To aid in the detection and prevention of insurer insolvencies:
(1) It shall be the duty of the board of directors, upon majority vote, to notify
the director of any information indicating that any member insurer may be insolvent
or in a financial condition hazardous to the policyholders or the public;
(2) The board of directors may, upon majority vote, request that the director order
an examination of any member insurer which the board in good faith believes may be
in a financial condition hazardous to the policyholders or the public. Within thirty days of the receipt of such request, the director shall begin such examination.
The examination may be conducted as a National Association of Insurance Commissioners
examination or may be conducted by such qualified persons as the director designates.
The cost of such examination shall be paid by the association and the examination
report shall be treated as are other examination reports. 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 public inspection prior to the release of the examination report to
(3) It shall be the duty of the director to report to the board of directors when
he has reasonable cause to believe that any member insurer examined or being examined
may be insolvent or in a financial condition hazardous to the policyholders or the
public. Such report to the board of directors shall not be considered a release to the public
under applicable insurer examination statutes;
(4) The board of directors may, upon majority vote, make reports and recommendations
to the director upon 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 may, upon majority vote, make recommendations to the director
for the detection and prevention of insurer insolvencies; and
(6) The board of directors shall, at the conclusion of any insurer insolvency in which
the association was obligated to pay covered claims, prepare a report on the history
and causes of such insolvency, based on the information available to the association,
and submit such report to the director.
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