Massachusetts General Laws Part I. Administration of the Government (Ch. 1-182) Ch. 175D, § 5

(a)(1) The Fund shall be obligated to pay covered claims: (i) existing prior to an order of liquidation of a member insurer; (ii) arising within 30 days after the order of liquidation or before the policy expiration date if such expiration occurs less than 30 days after the order of liquidation; or (iii) before the insured replaces the policy or causes its cancellation if the insured does so within 30 days of the order of liquidation. The obligation shall be satisfied by paying to the claimant an amount as follows:

(2) In no event shall the Fund be obligated to pay an amount in excess of $500,000 for all first- and third-party claims under a policy or endorsement providing or that is found to provide cybersecurity insurance coverage and arising out of or related to a single insured event, regardless of the number of claims made or the number of claimants.

(3) In no event shall the Fund be obligated to pay a claimant an amount in excess of the obligation of the insolvent member insurer under the policy or coverage from which the claim arises. Notwithstanding any other provision of this chapter, for liquidations commencing on or after January 1, 2023, a covered claim shall not include a claim filed with the Fund after the final date set by the court for the filing of claims against the liquidator or receiver of an insolvent member insurer.

(4) For the purpose of filing a claim under this section, notice of claims to the liquidator of the insolvent member insurer shall be deemed notice to the Fund or its agent and a list of claims shall be periodically submitted to the Fund or association similar to the Fund in another state by the liquidator.

(5) Any obligation of the Fund to defend an insured shall cease upon the Fund's payment or tender of an amount equal to the Fund's covered claim obligation limit or the applicable policy limit, whichever is lesser.

(c)(1) The Fund shall assess insurers the amounts necessary to pay the obligations of the Fund under subsection (a) subsequent to an insolvency, expenses of handling covered claims subsequent to an insolvency and other expenses authorized by this chapter. 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. Each member insurer shall be notified of the assessment not later than 30 days before it is due. A member insurer may not be assessed in any 1 year on any account an amount greater than 2 per cent of that member insurer's net direct written premiums for the calendar year preceding the assessment. A member insurer may be also subject to an additional assessment, not to exceed $1,000 in any 1 year, determined by the board for the purpose of covering administrative and other expenses of the Fund. If the maximum assessment, together with the other assets of the Fund, does not provide in any 1 year an amount sufficient to make all necessary payments, the Fund's available assets shall be pro-rated and the unpaid portion shall be paid as soon thereafter as additional assets become available.

(2) The Fund may exempt or defer, in whole or in part, the assessment of a member insurer, if 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 a jurisdiction in which the member insurer is authorized to transact insurance; provided, however, that during the period of deferment, no dividends shall be paid to shareholders or policyholders. Deferred assessments shall be paid when the payment will not reduce capital or surplus below required minimums. Payments shall be refunded to those companies receiving larger assessments due to such deferment, or at the election of the member insurer, credited against future assessments.

(f)(1) The Fund shall have the right to review and contest as set forth in this subsection settlements, releases, compromises, waivers and judgments to which the insolvent member insurer or its insureds were parties prior to the entry of the order of liquidation. In an action to enforce settlements, releases and judgments to which the insolvent member insurer or its insureds were parties prior to the entry of the order of liquidation, the Fund may assert the following defenses, in addition to the defenses available to the insurer:

(2) As to any covered claims arising from a judgment under any decision, verdict or finding based on the default of the insolvent member insurer or its failure to defend, the Fund may, either on its own behalf or on behalf of an insured, apply to have the judgment, order, decision, verdict or finding set aside by the same court or administrator that entered the judgment, order, decision, verdict or finding and such judgement shall be vacated and the Fund shall be permitted to defend the claim on the merits.

(i) employ or retain persons as are necessary to handle claims, provide covered policy benefits and perform other duties of the Fund;

(ii) borrow funds necessary to carry out the purposes of this chapter in accordance with the plan of operation; provided, however, that the board of directors shall have the authority to pledge all or an appropriate portion of future assessments as necessary to secure a loan that may be needed to pay covered claims; and provided further, that until all loans secured by any pledged assessments are fully satisfied, the board of directors shall assess the maximum allowable under subsection (c);

(iii) sue or be sued, including, but not limited to, taking any legal action to collect unpaid assessments from member insurers, any amounts due for subrogation or salvage, other insurance recoveries, large deductible reimbursements or to recover any amount due from a high net worth policyholder; provided, however, that the Fund's power to sue shall include, but not be limited to, the power and right to intervene as a party to the proceedings before any court that has jurisdiction over an insolvent member insurer when the Fund is a creditor or potential creditor of the insolvent member insurer's estate;

(iv) negotiate and become a party to contracts necessary to carry out the purpose of this chapter;

(v) refund to the member insurers in proportion to the contribution of each member insurer that amount by which the assets of the Fund exceed the liabilities if, at the end of any calendar year, the board of directors finds that the assets of the Fund exceed the reasonable amounts the board determines are appropriate to assure that the Fund has sufficient capacity to fulfill its statutory duties; and

(vi) perform other acts necessary or proper to carry out the purpose of this chapter.