W L H I G A
THE WYOMING LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION
Plan of Operation
Home
(As of November 2001)
Article 2. Annual Meetings of the Member Insurer
Article 5. Records and Reports
Article 9. Conformity to Statute
Article 1. Plan of Operation
A.
This Plan of Operation ("the Plan") shall become effective, as
provided in W.S. § 26-42-108(a), upon written approval of the
Commissioner or 30 days after submission to the Commissioner if the
Commissioner has not disapproved them.
B.
Amendments to this Plan of Operation, as necessary or suitable to assure
the fair, reasonable and stable administration of the Association, shall
be adopted by the Board of Directors and submitted to the Commissioner
for approval. Any such
amendments so submitted shall be effective upon written approval of the
Commissioner or 30 days after submission if the Commissioner has not
disapproved them.
C.
A copy of this Plan of Operation shall be available for inspection by any
member insurer at the office of the Association during normal business
hours, and a copy shall be provided to any member insurer upon request.
Article
2. Annual Meetings of the Member Insurers
A.
An annual meeting of the member insurers of the Association shall be held
for the election of directors at the office of the Association
immediately preceding the annual meeting of the Board of Directors,
unless the Chairman of the Board of Directors, upon proper notice, shall
designate some other time, day or place.
B.
Member insurers shall be notified of the time, day and place of the
annual meeting of the member insurers at least 30 days prior to such
annual meeting.
C.
The members of the initial Board of Directors shall be elected by the
member insurers at the organizational meeting.
If there are more nominees than vacancies, each such insurer
shall be entitled to one vote in person or by proxy for each member of
the Board of Directors to be elected.
D.
At annual meetings of the member insurers other than the organizational
meeting, if there are more nominees than vacancies, Directors shall be
elected by member insurers by votes cast on a weighted basis using the
net Wyoming direct premiums received as provided by the Commissioner for
the last available year on covered policies.
Each member insurer shall have at least one vote in person or by
proxy for each member of the Board of Directors to be elected.
E.
At the organizational meeting and all subsequent annual meetings of the
member insurers:
1.
Proxy voting shall be permitted, except that the presence of not fewer
than five member insurers shall be required to constitute a quorum.
2.
The member insurers receiving the greatest number of votes, on a
cumulative basis, shall be elected.
3.
In the event that there is not more than one nominee for each position to
be filled, the Secretary shall cast one vote for each nominee.
Article 3. Board of
Directors
A.
There shall be a Board of Directors in accordance with the provisions of
W.S. § 26-42-105.
1.
The Board of Directors shall consist of seven member insurers which shall
serve staggered terms of three years.
To provide for staggered terms, three Directors shall be elected
initially for terms of three years, two Directors shall be elected
initially for terms of two years, and two Directors shall be elected
initially for terms of one year.
a. The Board of Directors shall be elected by the member insurers as provided in Article 2 hereof, and shall fairly represent member insurers.
b.
Each member of the Board shall designate its representative and any
alternate from the same member insurer.
c.
The previously elected Board members shall serve until their successors
have been duly elected and qualified to serve.
2.
Upon the election of members of the Board of Directors, the Association
shall notify the Commissioner and request written approval of the
members of the Board as elected. In
the event the Commissioner shall determine that all member insurers are
not fairly represented, the Commissioner shall disapprove the election
of the Board members and order another election.
In the interim between such disapproval and the subsequent
election, the Commissioner may appoint temporary members of the Board of
Directors which fairly represent the member insurers.
3.
The Board of Directors shall:
a.
Elect a Chairman, Vice Chairman, Secretary and Treasurer from among its
members, and such other officers as it deems necessary.
The posts of Secretary and Treasurer may be held by the same
member. Each officer shall
serve a term of one year or until a successor is elected.
b.
Appoint, from among its members, a nominating committee.
Such committee shall select a nominee to succeed each board
member whose term expires at the annual meeting of the member insurers.
Such nominees shall be made known to the member insurers at least
30 days prior to such annual meeting.
Other nominees may be submitted to the Board, but not less than
20 days prior to such annual meeting, upon the petition of ten member
insurers.
c.
In the event there is more than one nominee for each position to be
filled, the Board shall make the names of said nominees known to member
insurers at least ten (10) days prior to the annual meeting of the
member insurers.
4.
Vacancies occurring on the Board of Directors between annual meetings of
the member insurers shall be filled by a majority vote of the remaining
members of the Board with the approval of the Commissioner. Vacancies occurring in elective offices between the annual
meetings shall be filled by majority vote of the Board.
Such appointees shall serve for the unexpired terms.
B.
1.
At any meeting of the Board of Directors, each member of the Board shall
have one vote.
2.
A majority of the Board shall constitute a quorum for the transaction of
business and the acts of the majority of the Board members present at a
meeting at which a quorum is present shall be the acts of the Board,
except as provided in paragraph 3 below.
3.
An affirmative vote of a majority of the full Board is required to:
a.
approve a contract with a servicing facility for overall administration
of the Association, except that administration of specific functions
with regard to specific insolvencies shall not require an affirmative
vote of a majority of the full Board;
b.
levy an assessment or provide for a refund;
c.
borrow money;
d.
adopt amendments to the Plan of Operation.
C.
1.
An annual meeting of the Board shall be held at the office of the
Association at Cheyenne on the 3rd Tuesday in the month of June,
immediately following the annual meeting of the member insurers, unless
the Chairman of the Board, upon proper notice, shall designate some
other time, day or place.
2.
At any meeting the Board may:
a.
Review the Plan and submit proposed amendments, if any, to the
Commissioner for approval.
b.
Review each outstanding contract or agreement, if any, and make necessary
or desirable corrections, improvements or additions.
c.
Review operating expenses and outstanding contractual obligations and
determine whether an assessment, or a refund of a prior assessment, is
necessary for the proper administration of the Association and if so,
the amount of either. In
order to avoid disproportionate clerical expense, (1) the Board may
establish an amount below which assessments or refunds shall not be
made; and (2) the Board may authorize the transfer of funds between
accounts and classes.
d.
Review, consider and act on any other matters deemed by it to be
necessary and proper for the administration of the Association.
D.
The Board may hold other regular or special meetings at such times and
with such frequency as it deems appropriate to conduct the business of
the Association. Such
meetings may be held telephonically.
Any Board member not present may consent in writing to any
specific action taken by the Board, but this shall not permit Board
members to act through other Board members by proxy.
Any action approved by the required number of Board members at
such meeting, including those consenting in writing, shall be as valid a
Board action as though authorized at an annual or regular meeting of the
Board or at the meeting held in person.
1.
Meetings by consent. Any
action required to be taken at a meeting of the Board of Directors or
any action which may be taken at a meeting of the Board of Directors may
be taken without a meeting if a consent in writing, setting forth the
action so taken, shall be signed by all of the directors entitled to
vote with respect to the subject matter thereof.
2.
Waiver of Notice. Whenever
notice is required to be given to any director under the provisions of
the Wyoming Life and Health Insurance Guaranty Association Act or the
Plan of Operation, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before, at or after the time
stated therein, shall be equivalent to the giving of such notice.
E.
Special meetings of the Board of Directors may be called by the chairman
and shall be called upon the request of any two Board members.
At such special meeting the Board may consider and decide any
matter deemed necessary for the proper administration of the
Association. Not less than
five days notice shall be given to each Board member of the time, place
and purpose of any such special meeting.
F.
At meetings at which the impairment or insolvency of a member insurer is
considered, the Board shall:
1.
Consider and determine the legal obligations of the Association with
regard to any reported impairment or insolvency.
2.
Consider and decide what methods or facilities, as permitted under W.S.
§ 26‑42‑106, shall be adopted or utilized to assure
fulfillment of the covered obligations of the impaired or insolvent
member insurer for each of the categories of covered policies.
3.
Assure that timely action is taken to gain access to and effect proper
retention of records of the impaired or insolvent member insurer which
are deemed necessary to the prompt and economical handling of its
legally imposed duties.
4.
Consider and decide to what extent and in what manner the Board shall
exercise the powers authorized by W.S. § 26-42-106(v) to bring
legal actions or provide for the defense thereof in order to avoid
payment of improper claims.
5.
Consider and decide what assessment, if any, should be levied.
Notices of assessments to member insurers shall be in sufficient
detail as to form a basis for the payment of such assessment by the
member insurer. The Board
shall promptly inform the Commissioner of the failure of any member to
pay an assessment made pursuant to this paragraph when due.
The Association shall make necessary efforts to collect interest
from member insurers for late paid assessment in accordance with W.S. §
26-42-107(a) unless the cost of such collection efforts would exceed the
interest to be collected from such member insurer.
In order to avoid disproportionate clerical expenses, the Board
may: (1) establish amounts
below which refunds and assessments shall not be made; and (2) authorize
the transfer of funds between accounts and classes.
At each annual meeting of the Board of Directors, the
Board shall review all Class A and Class B assessments previously
authorized by the Board but uncalled by the Association at the time of
such annual meeting. At
such annual meeting, the Board may elect to continue the authorized but
uncalled assessment, cancel the assessment or call for payment of the
assessment by the member insurers.
6.
Take all steps permitted by law, and deemed necessary, to protect the
Association's rights as pertaining to the impaired or insolvent member
insurer and its policyholders.
7.
Issue to each member insurer a certificate of contribution for each Class
of assessment paid for which certificates are to be provided under W.S.
§ 26-42-107(k). The
certificate shall show the amount paid by each such insurer, the date of
the assessment, name of the particular insolvent or impaired insurer for
which the assessment was made, the value, if any, of such certificate as
determined by the Commissioner, and such other information as the Board
shall find relevant.
8.
In addition to the foregoing powers, the Board shall have and exercise
such other powers as may be reasonably necessary to implement the
provisions of the Act.
G.
Dispose of any and all covered obligations the total liabilities of which
in this state, for each category of covered policy, shall not exceed the
dollar amount periodically prescribed pursuant to Resolution of the
Board if such disposition of covered obligations is made pursuant to a
rehabilitation plan, liquidation plan or other plan approved by the
Members Participation Council of the National Organization of Life and
Health Insurance Guaranty Associations ("NOLHGA"), if the
Association is at that time a member of NOLHGA.
Such authority is vested in the Association's Chairman or other
officer who may act with the advice of the Association's administrator
and counsel. Any
disposition of Association covered obligations pursuant to this
paragraph shall be reported to the full Board at the next special or
annual meeting after such action.
H.
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 upon
approval of such expenses by the Chairman or other officer of the
Association, but members of the Board shall not be compensated by the
Association for their services as members of the Board of Directors.
No officer may approve his or her own expenses.
I.
Member Insurer Procedure for Assessment Protests
1.
To protest an assessment, member insurers must do the following: (1) the
member insurer must first pay the full amount of the assessment; (2) the
member insurer must accompany the payment with a statement in writing
that the payment is made under protest; (3) the member insurer must set
forth a brief statement of the grounds for the protest.
2.
Within sixty (60) days of receipt of the protest, the Association will
either (1) notify the member insurer in writing of a determination; or
(2) notify the member insurer that additional time is required to
resolve the issues raised by the protest.
If the Board decides to provide a refund, the refund shall be
sent within sixty (60) days of the final decision.
3.
The Board shall consider each protest pursuant to and in compliance with
all statutory requirements. The
member insurer has the burden of proving to the Board that a protest
should be granted. Based on
the grounds stated in the protest, the Board will determine whether the
statutory requirements for a valid assessment have been met.
The Board will notify the member insurer of its decision to grant
or deny the protest.
4.
In order to avoid shortfalls caused by the protest procedure, the Board
may authorize the transfer of funds between accounts and classes.
J.
Procedure for Granting Abatement or Deferral
1.
Pursuant to and in compliance with all statutory requirements, the Board
shall consider and decide whether any assessment shall be deferred or
abated. The Board will
grant an abatement or deferral if, in its opinion, payment of the
assessment would endanger the ability of the member insurer to fulfill
its contractual obligations.
a.
Each member insurer that has been placed under an Order of Liquidation
with a finding of insolvency shall receive an automatic deferral.
The Board may resolve to grant an abatement or take other action
modifying the automatic deferral for any specific member insurer.
b.
Each member insurer that has been placed under an Order of Rehabilitation
shall receive an automatic deferral. This automatic deferral shall not apply if a resolution of
the Board specifies otherwise with respect to a specific member insurer.
2.
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 order to avoid shortfalls caused by the abatement and deferral
process, the Board may authorize the transfer of funds between accounts
and classes.
Article 4. Operations
A.
The official address of the Association shall be the address of the
office of the Chairman of the Board of Directors unless otherwise
designated by the Board of Directors.
B.
The Board of Directors may employ or retain such persons, firms or
corporations to perform such administrative functions as are necessary
for the Board's performance of the duties imposed upon the Association.
The Board may use the mailing address of such person, firm or
corporation as the official address of the Association.
Such persons may include an executive director with such
authority as may be delegated by the Board to implement and carry out
broad directives of the Board made pursuant to its statutory authority
and duties. Such person
shall be knowledgeable about insurance matters, conversant with the law
as it related to covered policies of insurance and administratively
capable of implementing the Board's directives.
Such persons may also include attorneys at law, actuaries,
accountants, claims personnel and such other specialists or persons
whose advice or assistance is deemed by the Board to be necessary to the
discharge of its duties imposed by law.
The Board may agree to compensate such persons so as best to
serve the interests of the Association and the public.
Such persons, firms or corporations shall keep and maintain such
records of their activities as may be required by the Board.
C.
The Board may open such bank accounts as it deems necessary for the
proper administration of association business.
Reasonable delegation and withdrawal authority to such accounts
for Association business will be made consistent with prudent fiscal
policy.
D.
In order to effectuate the purposes set forth in W.S. § 26-42-110
concerning the prevention of impairments, the Board of Directors may
develop procedures for discovering and reporting any member insurer that
may be insolvent or in an impaired financial condition which is
hazardous to the interest of the policyholders of such insurer or to the
public interest. No such
reports shall be considered public documents.
The Board of Directors may review the Insurance Code and
appropriate regulations with a view toward making recommendations to the
Commissioner for the improved and more certain detection and prevention
of member insurer insolvencies or impairments.
E.
Pursuant to the Association's authority under W.S. § 26-42-106, the
Board of Directors may adopt for future issuance without regard to any
particular impairment or insolvency, and submit to the Commissioner for
approval, policy forms of various types, containing at least the minimum
statutory provisions required in this state, and associated tables of
premium rates. Policy forms
and rates so adopted and approved may be used to provide substitute
benefits or alternative continued coverage with respect to the covered
policies or contracts of an impaired or insolvent member insurer.
F.
Within 180 days of the effective date of the Wyoming Life and Health
Insurance Guaranty Association Act, the Board of Directors shall prepare
and submit to the Commissioner for approval a summary document in
accordance with W.S. § 26-42-116(b) describing the general
purposes and current limitations of the Act.
G.
In the event in the judgment of the Board of Directors the maximum
assessment under W.S. § 26-42-107(g), in combination with the
association's borrowing authority, will be insufficient over any two
years to cover the outstanding and anticipated covered claims against
the Association relating to one or more impaired or insolvent member
insurers under any account or accounts, the Board of Directors may
provide that the Association shall make partial and periodic payments on
such claims in accordance with a schedule to be adopted by the Board of
Directors. Such schedule
may give preference to health claims, periodic annuity benefit payments,
death benefits, supplemental benefits and cash withdrawals under
emergency or hardship standards proposed by the Board of Directors and
approved by the Commissioner under W.S. § 26-42-106(b)(2).
Such schedule may be adjusted from time to time as changes in the
volume and type of such covered claims may warrant, and may be
structured so as not to give preference to claims in the order in which
they were incurred or made or in the order of which member insurers
first became impaired or insolvent, or to require retroactive
adjustments.
H.
The Board of Directors may refund to member insurers, in proportion to
the contribution of each 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. Refunds to member
insurers may be made by payments to member insurers, credits or debits
to member insurers with respect to current or future Class B assessments
or otherwise, in the discretion of the Board.
Unless the Board otherwise directs, the Association will not
refund assessments which member insurers have offset against premium
taxes. Refunds shall be
made in the inverse chronological order of assessments imposed by the
Association (i.e., the most recent of such assessments shall be refunded
first).
I.
In the event of dissolution of this association, assets shall be
distributed for one or more exempt purposes within the meaning of
Section 501(c)(6) of the Internal Revenue Code or corresponding section
of any future federal tax code or shall be distributed to the Federal
Government or to a State or Local Government for a public purpose.
J.
With respect to each insolvency, if the Association accrues an amount
less than or equal to $25,000 in administrative expenses, legal expenses
and accounting expenses and payments for policyholder liabilities, the
Board may resolve to pay such expenses with funds from a Class A
assessment instead of imposing a Class B assessment for such amounts.
K.
Composite Account. The
Association may create a composite account which operates as follows.
To the extent an excess of funds raised by Class B assessments,
recoveries or any other source with respect to any one impaired or
insolvent insurer is less than $25,000, the Association may return that
excess to the member insurers, either by credit or refund, or the
Association may deposit the excess into the composite account.
The Board shall review the composite account balance and activity
at each annual meeting and as necessary during special meetings during
the year at which time the appropriate use of the funds will be decided.
Any funds in the composite account shall be used the same as any
funds raised by Class A or Class B assessment.
Article 5. Records and
Reports
A.
Minutes of the proceedings of each Board Meeting shall be written. The
original of these minutes shall be retained by the Secretary of the
Board of Directors or by such other person as the Board may designate.
Records shall be kept of all negotiations and meetings in which
the Association or its representatives are involved to discuss the
activities of the Association in carrying out its powers and duties
under W.S. § 26-42-106. Records
of such negotiations or meetings shall be made public only upon the
termination of a liquidation, rehabilitation or conservation proceeding
involving the impaired or insolvent insurer, upon the termination of the
impairment or insolvency of the insurer, or upon the order of a court of
competent jurisdiction. Nothing
in this subsection shall limit the duty of the Association to render a
report of its activities under Section C. 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 or to the solvency of any company seeking to do an insurance
business in this state. Such
reports and recommendations shall not be considered public documents.
B.
Copies of minutes, reports, recommendations, records and documents shall
be furnished to each Board member, to the Commissioner and to any member
insurer upon request provided, however, that such minutes, reports,
recommendations or other records and documents relating to the portions
of such proceeding which were closed, because of confidential nature of
the matters addressed, shall also be confidential, and distribution of
such minutes, reports, recommendations, records and documents shall be
limited to the members of the Board of Directors and the Association's
attorneys, employees or agents, considered by the Board of Directors to
be necessary or pertinent to the discussion of the matters addressed or
performance of the actions taken during such confidential proceedings.
C.
1.
The Board of Directors shall make an annual report as required by W.S. §
26-42-113 not later than May 1 of each year to the Commissioner.
Such report shall include a financial report for the preceding
year in a form approved by the Commissioner and a review of the
activities of the Association during the preceding calendar year.
2.
At the conclusion of any insurer insolvency in which the Association was
required to pay covered claims, the Board of Directors shall, in
cooperation with other similar associations in other states which were
also so obligated, prepare a report to the Commissioner bearing on the
history and causes of the insolvency, pursuant to W.S. § 26-42-110(g).
D.
The Board shall, once each calendar year, either appoint certain
of the member insurers as an audit committee, or engage a certified
public accountant to review or audit the financial affairs of the
Association. An audit
committee shall consist of three members of the Board of Directors.
Such committee or accountant shall report its findings to the
Board of Directors.
Article 6. Membership
A.
Pursuant to W.S. § 26-42-102(vii), insurers which are licensed or hold a
certificate of authority to transact the kinds of insurance covered by
the Wyoming Life and Health Insurance Guaranty Association Act in the
State of Wyoming are and shall be members of this Association. Each insurer admitted after the effective date of the Act to
transact the kinds of insurance covered by the Act shall automatically
become, effective on the date of its admission, a member insurer of this
Association.
B.
A member insurer which ceases to be admitted after said date shall remain
liable for any assessments based on an insolvency or insolvencies
occurring prior to its ceasing to be admitted.
C.
A member insurer which becomes an impaired or insolvent insurer after its
license or certificate of authority in this state may have been
suspended, revoked, not renewed, or voluntarily withdrawn shall remain a
member insurer for purposes of the liability of the Association with
respect to the covered policies or contracts of such member insurer.
Article 7. Appeals
Any member insurer aggrieved by an act of the Board of Directors
or Association shall appeal to the Board of Directors before appealing
to the Commissioner. If such member insurer is aggrieved by the final action or
decision of the Board on the appeal, or if the Board declines or fails
to act on such appeal within 60 days, the member insurer may appeal to
the Commissioner within 60 days after the action or decision of the
Board or the expiration of the 60-day period within which the Board
failed to act on such appeal. Any
member insurer which makes an appeal to the Commissioner pursuant to
this Article must provide the Association with notice of the appeal by
mailing a copy of the appeal to the Association by certified mail on the
same day on which the appeal is submitted to the Commissioner.
The procedure by which member insurers may protest
assessments is addressed in Article 3, Paragraph I.
Article 8.
Indemnification
A.
All persons, except the Commissioner and his representatives, described
in W.S. § 26-42-117, including but not limited to the individual
representatives of the member insurers serving on the Board of
Directors, shall be indemnified by the Association for all reasonable
expenses incurred on account of any action taken or not taken by them in
the performance of their powers and duties under the Wyoming Life and
Health Insurance Guaranty Association Act, unless such persons shall be
finally adjudged to have committed a breach of duty involving gross
negligence, bad faith, dishonesty, willful misfeasance or reckless
disregard of the responsibilities of their office or position.
Such expenses shall include, but not be limited to, attorneys'
fees, judgments, decrees, fines, penalties and amounts paid in
settlement actually and necessarily incurred in the defense of any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, including all appeals, brought against such persons,
their testators or intestates. In
the event of settlement before final adjudication, with or without court
approval, such indemnity shall be provided only if the Association is
advised by independent legal counsel that such persons did not, in
counsel's opinion, commit such a breach of duty.
B.
This Article is intended to operate as a supplement and additional
safeguard to, and not in place of, the immunity granted by W.S. §
26-42-117.
Article 9.
Conformity to Statute
W.S.
§ 26-42-101-118 (the Wyoming Life and Health Insurance Guaranty
Association Act) as written, and as may be hereafter amended, is
incorporated as a part of this Plan and as such is attached hereto.