Chapter 3930: COMMERCIAL MARKET ASSISTANCE PLAN; COMMERCIAL INSURANCE JOINT UNDERWRITING ASSOCIATION

3930.01 Commercial market assistance plan - commercial insurance joint underwriting association definitions.

As used in sections 3930.01 to 3930.18 of the Revised Code or in any rules adopted under such sections:

(A) "Ohio commercial insurance joint underwriting association" means the nonprofit unincorporated joint underwriting association established under section 3930.03 of the Revised Code.

(B) "Commercial insurance" means any line of commercial casualty, commercial property, or commercial liability insurance except workers' compensation, medical malpractice, pollution liability, environmental impairment liability, fidelity and surety, sickness and accident, or coverages available through involuntary market mechanisms. "Commercial insurance" does not include farmowners insurance policies.

(C) "Net direct premiums" means gross direct premiums written on commercial insurance including the liability component of commercial multi-peril package policies as computed by the superintendent of insurance less return premiums or the unused or unabsorbed portions of premium deposits.

(D) "Ohio commercial market assistance plan" means the mechanism created to respond to assist commercial insurance buyers in Ohio in obtaining difficult-to-place commercial insurance coverages.

Cite as R.C. § 3930.01

Effective Date: 01-05-1988

3930.02 Commercial market assistance plan - written requests for assistance - executive committee - fiscal agent.

(A) The Ohio commercial market assistance plan is hereby established to assist in the placement of commercial insurance risks located in this state. The plan shall operate under the auspices of the department of insurance and shall attempt to be self-supporting. If, however, the fees collected pursuant to division (C) of this section are not adequate to make the plan self-supporting, the balance of the cost of operating the plan shall be borne by the department. The plan is not an insurer and is not authorized to assume insurance risks.

(B) Only written requests for assistance meeting all of the plan criteria shall be eligible for assistance by the plan.

(C) Each request for assistance shall be in writing and shall be submitted by a licensed Ohio agent or broker and accompanied by a fee, which shall be paid by the applicant for assistance and made payable to the "Ohio commercial market assistance plan." Each request also shall be accompanied by a statement of the agent or broker, in accordance with procedures, standards, and requirements set forth in rules adopted by the superintendent of insurance, that at least three insurance companies have been contacted for the issuance of insurance and that coverage was not available from those companies. The fee shall be reasonable and determined by the plan after consultation with the superintendent.

(D)

(1) In the event the coverage is placed through the plan with a request for assistance submitted by an agent not appointed by the insurer and the insurer assigns another agent to service the insured, the insurer shall pay the agent a producing fee from the commission with the remaining balance of the commission paid to the agent assigned by the insurer to service the insured.

(2) The plan shall not be considered a party to the relationship among insured, agent, and insurer.

(E) The superintendent of insurance shall appoint an executive committee, within thirty days of the effective date of this section, to administer the plan. The executive committee may appoint such other committees it considers appropriate to execute the purpose of the plan. The executive committee for the plan shall consist of nine members. Five members shall be representatives of commercial insurers and four shall be insurance agents, two of whom shall be representatives from excess surplus lines brokers. The superintendent shall serve as an ex-officio member of the executive committee. The executive committee shall develop a detailed written plan of operation. The plan of operation or any amendments thereto shall be submitted to the superintendent for approval within thirty days of the appointment of the executive committee. The plan of operation or amendments thereto shall be approved or disapproved by the superintendent within thirty days of submission by the executive committee or shall be deemed approved if the executive committee is not otherwise notified within the thirty-day period. The superintendent's disapproval shall be for specific reasons stated in writing. If the superintendent disapproves the proposed plan of operation, the executive committee shall, within fifteen days, submit for approval an appropriately revised plan of operation. If the executive committee fails to submit a revised plan, or if the revised plan submitted is unacceptable, the superintendent shall adopt a plan of operation.

(F) The superintendent may suspend or reactivate the plan of operation.

(G)

(1) The executive committee shall designate a fiscal agent for the plan. The fiscal agent is authorized to receive and hold funds submitted to the plan and to disburse them to pay reasonable and necessary expenses of the plan. The funds may be used for the necessary expenses of the plan, including but not limited to printing, postage, rent, mailing, telephone, and such other expenses incurred by the plan as the executive committee deems appropriate.

(2) The fiscal agent shall maintain books and records of all receipts and disbursements and shall submit financial statements as requested by the executive committee of the plan. The superintendent or any executive committee member shall have access to such books and records during normal business hours.

(3) The fiscal agent shall maintain a bank account under the name of the "Ohio commercial market assistance plan." All checks drawn upon the account of the plan shall bear the signatures of the fiscal agent and another person duly authorized by the executive committee.

(4) If a surplus of funds exists at any time the plan is suspended, the then existing surplus shall be disbursed to the state treasury to the credit of the operating fund of the department of insurance.

(5) Upon approval of the plan of operation and with the approval of the existing Ohio map committee established by the department of insurance and the executive committee of the Ohio commercial market assistance plan, all assets and all submitted questionnaires of the existing Ohio map committee may be transferred to the Ohio commercial market assistance plan and all questionnaires submitted to the existing Ohio map committee may be transferred to the Ohio commercial market assistance plan.

(6) There shall be no liability on the part of and no cause of action of any nature shall arise against any insurer, broker, agent, or any employee of the foregoing, employee or executive committee member of the Ohio commercial market assistance plan, or the superintendent of insurance or his representatives for any action taken by them in the performance of their powers and duties under sections 3930.01 to 3930.18 of the Revised Code.

Cite as R.C. § 3930.02

Effective Date: 01-05-1988

3930.03 Commercial insurance joint underwriting association - board of governors - plan of operation.

(A) The Ohio commercial insurance joint underwriting association is hereby created, consisting of all insurers authorized to write and engaged in writing within the state, on a direct basis, commercial insurance, including the liability component of commercial multi-peril insurance. Every such insurer shall be a member of the association and shall remain a member as a condition of its authority to continue to transact such kind of business in this state, notwithstanding other prohibitions or authorizations provided in the Revised Code, nor shall participation in the association by any insurer required to participate in such association constitute the writing of a line of insurance otherwise prohibited by the laws of this state.

The association shall be administered by a board of governors. It shall be activated for a particular class of insurance only by rule of the superintendent of insurance adopted pursuant to Chapter 119. of the Revised Code upon a finding by the superintendent that both of the following circumstances exist for that particular class of insurance:

(1) A substantial number of eligible requests for assistance for that particular class of insurance have not been placed by the Ohio commercial insurance market assistance plan and they are insurable risks;

(2) The lack of commercial insurance for that class of insurance threatens the continued operation of entities in this state and such condition will be detrimental to the general welfare of the citizens of this state.

(B) The board of governors of the association shall consist of eleven members appointed by the superintendent of insurance, eight of whom shall be selected from the members of the joint underwriting association. Five members shall be selected from commercial insurers domiciled in this state. Three members shall be selected from commercial insurers domiciled outside this state. One member shall be an insurance agent licensed and writing commercial insurance in this state. Two members shall be commercial insurance policyholders and shall not have any relationship with an insurance company or an insurance agent except as a purchaser of commercial insurance. Such governors shall serve a term of one year. The members of the board shall serve without compensation, but shall be reimbursed for their actual and necessary expenses incurred in the discharge of their official duties.

(C) There shall be a plan of operation promulgated under division (D) of this section. Pursuant to sections 3930.01 to 3930.18 of the Revised Code and the plan of operation with respect to commercial insurance promulgated under division (D) of this section, the association may:

(1) Issue or cause to be issued policies of insurance to applicants unable to obtain commercial insurance in the voluntary market, including incidental coverages and subject to limits as specified in the plan of operation;

(2) Underwrite such insurance and adjust and pay losses with respect thereto, or appoint service companies or syndicates to perform those functions;

(3) Assume reinsurance from its members;

(4) Cede reinsurance.

(D)

(1) Within forty-five days following the creation of the association, the board of governors of the association shall submit to the superintendent of insurance, for his review, a proposed plan of operation, consistent with sections 3930.01 to 3930.18 of the Revised Code. If the superintendent does not adopt such plan within thirty days of such submission, he shall resubmit the plan to the board with written reasons consistent with this chapter for the rejection. The board shall, within fifteen days, submit for approval an appropriately revised plan of operation and if the board of governors fails to do so, or if the revised plan submitted is unacceptable, the superintendent shall adopt a plan of operation. The superintendent shall adopt any plan by a rule under Chapter 119. of the Revised Code.

(2) The plan of operation shall provide for economic, fair, and nondiscriminatory administration and for the prompt and efficient provision of any class of commercial insurance that cannot be obtained in the voluntary market, and shall contain other provisions including, but not limited to, preliminary assessment of all members for initial expenses necessary to commence operations, establishment of necessary facilities, management of the association, assessment of members to defray losses and expenses, administrative expenses, establishment of reasonable and objective underwriting standards, acceptance and cession of reinsurance, and the appointment of servicing carriers or the direct issuance of syndicate policies.

(3) Amendments to the plan of operation may be made by the board of governors of the association, subject to the approval of the superintendent. The superintendent may also recommend amendments to the plan of operation. Upon adoption by the board and approval by the superintendent, the superintendent shall then amend the rule establishing the plan of operation pursuant to Chapter 119. of the Revised Code.

(4) The board of governors may employ, compensate, and prescribe the duties and powers of such employees and consultants as are necessary to carry out the purposes of sections 3930.01 to 3930.18 of the Revised Code.

(E) Upon application of an insurer, the superintendent may waive its participation in the plan if the superintendent determines that such participation would threaten the solvency of that insurer.

Cite as R.C. § 3930.03

Effective Date: 01-05-1988

3930.04 Applying for commercial insurance policy.

(A) An applicant shall be considered for the issuance of a policy of commercial insurance offered by the association if the applicant presents to the association evidence that the Ohio commercial market assistance plan was unable to assist the applicant in obtaining coverage. Such application shall be submitted on behalf of the applicant by a licensed Ohio agent or broker authorized by the applicant. If the association determines that an applicant meets the underwriting standards of the association as prescribed in the plan of operation and there is no unpaid premium due from the applicant for prior commercial insurance, the association, upon receipt of the premium or such portion thereof as is prescribed in the plan of operation, shall cause to be issued a policy of commercial insurance for a term of one year.

(B)

(1) The board of governors, in formulating the plan of operation, shall adopt minimum underwriting standards and shall be authorized to provide for coverage for losses which result from acts or omissions covered by such policy and reported during the policy period and for which written claim is made against the insured.

(2) All policies issued by or on behalf of the association shall contain a provision that upon termination of the policy through cancellation on grounds other than nonpayment of premium, or cessation of its underwriting operations as provided for by section 3930.17 of the Revised Code, the insured has the right on payment of appropriate additional premiums to extend coverage to include claims covered by such policy discovered and reported after the policy period, for which written claim is made against the insured.

(3) The rates, rating plans, rating rules, rating classifications, territories, and policy forms applicable to the insurance written by the association, and statistics relating thereto, are subject to Chapter 3937. of the Revised Code, giving due consideration to the past and prospective loss and expense experience for commercial insurance, trends in the frequency and severity of losses, the stabilization reserve fund, and such other information as the superintendent of insurance may require, and are subject to the prior approval of the superintendent pursuant to division (C)(3) of section 3937.03 of the Revised Code. All rates shall be on an actuarially sound basis, and shall be calculated to be self-supporting, exclusive of member insurer assessments. The superintendent shall take all appropriate steps to make available to the association the profit, loss, and expense experience of insurers currently or previously writing commercial insurance in this state.

(4) All policy forms issued by the association shall be approved by the superintendent.

(C) The association is under no obligation to issue any policy of commercial insurance to any applicant, unless the applicant would be insurable in accordance with reasonable underwriting standards in the voluntary insurance market, if such insurance were available.

Cite as R.C. § 3930.04

Effective Date: 01-05-1988

3930.05 Proportional participation by member insurers.

All insurers that are members of the Ohio commercial insurance joint underwriting association shall participate in its writings, expenses, deficits, and losses in the proportion that the net direct premiums of each bears to the aggregate net direct premiums written in this state by all members of the association, excluding premiums attributable to the operation of the association in the preceding calendar year.

Cite as R.C. § 3930.05

Effective Date: 01-05-1988

3930.06 Stabilization reserve fund.

(A) There is hereby created a stabilization reserve fund. The fund, after payment of all expenses allocated to the fund's operation, shall be available to reduce any deficit sustained in the operation of the Ohio commercial insurance joint underwriting association.

(B) Each association policyholder shall pay to the association a stabilization reserve fund charge equal to twenty per cent of the total annual premium payment due for insurance through the association without regard to whether assessment as authorized in section 3930.07 of the Revised Code has been imposed. Such charge shall be separately stated in the policy, and shall continue to be charged annually until the fund reaches a level that is determined by the board of governors to be actuarially sound, adequately reserved, financially stable, and efficiently managed so as to satisfy the purposes of the fund as stated in division (A) of this section. The association shall cancel the policy of any policyholder who fails to pay the stabilization reserve fund charge.

(C) All moneys received by the fund shall be held in a segregated account. All investment income shall be credited to the fund. All expenses of administration of the fund shall be charged against the fund.

(D) At a reasonable interval after the board of governors determines that the fund has reached a level that satisfies the purposes of the fund in accordance with division (B) of this section, the superintendent shall cause the remittance of the excess stabilization reserve fund moneys to the named insureds for their pro rata share of such moneys. The remittance shall be to each named insured in the proportion that the amount of premiums paid by such named insured bears to the total amount of premiums paid by all named insureds, taking into account any amounts previously remitted to such insureds. The remittance shall be effectuated in a manner that the superintendent believes best represents equity, fairness, and ease of administration.

Cite as R.C. § 3930.06

Effective Date: 01-05-1988

3930.07 Certification of insolvency.

(A) Upon a determination by the board of governors that the Ohio commercial insurance joint underwriting association will be unable to pay its incurred obligations in any class of commercial insurance, the board shall certify to the superintendent of insurance the existence of this condition. Within ten days of board certification, the board shall file with the superintendent a schedule of assessments for the collection of a loss contingency fund from association policyholders of that class for the purpose of payment of such obligations. If a majority consisting of two-thirds of the members of the board approve the schedule of assessments, it shall become final on the date that it is filed with the superintendent. If less than a two-thirds majority approve the schedule of assessments, it shall become final within fifteen days of filing unless disapproved by the superintendent. The board shall levy the assessments on policyholders and provide for their collection. Failure of any such policyholder to make prompt payment of the assessment shall be cause for cancellation of coverage.

(B) Within sixty days after board certification as provided for in division (A) of this section, the superintendent shall direct the board to perform an actuarial review of existing coverages, rates, reserves, and assessments of the affected class of commercial insurance.

Cite as R.C. § 3930.07

Effective Date: 01-05-1988

3930.08 Contributing to financial requirements of association.

In the event that sufficient funds are not available, from mechanisms provided for in sections 3930.04 , 3930.06 , and 3930.07 of the Revised Code, for the sound financial operation of the Ohio commercial insurance joint underwriting association, all members shall contribute to the financial requirements of the association in the manner provided for in section 3930.05 of the Revised Code. No member shall be obligated in any one year to reimburse the association on account of its proportionate share in the deficit from operations of the association in that year in excess of one-half of one per cent of its net direct premiums within this state and the aggregate amount not so reimbursed shall be reallocated among the remaining members in accordance with the method of determining participation prescribed in this section, after excluding from the computation the total net direct premiums of all members not sharing in such excess deficit. If a member is assessed or may be assessed because of a deficit, or projected deficit, it may recoup the assessment by increasing its commercial insurance policyholders' rates.

Cite as R.C. § 3930.08

Effective Date: 01-05-1988

3930.09 Appeals.

Any insurer or other person aggrieved by any action or decision of the Ohio commercial insurance joint underwriting association, or of any insurer as a result of its participation therein, may appeal to the board of governors. The decision of the board of governors may be appealed to the superintendent of insurance within thirty days from the date of the action or the decision. The superintendent shall, after hearing held upon proper notice, issue an order approving or disapproving the action or decision with respect to the matter which is the subject of appeal. All final orders and decisions of the superintendent are subject to judicial review as provided in Chapter 119. of the Revised Code.

Cite as R.C. § 3930.09

Effective Date: 01-05-1988

3930.10 Immunity.

There shall be no liability imposed on the part of and no cause of action of any nature arises against the Ohio commercial insurance joint underwriting association, its members, board of governors, agents, or employees, an insurer or its employees, any licensed agent or broker, or the superintendent of insurance or his authorized representatives, their members or employees for any action taken by them in the performance of their powers and duties under sections 3930.03 to 3930.17 of the Revised Code. Any reports and communications in connection therewith are not public records.

Cite as R.C. § 3930.10

Effective Date: 01-05-1988

3930.11 Annual statement.

The Ohio commercial insurance joint underwriting association shall file in the office of the superintendent of insurance, annually on or before the first day of March, a statement that shall contain information with respect to its transactions, conditions, operations, and affairs during the preceding calendar year. Such statement shall contain such matters and information as are prescribed and shall be in such form as is approved by the superintendent.

Cite as R.C. § 3930.11

Effective Date: 01-05-1988

3930.12 Superintendent or designee to examine association operation and experience.

The superintendent of insurance or any person designated by him may at any time visit and examine the operation and experience of the association and shall have free access to all the books, records, files, papers, and documents that relate to the operation of the association, and may summon, qualify, and examine as witnesses all persons having knowledge of such operations, including its officers, agents, or employees.

Cite as R.C. § 3930.12

Effective Date: 01-05-1988

3930.13 Examination of financial affairs by superintendent.

The Ohio commercial insurance joint underwriting association shall be subject to examination by the superintendent of insurance in accordance with section 3901.07 of the Revised Code. Section 3901.07 of the Revised Code shall govern every aspect of the examination, including the circumstances under and frequency with which it is conducted, the authority of the superintendent and any examiner or other person appointed by the superintendent, the liability for the assessment of expenses incurred in conducting the examination, and the remittance of the assessment to the superintendent's examination fund.

Cite as R.C. § 3930.13

Effective Date: 08-08-1991

3930.14 Underwriting association is exempt from license fees and taxes.

The Ohio commercial insurance joint underwriting association is exempt from all license fees, and income, franchise, premium, and privilege taxes levied or assessed by this state or any political subdivision.

Cite as R.C. § 3930.14

Effective Date: 01-05-1988

3930.15 Cancellation of policy.

A commercial insurance policy written by, or on behalf of, the Ohio commercial insurance joint underwriting association under the authority of sections 3930.01 to 3930.18 of the Revised Code may be canceled for reasons established by section 3937.25 of the Revised Code.

Cite as R.C. § 3930.15

Effective Date: 01-05-1988

3930.16 Program for decreasing overall utilization of association as source of insurance.

The board of governors of the Ohio commercial insurance joint underwriting association shall adopt a written program for decreasing the overall utilization of the association as a source of insurance. The program shall set forth actions that the board shall take to decrease such utilization, including actions intended to reduce the classes of insurance offered by the association, to reduce the number of policies issued, the number of persons insured, and the total amount of insurance written by the association, provided this section does not authorize the board to take action intended to decrease utilization of the association as a source of insurance if such action would substantially conflict with the purposes set forth in section 3930.03 of the Revised Code or the plan of operation of the association.

Cite as R.C. § 3930.16

Effective Date: 01-05-1988

3930.17 Rules governing cessation or reactivation of operations.

(A) The superintendent of insurance shall adopt rules pursuant to Chapter 119. of the Revised Code to do all of the following:

(1) Establish standards and procedures for the fair and equitable cessation of operations for any class of commercial insurance when such insurance is available in the normal market;

(2) Establish standards and procedures for the fair and equitable cessation of operations of the Ohio commercial insurance joint underwriting association, including the payment of all current and outstanding claims on policies issued by the association prior to such cessation, if all classes of commercial insurance authorized to be issued by the association are offered in the normal market;

(3) Provide that any subsequent reactivation of a class of commercial insurance or of the association shall be in accordance with the standards and procedures established in sections 3930.01 to 3930.18 of the Revised Code.

(B) After the initial year of operations and annually thereafter, the superintendent shall hold a hearing for the purpose of determining if commercial insurance is available in each class for which the association has been activated. Upon a finding that a class of insurance is available, the association shall cease its underwriting operations for such class of insurance and may make such arrangements as are necessary to cease operations for the class.

Cite as R.C. § 3930.17

Effective Date: 01-05-1988

3930.18 Association not member insurer of insurance guaranty association.

The Ohio commercial insurance joint underwriting association shall not be a member insurer of the Ohio insurance guaranty association under Chapter 3955. of the Revised Code.

Cite as R.C. § 3930.18

Effective Date: 01-05-1988