excessive delay in payment and to the extent provided in this subtitle to minimize financial loss to claimants or policyholders because of the insolvency of an insurer, to assist in the detection and prevention of insurer insolvencies, and to provide a means of funding the cost of such protection among insurers.
Effective: July 15, 1998
History: Amended 1998 Ky. Acts ch. 99, sec. 1, effective July 15, 1998. -- Created 1972 Ky. Acts ch. 137, sec. 2, effective June 16, 1972.
KRS 304.36-030 Scope of subtitle
304.36-030. Scope of subtitle
(1) As used in this section, "ocean marine insurance" includes:
(a) Any form of insurance, regardless of name, label, or marketing designation of the insurance policy, that insures against maritime perils or risks and other related perils or risks that are usually insured against by traditional marine insurance, such as hull and machinery, marine builders risk, and marine protection and indemnity. These perils and risks insured against include without limitation loss, damage, or expense or legal liability of the insured for loss, damage, or expense arising out of or incident to ownership, operation, chartering, maintenance, use, repair, or construction of any vessel, craft, or instrumentality in use in ocean or inland waterways, including liability of the insured for personal injury, illness, or death or for loss or damage to the property of the insured or another person; and
(b) That coverage written in accordance with the following: 1. The Jones Act, 46 U.S.C. sec. 30104; 2. The Longshore and Harbor Workers' Compensation Act, 33 U.S.C. sec. 901 et seq.; and 3. Any other similar federal statutory enactment or endorsement or policy affording protection and indemnity coverage.
(2) This subtitle shall apply to all kinds of direct insurance, except:
(a) Life, annuity, or health, including disability and paid family leave;
(b) Mortgage guaranty, financial guaranty, or other forms of insurance offering protection against investment risks;
(c) Credit insurance, vendors' single interest insurance, or collateral protection insurance or any similar insurance protecting the interests of a creditor arising out of a creditor-debtor transaction;
(d) Insurance of warranties or service contracts, including insurance that provides for the repair, replacement, or service of goods or property, indemnification for repair, replacement, or service for the operational or structural failure of the goods or property due to a defect in materials, workmanship, or normal wear and tear, or reimbursement for the liability incurred by the issuer of agreements or service contracts that provide these benefits;
(e) Title insurance;
(f) Ocean marine insurance;
(g) Any transaction or combination of transactions between a person, including affiliates of the person, and an insurer, including affiliates of the insurer, that involves the transfer of investment or cr edit risk and that is unaccompanied by transfer of insurance risk; or
(h) Any insurance provided, written, reinsured, or guaranteed by any government or governmental agencies.
(3) Notwithstanding subsection (2) of this section, this subtitle shall apply to health insurance written by an insolvent insurer if the insurer was not a member of the Kentucky Life and Health Insurance Guaranty Association created under KRS 304.42-060 or a successor association on the date of the order of liquidation.
Effective: April 5, 2024
History: Amended 2024 Ky. Acts ch. 99, sec. 14, effective April 5, 2024. -- Amended 2023 Ky. Acts ch. 19, sec. 1, effective June 29, 2023. -- Amended 1998 Ky. Acts ch. 99, sec. 2, effective July 15, 1998. -- Amended 1982 Ky. Acts ch. 123, sec. 1 6, effective July 15, 1982. -- Created 1972 Ky. Acts ch. 137, sec. 3, effective June 16, 1972.
KRS 304.36-040 Construction of subtitle
304.36-040. Construction of subtitle
This subtitle shall be construed to effect the purpose under KRS 304.36-020 which shall constitute an aid and guide to interpretation.
Effective: July 15, 1998
History: Amended 1998 Ky. Acts ch. 99, sec. 3, effective July 15, 1998. -- Created 1972 Ky. Acts ch. 137, sec. 4, effective June 16, 1972.
KRS 304.36-050 Definitions for subtitle
304.36-050. Definitions for subtitle
As used in this subtitle, unless the context otherwise requires:
(1) "Affiliate" means a person who directly or indirectly, through one (1) or more intermediaries, controls, is controlled by, or is under common control with an insolvent insurer on December 31 of the year immediately preceding the date that the insurer becomes an insolvent insurer;
(2) "Association" means the Kentucky Insurance Guaranty Association created under KRS 304.36-060;
(3) "Claimant" means any insured making a first-party claim or any person instituting a liability claim, except that no person who is an affiliate of the insolvent insurer may be a claimant;
(4) (a) "Control" means the possession, direct or indirect, of power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a loan contract or a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person.
(b) Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing ten percent (10%) or more of any other person. This presumption may be rebutted by a showing that control does not exist in fact;
(5) (a) "Covered claim": 1. Means an unpaid claim, including a claim for unearned premiums, submitted by a claimant, which arises out, is within the coverage, and is subject to the applicable limits of an insurance policy to which this subtitle applies issued by a member insurer, if the member insurer becomes an insolvent insurer after June 16, 1972, and: a. The claimant or insured is a resident of this state at the time of the insured event, except that for entities other than an individual, the residence of a claimant, insured, or policyholder is the state in which its principal place of business is located at the time of the insured event; or b. The claim is a first-party claim for damage to property with a permanent location in this state; and 2. Includes the obligations assumed by an assuming insurer from a ceding insurer when the assuming insurer subseque ntly becomes an insolvent insurer if: a. At the time of the assuming insurer's insolvency, the ceding insurer is no longer admitted to transact business in this state; and b. Both the assuming insurer and the ceding insurer were member insurers at the time the assumption was made.
(b) For purposes of paragraph (a) of this subsection, "issued by a member insurer" shall not include an insurance policy issued by a nonmember insurer and later allocated to, transferred to, assumed by, or otherwise made the sole responsibility of a member insurer under a state statute commonly known as a "Division" or an "Insurance Business Transfer" statute.
(c) "Covered claim" shall not include the following: 1. Any amount due any reinsurer, insurer, insurance pool, or underwriting association, as subrogation recoveries or otherwise; 2. Any amount sought as a return of premium under any retrospective rating plan or dividends plan; 3. Legal expenses for policyholders who were not Kentucky residents on the date of the insured event; 4. Legal expenses for policyholders who were Kentucky residents on the date of the insured event if the legal expenses exceed the association's statutory cap; 5. Any first-party claim by an insured whose net worth exceeds ten million dollars ($10,000,000) on December 31 of the year prior to the year in which the insurer becomes an insolvent insurer. An insured's net worth on that date shall be deemed to include the aggregate net worth of the insured and all of its subsidiaries as calculated on a consolidated basis; 6. Any first-party claim by an insured that is an affiliate of an insolvent insurer; 7. Any amount awarded as punitive or exemplary damages; 8. An obligation incurred after the expiration date of the insurance policy; 9. An obligation incurred after the insurance policy has been replaced by the insured, canceled at the insured's request, or canceled by the receiver or liquidator; 10. An obligation to a state, other than Kentucky, or federal government; or 11. Any claim for interest;
(6) "Insolvent insurer" means an insurer:
(a) That was a member insurer at the time the policy was issued; and
(b) Against whom a final order of liquidation, with a finding of insolvency, has been entered by a court of competent jurisdiction in the insurer's state of domicile;
(7) "Insured event," in an occurrence policy and claims-made policy, means the act that gave rise to the claim;
(8) (a) "Member insurer" means any person who: 1. Writes any kind of insurance to which this subtitle applies under KRS 304.36-030(2), including the exchange of reciprocal or inter-insurance contracts; and 2. Is licensed to transact insurance in this state.
(b) "Member insurer" shall not include a self-insurer.
(c) As used in paragraph (b) of this subsection, "self-insurer": 1. Means a person that covers its liability through a qualified individual or group self-insurance program or any other formal program created for the specific purpose of covering liabilities typically covered by insurance; and 2. Includes but is not limited to: a. Liability self-insurance groups under Subtitle 48 of KRS Chapter 304; b. Workers' compensation self-insured groups under Subtitle 50 of KRS Chapter 304; and c. Self-insurers and self-insured groups under KRS Chapter 342.
(d) For purposes of determining a withdrawing member's assessment liability, an insurer shall cease to be a member insurer effective on the day following the termination or expiration of its license to transact the kinds of insurance to which this subtitle applies, except that the insurer shall remain liable as a member insurer for any and all obligations, including obligations for assessments levied prior to the termination or expiration of the insurer's license and assessments levied after the termination or expiration, that relate to any insurer that became an insolvent insurer prior to the termination or expiration of the insurer's license; and
(9) (a) "Net direct written premiums" means direct gross premiums written, or in the case of an insurer organized under KRS Chapter 299, assessments, membership fees, and policy fees levied and collected, in this state, less returns thereon and dividends paid or credited to policyholders on such direct business.
(b) "Net direct written premiums" shall not include premiums on contracts between insurers or reinsurers.
Effective: June 29, 2023
History: Amended 2023 Ky. Acts ch. 19, sec. 2, effective June 29, 2023. -- Amended 2010 Ky. Acts ch. 24, sec. 1464, effective July 15, 2010. -- Amended 1998 Ky. Acts ch. 99, sec. 4, effective July 15, 1998. -- Amended 1982 Ky. Acts ch. 209, sec. 3, effective July 15, 1982. -- Created 1972 Ky. Acts ch. 137, sec. 5, effective June 16, 1972.
KRS 304.36-060 Creation of the association
304.36-060. Creation of the association
There is created a nonprofit unincorporated legal entity to be known as the Kentucky Insurance Guaranty Association. All insurers defined as member insurers in KRS 304.36- 050 shall be and remain members of the association as a condition of their authority to transact insurance in this state. The association shall perform its functions under a plan of operation established and approved under KRS 304.36-090 and shall exercise its powers through a board of directors established under KRS 304.36-070.
Effective: June 16, 1972
History: Created 1972 Ky. Acts ch. 137, sec. 6, effective June 16, 1972.
KRS 304.36-070 Board of directors
304.36-070. Board of directors
(1) The board of directors of the association shall consist of not less than five (5) nor more than nine (9) persons serving terms as established in the plan of operation. The members of the board shall be selected by member insurers subject to the approval of the commissioner. Vacancies on the board shall be filled for the remaining period of the term by a majority vote of the remaining board members, subject to the approval of the commissioner. If no members are selected within sixty (60) days after June 16, 1972, the commissioner may appoint the initial members of the board of directors.
(2) In approving selections to the board, the commissioner shall consider among other things whether all member insurers are fairly represented.
(3) Members of the board may be reimbursed from the assets of the association for expenses incurred by them as members of the board of directors.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1465, effective July 15, 2010. -- Created 1972 Ky. Acts ch. 137, sec. 7, effective June 16, 1972.
KRS 304.36-080 Powers and duties of association
304.36-080. Powers and duties of association
(1) The association shall:
(a) 1. Be obligated to the extent of the covered claims existing: a. Prior to the order of liquidation and arising within thirty (30) days after the order of liquidation; b. Before the policy expiration date if less than thirty (30) days after the order of liquidation; or c. Before the insured replaces the policy or on request, effects cancellation, if the insured does so within thirty (30) days of the order of liquidation. 2. The obligation shall be satisfied by paying to the claimant an amount as follows: a. The full amount of a covered claim for benefits arising from a workers' compensation insurance policy purchased to satisfy the requirements of KRS 342.340; b. An amount not exceeding ten thousand dollars ($10,000) per policy for a covered claim for the return of unearned premium; c. An amount not exceeding five hundred thousand dollars ($500,000) per insured event for all covered claims resulting from that event for benefits arising from a cybersecurity insurance policy; or d. An amount not exceeding three hundred thousand dollars ($300,000) per claimant for all other covered claims;
(b) 1. Not be obligated to pay a claimant an amount in excess of the obligation of the insolvent insurer under the policy or coverage from which the claim arises. 2. Notwithstanding any other provisions of this subtitle, a covered claim shall not include: a. A claim filed with the association after the earlier of: i. Twelve (12) months after the date of the order of liquidation; or ii. The final date set by the court for the filing of claims against the liquidator or receiver of an insolvent insurer; or b. Any claim filed with the association or a liquidator for protection afforded under the insured's policy for incurred but not reported losses. 3. Any obligation of the association to defend an insured shall cease upon the association's payment or tender of an amount equal to the lesser of the association's covered claim obligation limit or the applicable policy limit. 4. Notwithstanding any other provisions of this subtitle, except in the case of a claim for benefits under workers' compensation coverage, any obligation of the association to any and all persons shall cease when ten million dollars ($10,000,000) shall have been paid in the aggregate by the association and any one (1) or more associations similar to the association of any other state or states or any property and casualty security fund that obtains contributions from insurers on a preinsolvency basis to or on behalf of any insured and its affiliates on covered claims or allowed claims arising under the policy or policies of any one (1) insolvent insurer. 5. For purposes of this paragraph, the term "affiliates" means any person who directly or indirectly, through one (1) or more intermediaries, controls, is controlled by, or is under common control with another person. 6. If the claimant has a covered claim or allowed claim against the association or any associations similar to the association or any property and casualty insurance security fund of another state, under the policy or policies of any one (1) insolvent insurer, the association may establish a plan to allocate amounts payable by the association in a manner as the association in its discretion deems equitable;
(c) 1. Be deemed the insurer to the extent of its obligation on the covered claims and to that extent shall have all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent, including, but not limited to, the right to pursue and retain salvage and subrogation recoverable on paid covered claim obligations. 2. In the case of a covered claim involving obligations assumed by an assuming insurer from a ceding insurer, the association shall: a. Have the right to recover a deposit, bond, or other assets that may have been required to be posted by the ceding insurer to the extent of covered claim payments; and b. Be subrogated to any rights the ceding insurer's policyholders ma y have against the ceding insurer;
(d) 1. Assess insurers amounts necessary to pay the obligations of the association under paragraph (a) of this subsection subsequent to an insolvency, the expenses of handling covered claims subsequent to an insolvency, the cost of examinations under KRS 304.36 -130, and other expenses authorized by this subtitle. 2. The assessments of each member insurer shall be in the proportion that the net direct written premiums of the member insurer for the calendar year preceding the assessment bears to the net direct written premiums of all member insurers for the calendar year preceding the assessment. 3. Each member insurer shall be notified of the assessment not later than thirty (30) days before it is due. 4. No member insurer may be assessed in any year an amount greater than two percent (2%) of that member insurer's net direct written premiums for the calendar year preceding the assessment. 5. If the maximum assessment, together with the other assets of the association, does not provide in any one (1) year an amount sufficient to make all necessary payments, the funds available shall be prorated and the unpaid portion shall be paid as soon thereafter as funds become available. 6. The association shall pay claims in any order which it may deem reasonable including the payment of claims as such are received from the claimants or in groups or categories of claims. 7. The association may exempt or defer, in whole or in part, the assessment of any member insurer, if: a. The assessment would cause the member insurer's financial statement to reflect amounts of capital or surplus less than the minimum amounts required for a certificate of authority by any jurisdiction in which the member insurer is authorized to transact insurance; and b. During the period of deferment, no dividends are paid by the member insurer to shareholders or policyholders. 8. Deferred assessments shall be paid when the payments will not reduce capital and surplus below required minimums, and the payments shall be refunded to those companies receiving larger assessments by virtue of the deferment or at the election of any such c ompany, credited against future assessments. 9. Each member insurer serving as a servicing facility may set off against any assessment authorized payments made on covered claims and expenses incurred in the payment of such claims by such member insurer;
(e) Investigate claims brought against the association and adjust, compromise, settle, and pay covered claims to the extent of the association's obligation and deny all other claims;
(f) Notify such persons as the commissioner directs under KRS 304.36 -100(2)(a);
(g) 1. Handle claims through its employees or through one (1) or more insurers or other persons designated as servicing facilities. 2. Designation of a servicing facility is subject to the approval of the commissioner, but the designation may be decli ned by a member insurer;
(h) Reimburse each servicing facility for obligations of the association paid by the facility and for expenses incurred by the facility while handling claims on behalf of the association; and
(i) Pay the other expenses of the association authorized by this subtitle.
(2) The association may:
(a) Appear in, defend, and appeal any action on a claim brought against the association;
(b) Employ or retain such persons as are necessary to handle claims and perform other duties of the association;
(c) Borrow funds necessary to effect the purposes of this subtitle in accord with the plan of operation;
(d) Sue or be sued;
(e) Negotiate and become a party to such contracts as are necessary to carry out the purpose of this subtitle;
(f) Perform such other acts as are necessary or proper to effectuate the purpose of this subtitle; and
(g) Refund to the member insurers in proportion to the contribution of each member insurer to the association that amount by which the assets of the association exceed the liabilities, if, at the end of any calendar year, the board of directors finds that the assets of the association exceed the liabilities of the association as estimated by the board of directors for the coming year.
Effective: June 29, 2023
History: Amended 2023 Ky. Acts ch. 19, sec. 3, effective June 29, 2023. -- Amended 2010 Ky. Acts ch. 24, sec. 1466, effective July 15, 2010. -- Amended 1998 Ky. Acts ch. 99, sec. 5, effective July 15, 1998. -- Amended 1990 Ky. Acts ch. 268, sec. 1, effective July 13, 1990. -- Amended 1986 Ky. Acts ch. 437, sec. 24, effective July 15, 1986. -- Amended 1984 Ky. Acts ch. 322, sec. 15, effective July 13, 1984. -- Created 1972 Ky. Acts ch. 137, sec. 8, effective June 16, 1972.
KRS 304.36-085 Stay of proceedings involving insolvent insurer -- Defense by association -- Association permitted to apply to vacate judgment based on default of insolvent insurer
304.36-085. Stay of proceedings involving insolvent insurer -- Defense by association -- Association permitted to apply to vacate judgment based on default of insolvent insurer
All proceedings in which the insolvent insurer is a party or is obligated to defend a party in any court in this state shall, subject to waiver by the association in specific cases involving covered claims, be stayed for six (6) months and any additional time that may be determined by the court from the date that the insolvency is determined or an ancillary proceeding is instituted in the state, whichever is later, to permit proper defense by the association of all pending causes of action. As to covered claims arising from a judgment under decision, verdict, or finding based on the default of the insolvent insurer or its failure to defend an insured, the association, either on its own behalf or on behalf of an insured, may apply to have the judgment, order, decision, verdict, or finding vacated or set aside and shall be permitted to defend the claim on its merits.
Effective: July 15, 1998
History: Created 1998 Ky. Acts ch. 99, sec. 9, effective July 15, 1998.
KRS 304.36-090 Plan of operation
304.36-090. Plan of operation
(1) (a) The association shall submit to the commissioner a plan of operation and any amendments thereto necessary or suitable to assure the fair, reasonable, and equitable administration of the association. The plan of operation and any amendments thereto shall become effective upon approval in writing by the commissioner.
(b) If the association fails to submit a suitable plan of operation within ninety (90) days following June 16, 1972, or if at any time thereafter the association fails to submit suitable amendments to the plan, the commissioner shall, after notice and hearing, adopt and promulgate such reasonable rules as are necessary or advisable to effectuate the provisions of this subtitle. Such rules shall continue in force until modified by the commissioner or superseded by a plan submitted by the association and approved by the commissioner.
(2) All member insurers shall comply with the plan of operation.
(3) The plan of operation shall:
(a) Establish the procedures whereby all the powers and duties of the association under KRS 304.36-080 will be performed;
(b) Establish procedures for handling assets of the association;
(c) Establish the amount and method of reimbursing members of the board of directors under KRS 304.36-070;
(d) Establish procedures by which claims may be filed with the association and establish acceptable forms of proof of covered claims. Notice of claims to the receiver or liquidator of the insolvent insurer shall be deemed notice to the association or its agent, and a list of such claims shall be periodically submitted to the association or similar organization in another state by the receiver or liquidator;
(e) Establish regular places and times for meetings of the board of directors;
(f) Establish procedures for records to be kept of all financial transactions of the association, its agents, and the board of directors;
(g) Provide that any member insurer aggrieved by any final action or decision of the association may appeal to the commissioner within thirty (30) days after the action or decision;
(h) Establish the procedures whereby selections for the board of directors will be submitted to the commissioner; and
(i) Contain additional provisions necessary or proper for the execution of the powers and duties of the association.
(4) The plan of operation may provide that any or all powers and duties of the association, except those under KRS 304.36-080(1)(d) and (2)(c), are delegated to a corporation, association, or other organization which performs or will perform functions similar to those of this association, or its equivalent, in two (2) or more states. Such a corporation, association, or organization shall be reimbursed as a servicing facility would be reimbursed and shall be paid for its performance of any other functions of the association. A delegation under this subsection shall take effect only with the approval of both the board of directors and the commissioner, and may be made only to a corporation, association, or organization which extends protection not substantially less favorable and effective than that provided by this subtitle.
(5) The plan of operation may establish procedures by which claims may be filed with the association and establish acceptable forms of proof of covered claims. Notice of claims to the receiver or liquidator of the insolvent insurer shall be deemed notice to the association or its agent, and a list of claims shall be periodically submitted to the association or similar organization in another state by the receiver or liquidator.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1467, effective July 15, 2010. -- Amended 1998 Ky. Acts ch. 99, sec. 6, effective July 15, 1998. -- Created 1972 Ky. Acts ch. 137, sec. 9, effective June 16, 1972.
KRS 304.36-100 Duties and powers of the commissioner
304.36-100. Duties and powers of the commissioner
(1) The commissioner shall:
(a) Notify the association of the existence of an insolvent insurer not later than three (3) days after he or she receives notice of the determination of the insolvency; and
(b) Upon request of the board of directors, provide the association with a statement of the net direct written premiums of each member insurer.
(2) The commissioner may:
(a) Require that the association notify the insureds of the insolvent insurer and any other interested parties of the determination of insolvency and of their rights under this subtitle. Such notification shall be by mail at their last known address, where available, but if sufficient information for notification by mail is not available, notice by publication in a newspaper of general circulation shall be sufficient;
(b) Suspend or revoke, after notice and hearing, the certificate of authority to transact insurance in this state of any member insurer which fails to pay an assessment when due or fails to comply with the plan of operation. As an alternative, the commissioner may levy a fine on any member insurer which fails to pay an assessment when due. Such fine shall not exceed five percent (5%) of the unpaid assessment per month, except that no fine shall be less than one hundred dollars ($100) per month; and
(c) Revoke the designation of any servicing facility if the commissioner finds claims are being handled unsatisfactorily.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1468, effective July 15, 2010. -- Created 1972 Ky. Acts ch. 137, sec. 10, effective June 16, 1972.
KRS 304.36-110 Effect of paid claims
304.36-110. Effect of paid claims
(1) Any person recovering under this subtitle shall be deemed to have assigned his rights under the policy to the association to the extent of his recovery from the association. Every insured or claimant seeking the protection of this subtitle shall cooperate with the association to the same extent as such person would have been required to cooperate with the insolvent insurer. The association shall have no cause of action against the insured of the insolvent insurer for any sums it has paid out, except as follows:
(a) Any insured whose net worth on December 31 of the year next preceding the date the insurer becomes an insolvent insurer exceeds twenty-five million dollars ($25,000,000) and whose liability obligations to other persons are satisfied in whole or in part by payments made under this subtitle;
(b) Any person who is an affiliate of the insolvent insurer and whose liability obligations to other persons are satisfied in whole or in part by payments made under this subtitle; and
(c) No limitation is placed on the ability of the association to recover from the principal all claim payments and expenses arising from a surety contract that is a covered claim to the association.
(2) The receiver, liquidator, or statutory successor of an insolvent insurer shall be bound by settlements of covered claims by the association or a similar organization in another state. The court having jurisdiction shall grant such claims priority equal to that which the claimant would have been entitled in the absence of this subtitle against the assets of the insolvent insurer. The expenses of the association or similar organization in handling claims shall be accorded the same priority as the liquidator's expenses.
(3) The association shall periodically file with the receiver or liquidator of the insolvent insurer statements of the covered claims paid by the association and estimates of anticipated claims on the association which shall preserve the rights of the association against the assets of the insolvent insurer.
Effective: July 15, 1998
History: Amended 1998 Ky. Acts ch. 99, sec. 7, effective July 15, 1998. -- Created 1972 Ky. Acts ch. 137, sec. 11., effective June 16, 1972
KRS 304.36-120 Nonduplication of recovery
304.36-120. Nonduplication of recovery
(1) Any person having a claim against an insurer under any provision in an insurance policy other than the policy of an insolvent insurer which is also a covered claim shall be required to exhaust first his right under the policy. Any amount payable on a covered claim under this subtitle shall be reduced by the amount of recovery under the insurance policy. Any provision in an insurance policy includes, but is not limited to, the following coverages: basic reparation benefits under KRS Chapter 304, Subtitle 39; uninsured motorist; underinsured motorist; workers' compensation; and health care.
(2) Any person having a claim which may be recovered under more than one (1) insurance guaranty association or its equivalent shall seek recovery first from the association of the place of residence of the insured except that if it is a first-party claim for damage to property with a permanent location, from the association of the location of the property, and if it is a workers' compensation claim, from the association of the residence of the claimant. Any recovery under this subtitle shall be reduced by the amount of the recovery from any other insurance guaranty association or its equivalent.
(3) The guaranty association shall receive the benefit of any reinsurance contract or treaties entered into by the insolvent insurer which cover any of the liabilities incurred by the insolvent insurer with respect to covered claims.
Effective: July 15, 1998
History: Amended 1998 Ky. Acts ch. 99, sec. 8, effective July 15, 1998. -- Created 1972 Ky. Acts ch. 137, sec. 12, effective June 16, 1972.
KRS 304.36-130 Prevention of insolvencies
304.36-130. Prevention of insolvencies
To aid in the detection and prevention of insurer insolvencies:
(1) It shall be the duty of the board of directors, upon majority vote, to notify the commissioner of any information indicating any member insurer may be insolvent or in a financial condition hazardous to the policyholders or the public;
(2) The board of directors may, upon majority vote, request that the commissioner order an examination of any member insurer which the board in good faith believes may be in a financial condition hazardous to the policyholders or the public. Within thirty (30) days of the receipt of such request, the commissioner shall begin such examination. The examination may be conducted as a National Association of Insurance Commissioners examination or may be conducted by such persons as the commissioner designates. The cost of such examination shall be paid by the association and the examination report shall be treated as are other examination reports. In no event shall such examination report be released to the board of directors prior to its release to the public, but this shall not preclude the commissioner from complying with subsection (3) of this section. The commissioner shall notify the board of directors when the examination is completed. The request for an examination shall be kept on file by the commissioner but it shall not be open to public inspection prior to the release of the examination report to the public;
(3) It shall be the duty of the commissioner to report to the board of directors when the commissioner has reasonable cause to believe that any member insurer examined or being examined at the request of the board of directors may be insolvent or in a financial condition hazardous to the policyholders or the public;
(4) The board of directors may, upon majority vote, make reports and recommendations to the commissioner upon any matter germane to the solvency, liquidation, rehabilitation or conservation of any member insurer. Such reports and recommendations shall not be considered public documents;
(5) The board of directors may, upon majority vote, make recommendations to the commissioner for the detection and prevention of insurer insolvencies; and
(6) The board of directors shall, at the conclusion of any insurer insolvency in which the association was obligated to pay covered claims, prepare a report on the history and causes of such insolvency, based on the information available to the association, and submit such report to the commissioner.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1469, effective July 15, 2010. -- Created 1972 Ky. Acts ch. 137, sec. 13, effective June 16, 1972.
KRS 304.36-140 Examination of the association
304.36-140. Examination of the association
The association shall be subject to examination and regulation by the commissioner. The board of directors shall submit, not later than March 30 of each year, a financial report for the preceding calendar year in a form approved by the commissioner.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1470, effective July 15, 2010. -- Created 1972 Ky. Acts ch. 137, sec. 14, effective June 16, 1972.
KRS 304.36-150 Tax exemption
304.36-150. Tax exemption
The association shall be exempt from payment of all fees and all taxes levied by this state or any of its subdivisions except taxes levied on real or personal property.
Effective: June 16, 1972
History: Created 1972 Ky. Acts ch. 137, sec. 15, effective June 16, 1972.
KRS 304.36-160 Recognition of assessments in rates
304.36-160. Recognition of assessments in rates
The rates and premiums charged for insurance policies to which this subtitle applies shall include amounts sufficient to recoup a sum equal to the amounts paid to the association by the member insurer less any amounts returned to the member insurer by the association and such rates shall not be deemed excessive because they contain an amount reasonably calculated to recoup assessments paid by the member insurer.
Effective: June 16, 1972
History: Created 1972 Ky. Acts ch. 137, sec. 16, effective June 16, 1972.
KRS 304.36-170 Immunity
304.36-170. Immunity
There shall be no liability on the part of and no cause of action of any nature shall arise against any member insurer, the association or its agents or employees, the board of directors, or the commissioner, or the commissioner's representatives for any action taken by them in the performance of their powers and duties under this subtitle.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1471, effective July 15, 2010. -- Created 1972 Ky. Acts ch. 137, sec. 17, effective June 16, 1972.
Source: Kentucky Legislative Research Commission (legislature.ky.gov)URL: https://apps.legislature.ky.gov/law/statutes/chapter.aspx?id=38751Fetched: 10/20/2026