C.R.S.
Section 10-20-109
Assessments
(1)
For the purpose of providing the funds necessary to carry out the powers and duties of the association, the board shall assess each member insurer separately for each account at such time and for such amounts as the board finds necessary. Assessments shall be due not less than thirty days after prior written notice to the member insurers and shall accrue interest at the rate set forth in 28 U.S.C. sec. 1961 on and after the due date.(2)
The board shall impose two assessments, as follows:(a)
Class A assessments must be authorized and called for the purpose of meeting administrative and legal costs and other expenses and examinations conducted under the authority of section 10-20-115; except that the board shall not impose a class A assessment against a member insurer that has not received premiums for a covered policy in the calendar year immediately preceding the calendar year in which the assessment is imposed. Class A assessments may be authorized and called whether or not related to a particular impaired or insolvent insurer.(b)
Class B assessments must be authorized and called to the extent necessary to carry out the powers and duties of the association under section 10-20-108 with regard to an impaired or insolvent insurer.(3)
Intentionally left blank —Ed.(a)
The amount of any class A assessment must be determined by the board and may be authorized and called on a non-pro rata basis. The amount of any class B assessment shall be allocated for assessment purposes among the accounts 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 to be fair and reasonable under the circumstances.(b)
Intentionally left blank —Ed.(I)
The board shall determine class B assessments against member insurers for each account based on 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 impaired or insolvent, bear to the premiums received on business in this state for those calendar years by all assessed member insurers.(II)
Of the amount of class B assessments for long-term care insurance written by the impaired or insolvent insurer, the board shall allocate:(A)
Fifty percent to the health insurance account; except that a member insurer that is a nonprofit health maintenance organization that provides a majority of covered professional services through physicians it employs or through a single contracted medical group shall be assessed as if the board allocated only twenty-five percent to the health insurance account; and(B)
Fifty percent, on a pro rata basis, to the life insurance account and the annuity account; except that, on a pro rata basis, the life insurance account and the annuity account shall cover the shortfall from the health insurance account that results from the lower assessment rate described in subsection (3)(b)(II)(A) of this section on a member insurer that is a nonprofit health maintenance organization that provides a majority of covered professional services through physicians it employs or through a single contracted medical group.(c)
Assessments for funds to meet the requirements of the association with respect to an impaired or insolvent insurer must not be authorized or called until necessary to implement the purposes of this article. Classification of assessments under subsection (2) of this section and computation of assessments under this subsection (3) 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 one hundred eighty days after the assessment is authorized.(4)
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.(5)
Intentionally left blank —Ed.(a)
Subject to subsection (5)(b) of this section, the total of all assessments authorized by the association with respect to a member insurer for each account must not exceed, in any one calendar year, two percent of the average premiums received by the member insurer in this state on the policies and contracts covered by the account during the three calendar years preceding the year in which the member insurer became impaired or insolvent.(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 subsection (5)(a) of this section is equal and limited to the highest of the three-year average annual premiums for the applicable account as calculated under this section.(c)
If the maximum assessment, together with the other assets of the association in any account, does not provide in any one year in any of the accounts 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 article.(d)
The board shall 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.(6)
The board shall, 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. The board shall retain a reasonable amount in each account to provide funds for the continuing expenses of the association and for future losses.(7)
Intentionally left blank —Ed.(a)
A member insurer, in determining its premium rates and policyholder dividends for any kind of insurance or health maintenance organization business within the scope of this article 20, may consider the amount reasonably necessary to meet its assessment obligations under this article 20.(b)
A member insurer subject to assessments pursuant to subsection (2) of this section shall not cut employment, reduce employee pay or hours, or reduce employment benefits as a result of the assessments levied pursuant to subsection (2) of this section.(8)
The association shall issue to each member insurer paying an assessment for the life and annuity accounts under this article 20, other than a class A assessment, a certificate of contribution from the association, in a form prescribed by the commissioner, for the amount of the assessment so paid. All outstanding certificates shall be of equal dignity and priority without reference to amounts or dates of issue. The member insurer may show the certificate of contribution 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; but the member insurer, at its option, has the right in any event to show the certificate of contribution as an admitted asset at percentages of the original face amount of the assessment for calendar years as follows:(a)
One hundred percent for the first year after issuance; and(b)
One hundred percent less any amount already taken as an offset against premium tax liability pursuant to section 10-20-113 for the second and subsequent years after issuance.(9)
Any member insurer whose certificate of authority or license has been terminated for any reason whatsoever is liable for any assessment based on insolvencies arising prior to termination of a member insurer’s certificate of authority or license.(10)
Intentionally left blank —Ed.(a)
A member insurer that intends to protest all or part of an assessment shall pay, when due, the full amount of the assessment in the notice provided by the association. The payment must be available to meet association obligations during the pendency of the protest or any subsequent appeal. Payments must be accompanied by a statement in writing that the payment is made under protest and a brief statement of the grounds for the protest.(b)
Within sixty 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.(c)
Within thirty days after a final decision, the association shall notify the protesting member insurer in writing of the final decision. Within sixty days after receiving notice of the final decision, the protesting member insurer may appeal the final decision to the commissioner.(d)
In alternative to rendering a final decision with respect to a protest based on a question regarding the assessment base, the association may refer protests directly to the commissioner for a final decision, with or without a recommendation from the association.(e)
If the protest or appeal on the assessment is upheld, the association must return the amount paid in error or excess to the member insurer. Interest on a refund due to a protesting member insurer must be paid at the rate actually earned by the association.(11)
The association may request information of member insurers in order to aid in the exercise of its power under this section. Member insurers shall promptly reply to any request for information from the association.
Source:
Section 10-20-109 — Assessments, https://leg.colorado.gov/sites/default/files/images/olls/crs2023-title-10.pdf (accessed Oct. 20, 2023).
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