20-689. Prevention of impairments

388 words·~2 min read·/az/title-20/20-689

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

To aid in the detection and prevention of member insurer impairments and insolvencies:

1. The board of directors, on majority vote, shall notify the director of any information indicating that any member insurer may be unable or potentially unable to fulfill its contractual obligations.

2. The board of directors, on majority vote, may request that the director order an examination of any member insurer which the board in good faith believes may be unable or potentially unable to fulfill its contractual obligations. The director may conduct such examination. The examination may be conducted as a national association of insurance commissioners examination or may be conducted by such persons as the director designates. The cost of such examination shall be paid by the fund and the examination report shall be treated as are other examination reports.

The examination report shall not be released to the board of directors of the fund before its release to the public, but this shall not excuse the director from the obligation to comply with paragraph 3. The director shall notify the board of directors when the examination is completed. The request for an examination shall be kept on file by the director but it shall not be open to the public and shall be released only if the examination discloses that the examined insurer is unable or potentially unable to meet its contractual obligations.

3. The director shall report to the board of directors when the director has reasonable cause to believe that any member insurer examined at the request of the board of directors may be unable or potentially unable to fulfill its contractual obligations.

4. The board of directors, on majority vote, may make reports and recommendations to the director on 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, on majority vote, may make recommendations to the director for the detection and prevention of member insurer impairments and insolvencies.

6. The board of directors, at the conclusion of any insurer impairment or insolvency in which the fund carried out its duties, shall prepare a report on the history and causes of such impairment or insolvency based on the information available to the fund and submit such report to the director.