{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/38.2-1704.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/38.2-1704.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/38.2-1704.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/38.2-1704.html"}],"law_id":65404,"edition_id":1,"section_id":65404,"structure_id":14902,"section_number":"38.2-1704","catch_line":"Powers and duties of Association","history":"1976, c. 330, \u00a7 38.1-482.22; 1986, c. 562; 1991, c. 340; 1993, c. 142; 2007, c. 482; 2010, c. 510; 2018, c. 706.","full_text":"In addition to the powers and duties enumerated in other sections of this chapter:\n\nA\n\nIf the member insurer is an impaired insurer, the Association may, in its discretion and subject to any conditions imposed by the Association that do not impair the contractual obligations of the impaired insurer and that are approved by the Commission:1\n\nGuarantee, assume, reissue, or reinsure, or cause to be guaranteed, assumed, reissued, or reinsured, any or all of the policies or contracts of the impaired insurer; and2\n\nProvide moneys, pledges, loans, notes, guarantees or other means as are proper to effectuate subdivision 1 and assure payment of the contractual obligations of the impaired insurer pending action under that subdivision.B\n\nIf the member insurer is an insolvent insurer, the Association shall, in its discretion and subject to the approval of the Commission, either:1\n\na. Guarantee, assume, reissue, or reinsure or cause to be guaranteed, assumed, reissued, or reinsured the covered policies of the insolvent insurer or assure payment of the contractual obligations of the insolvent insurer; and\n\t\t\t\tb. Provide moneys, pledges, notes, guarantees, or other means reasonably necessary to discharge its duties; or2\n\nProvide benefits and coverages in accordance with the following provisions:\n\t\t\t\ta. With respect to policies and contracts, assure payment of benefits that would have been payable under the policies or contracts of the insolvent insurer, for claims incurred:1\n\nWith respect to group policies and contracts, not later than the earlier of the next renewal date under those policies or contracts or 45 days, but in no event less than 30 days, after the date on which the Association becomes obligated with respect to the policies and contracts;2\n\nWith respect to nongroup policies, contracts, and annuities, not later than the earlier of the next renewal date, if any, under the policies or contracts or one year, but in no event less than 30 days, from the date on which the Association becomes obligated with respect to the policies or contracts;\n\t\t\t\t\tb. Make diligent efforts to provide all known insureds, enrollees, or annuitants (for nongroup policies and contracts), or group policy or contract owners with respect to group policies and contracts, 30 days’ notice of the termination, pursuant to subdivision 2 a, of the benefits provided;\n\t\t\t\t\tc. With respect to nongroup policies and contracts covered by the Association, make available to each known insured, enrollee, or annuitant, or owner if other than the insured, enrollee, or annuitant, and with respect to an individual formerly an insured, enrollee, or annuitant under a group policy or contract who is not eligible for replacement group coverage, make available substitute coverage on an individual basis in accordance with the provisions of subdivision 2 d, if the insureds, enrollees, or annuitants had a right under law or the terminated policy or annuity to convert coverage to individual coverage or to continue an individual policy, contract, or annuity in force until a specified age or for a specified time, during which the insurer or health maintenance organization had no right unilaterally to make changes in any provision of the policy, contract, or annuity or had a right only to make changes in premium by class;\n\t\t\t\t\td. In providing the substitute coverage required under subdivision 2 c, the Association may offer either to reissue the terminated coverage or to issue an alternative policy or contract at actuarially justified rates, subject to the prior approval of the Commission. Alternative or reissued policies shall be offered without requiring evidence of insurability, and shall not provide for any waiting period or exclusion that would not have applied under the terminated policy or contract. The Association may reinsure any alternative or reissued policy or contract;\n\t\t\t\t\te. Alternative policies or contracts adopted by the Association shall be subject to the approval of the Commission. The Association may adopt alternative policies or contracts of various types for future issuance without regard to any particular impairment or insolvency. Alternative policies or contracts shall contain at least the minimum statutory provisions required in the Commonwealth and provide benefits that shall not be unreasonable in relation to the premium charged. The Association shall set the premium in accordance with a table of rates that it shall adopt. The premium shall reflect the amount of insurance to be provided and the age and class of risk of each insured, but shall not reflect any changes in the health of the insured after the original policy or contract was last underwritten. Any alternative policy or contract issued by the Association shall provide coverage of a type similar to that of the policy or contract issued by the impaired or insolvent insurer, as determined by the Association;\n\t\t\t\t\tf. If the Association elects to reissue terminated coverage at a premium rate different from that charged under the terminated policy or contract, the premium shall be actuarially justified and set by the Association in accordance with the amount of insurance or coverage provided and the age and class of risk, subject to approval of the Commission;\n\t\t\t\t\tg. The Association’s obligations with respect to coverage under any policy or contract of the impaired or insolvent insurer or under any reissued or alternative policy or contract shall cease on the date the coverage or policy or contract is replaced by another similar policy or contract by the policy or contract owner, the insured, the enrollee, or the Association; and\n\t\t\t\t\th. When proceeding under subdivision B 2 with respect to a policy or contract carrying guaranteed minimum interest rates, the Association shall assure the payment or crediting of a rate of interest consistent with subdivision C 2 c of § 38.2-1700.C\n\nNonpayment of premiums within 31 days after the date required under the terms of any guaranteed, assumed, alternative, or reissued policy or contract or substitute coverage shall terminate the Association’s obligations under the policy or contract or coverage under this chapter with respect to the policy, contract, or coverage, except with respect to any claims incurred or any net cash surrender value that may be due in accordance with the provisions of this chapter.D\n\nPremiums due for coverage after entry of an order of liquidation of an insolvent insurer shall belong to and be payable at the direction of the Association. If the liquidator of an insolvent insurer requests, the Association shall provide a report to the liquidator regarding such premium collected by the Association. The Association shall be liable for unearned premiums due to policy or contract owners arising after the entry of the order.E\n\nThe protection provided by this chapter shall not apply where the Commission has determined that the foreign or alien insurer’s domiciliary jurisdiction or state of entry provides substantially similar protection by statute or regulation for residents of the Commonwealth.F\n\nIn carrying out its duties under subsection B, the Association may:1\n\nSubject to approval by the Commission, impose permanent policy contract liens in connection with a guarantee, assumption, or reinsurance agreement, if the Association finds that the amounts that can be assessed under this chapter are less than the amounts needed to assure full and prompt performance of the Association’s duties under this chapter, or that economic or financial conditions as they affect member insurers are sufficiently adverse to render the imposition of such permanent policy or contract liens to be in the public interest; and2\n\nSubject to approval by the Commission, impose temporary moratoriums or liens on payments of cash values and policy loans or any other right to withdraw funds held in conjunction with policies or contracts, in addition to any contractual provisions for deferral of cash or policy loan values. In addition, in the event of a temporary moratorium or moratorium charge imposed by the receivership court on payment of cash values or policy loans, or on any other right to withdraw funds held in conjunction with policies or contracts, out of the assets of the impaired or insolvent insurer, the Association may defer the payment of cash values, policy loans, or other rights by the Association for the period of the moratorium or moratorium charge imposed by the receivership court, except for claims covered by the Association to be paid in accordance with a hardship procedure established by the liquidator or rehabilitator and approved by the receivership court.G\n\nA deposit in the Commonwealth, held pursuant to law or required by the Commission for the benefit of creditors, including policy or contract owners, not turned over to the domiciliary liquidator upon the entry of a final order of liquidation or order approving a rehabilitation plan of a member insurer domiciled in the Commonwealth or in a reciprocal state, pursuant to Article 7 (§ 38.2-1045 et seq.) of Chapter 10 shall be promptly paid to the Association. The Association shall be entitled to retain a portion of any amount so paid to it equal to the percentage determined by dividing the aggregate amount of policy or contract owners’ claims related to that insolvency for which the Association has provided statutory benefits by the aggregate amount of all policy or contract owners’ claims in the Commonwealth related to that insolvency and shall remit to the domiciliary receiver the amount so paid to the Association less the amount retained pursuant to this subsection. Any amount so paid to the Association and retained by it shall be treated as a distribution of estate assets pursuant to applicable state receivership law dealing with early access disbursements.H\n\nIf the Association fails to act within a reasonable period of time with respect to an insolvent insurer, as provided in subsection B, the Commission shall have the powers and duties of the Association under this chapter with respect to the insolvent insurer.I\n\nThe Association may render assistance and advice to the Commission, upon the Commission’s request, concerning rehabilitation, payment of claims, continuation of coverage, or the performance of other contractual obligations of an impaired or insolvent insurer.J\n\nThe Association shall have standing to appear or intervene before the Commission or any court or agency in the Commonwealth with jurisdiction over an impaired or insolvent insurer concerning which the Association is or may become obligated under this chapter or with jurisdiction over any person or property against which the Association may have rights through subrogation or otherwise. Standing shall extend to all matters germane to the powers and duties of the Association, including proposals for reinsuring, reissuing, modifying, or guaranteeing the policies or contracts of the impaired or insolvent insurer and the determination of the policies or contracts and contractual obligations. The Association shall also have the right to appear or intervene before a court or agency in another state with jurisdiction over an impaired or insolvent insurer for which the Association is or may become obligated or with jurisdiction over any person or property against whom the Association may have rights through subrogation or otherwise.K\n\n1. Any person receiving benefits under this chapter shall be deemed to have assigned the rights under, and any causes of action against any person for losses arising under, resulting from, or otherwise relating to, the covered policy or contract to the Association to the extent of the benefits received because of this chapter, whether the benefits are payments of or on account of contractual obligations, continuation of coverage, or provision of substitute or alternative policies, contracts, or coverages. The Association may require an assignment to it of such rights and causes of action by any enrollee, payee, policy or contract owner, beneficiary, insured, or annuitant as a condition precedent to the receipt of any right or benefits conferred by this chapter upon the person.2\n\nThe subrogation rights of the Association under this subsection shall have the same priority against the assets of the insolvent insurer as that possessed by the person entitled to receive benefits under this chapter.3\n\nIn addition to the rights provided by subdivisions K 1 and K 2, the Association shall have all common law rights of subrogation and any other equitable or legal remedy that would have been available to the impaired or insolvent insurer or owner, beneficiary, enrollee, or payee of a policy or contract with respect to the policy or contract, including, in the case of a structured settlement annuity, any rights of the owner, beneficiary, or payee of the annuity, to the extent of benefits received pursuant to this chapter, against a person originally or by succession responsible for the losses arising from the personal injury relating to the annuity or payment therefor, excepting any such person responsible solely by reason of serving as an assignee in respect of a qualified assignment under § 130 of the Internal Revenue Code.4\n\nIf subdivisions K 1, 2, and 3 are invalid or ineffective with respect to any person or claim for any reason, the amount payable by the Association with respect to the related covered obligations shall be reduced by the amount realized by any other person with respect to the person or claim that is attributable to the policies or contracts, or portion thereof, covered by the Association.5\n\nIf the Association has provided benefits with respect to a covered obligation and a person recovers amounts to which the Association has rights as described in subdivisions K 1 through K 4, the person shall pay to the Association the portion of the recovery attributable to the policies or contracts, or portion thereof, covered by the Association.L\n\nIn addition to the rights and powers granted to it elsewhere in this chapter, the Association may:1\n\nEnter into such contracts as are necessary or proper to carry out the provisions and purposes of this chapter;2\n\nSue or be sued, including taking any legal actions necessary or proper to recover any unpaid assessments under § 38.2-1705 and to settle any claims or potential claims against it;3\n\nBorrow money to effect the purposes of this chapter. Any notes or other evidence of indebtedness of the Association not in default shall be Category 1 investments, as defined in § 38.2-1401, for domestic member insurers;4\n\nEmploy or retain such persons as are necessary or appropriate to handle the financial transactions of the Association, and to perform other functions as become necessary or proper under this chapter;5\n\nNegotiate and contract with any liquidator, rehabilitator, conservator, or ancillary receiver to carry out the powers and duties of the Association;6\n\nTake such legal action as may be necessary or appropriate to avoid or recover payment of improper claims;7\n\nExercise, for the purposes of this chapter and to the extent approved by the Commission, the powers of a domestic life insurer, accident and sickness insurer, or health maintenance organization, but in no case may the Association issue policies or contracts other than those issued to perform its obligations under this chapter;8\n\nOrganize itself as a corporation or in other legal form permitted by the laws of the Commonwealth;9\n\nRequest information from a person seeking coverage from the Association in order to aid the Association in determining its obligations under this chapter with respect to the person, and the person shall promptly comply with the request;10\n\nIn accordance with the terms and conditions of the policy or contract, file for actuarially justified rate or premium increases for any policy or contract for which it provides coverage under this chapter; and11\n\nTake other necessary or appropriate action to discharge its duties and obligations under this chapter or to exercise its powers under this chapter.M\n\nThe Association may join an organization of one or more other state associations of similar purposes, to further the purposes and administer the powers and duties of the Association.N\n\n1. a. At any time within 180 days of the date of the order of liquidation, the Association may elect to succeed to the rights and obligations of the ceding member insurer that relate to policies, contracts, or annuities covered, in whole or in part, by the Association, in each case under any one or more reinsurance contracts entered into by the insolvent insurer and its reinsurers and selected by the Association. Any such assumption shall be effective as of the date of the order of liquidation. The election shall be effected by the Association or any agent of the Association on the Association’s behalf sending written notice, return receipt requested, to the affected reinsurers.\n\t\t\tb. To facilitate the earliest practicable decision about whether to assume any of the contracts of reinsurance, and in order to protect the financial position of the estate, the receiver and each reinsurer of the ceding member insurer shall make available upon request to the Association or to any agent of the Association on the Association’s behalf as soon as possible after commencement of formal delinquency proceedings (i) copies of in-force contracts of reinsurance and all related files and records relevant to the determination of whether such contracts should be assumed and (ii) notices of any defaults under the reinsurance contracts or any known event or condition which with the passage of time could become a default under the reinsurance contracts.\n\t\t\tc. The following shall apply to reinsurance contracts so assumed by the Association:1\n\nThe Association shall be responsible for all unpaid premiums due under the reinsurance contracts for periods both before and after the date of the order of liquidation, and shall be responsible for the performance of all other obligations to be performed after the date of the order of liquidation, in each case which relate to policies, contracts, or annuities covered, in whole or in part, by the Association. The Association may charge policies, contracts, or annuities covered in part by the Association, through reasonable allocation methods, the costs for reinsurance in excess of the obligations of the Association and shall provide notice and an accounting of these charges to the liquidator;2\n\nThe Association shall be entitled to any amounts payable by the reinsurer under the reinsurance contracts with respect to losses or events that occur in periods after the date of the order of liquidation and that relate to policies, contracts, or annuities covered, in whole or in part, by the Association, provided that, upon receipt of any such amounts, the Association shall be obliged to pay to the beneficiary, under the policy, contract, or annuity on account of which the amounts were paid, a portion of the amount equal to the lesser of (i) the amount received by the Association and (ii) the excess of the amount received by the Association over the amount equal to the benefits paid by the Association on account of the policy, contract, or annuity less the retention of the insurer applicable to the loss or event;3\n\nWithin 30 days following the Association’s election (the election date), the Association and each reinsurer under contracts assumed by the Association shall calculate the net balance due to or from the Association under each reinsurance contract as of the election date with respect to policies, contracts, or annuities covered, in whole or in part, by the Association, which calculation shall give full credit to all items paid by either the member insurer or its receiver or the reinsurer prior to the election date. The reinsurer shall pay the receiver any amounts due for losses or events prior to the date of the order of liquidation, subject to any set-off for premiums unpaid for periods prior to the date, and the Association or reinsurer shall pay any remaining balance due the other, in each case within five days of the completion of the aforementioned calculation. Any disputes over the amounts due to either the Association or the reinsurer shall be resolved by arbitration pursuant to the terms of the affected reinsurance contract or, if the contract contains no arbitration clause, as otherwise provided by law. If the receiver has received any amounts due the Association pursuant to subdivision N 1 c (2), the receiver shall remit the same to the Association as promptly as practicable; and4\n\nIf the Association or receiver, on the Association’s behalf, within 60 days of the election date, pays the unpaid premiums due for periods both before and after the election date that relate to policies, contracts, or annuities covered, in whole or in part, by the Association, the reinsurer shall not be entitled to terminate the reinsurance contracts for failure to pay premium insofar as the reinsurance contracts related to policies, contracts, or annuities covered, in whole or in part, by the Association, and shall not be entitled to set off any unpaid amounts due under other contracts, or unpaid amounts due from parties other than the Association, against amounts due the Association.2\n\nDuring the period from the date of the order of liquidation until the election date (or, if the election date does not occur, until 180 days after the date of the order of liquidation),\n\t\t\t\ta. Neither the Association nor the reinsurer shall have any rights or obligations under reinsurance contracts that the Association has the right to assume under subdivision N 1, whether for periods prior to or after the date of the order of liquidation; and the reinsurer, the receiver, and the Association shall, to the extent practicable, provide each other data and records reasonably requested;\n\t\t\t\tb. Provided that once the Association has elected to assume a reinsurance contract, the parties’ rights and obligations shall be governed by subdivision N 1.3\n\nIf the Association does not elect to assume a reinsurance contract by the election date pursuant to subdivision N 1, the Association shall have no rights or obligations, in each case for periods both before and after the date of the order of liquidation, with respect to the reinsurance contract.4\n\nWhen policies, contracts, or annuities, or covered obligations with respect thereto, are transferred to an assuming insurer, reinsurance on the policies, contracts, or annuities may also be transferred by the Association, in the case of contracts assumed under subdivision N 1, subject to the following:\n\t\t\t\ta. Unless the reinsurer and the assuming insurer agree otherwise, the reinsurance contract transferred shall not cover any new policies of insurance, contracts, or annuities in addition to those transferred;\n\t\t\t\tb. The obligations described in subdivision N 1 shall no longer apply with respect to matters arising after the effective date of the transfer; and\n\t\t\t\tc. Notice shall be given in writing, return receipt requested, by the transferring party to the affected reinsurer not less than 30 days prior to the effective date of the transfer.5\n\nThe provisions of this subsection shall supersede the provisions of any Commonwealth law or of any affected reinsurance contract that provides for or requires any payment of reinsurance proceeds, on account of losses or events that occur in periods after the date of the order of liquidation, to the receiver of the insolvent insurer or any other person. The receiver shall remain entitled to any amounts payable by the reinsurer under the reinsurance contracts with respect to losses or events that occur in periods prior to the date of the order of liquidation, subject to applicable setoff provisions.6\n\nExcept as otherwise provided in this section, nothing in this subsection shall alter or modify the terms and conditions of any reinsurance contract. Nothing in this section shall abrogate or limit any rights of any reinsurer to claim that it is entitled to rescind a reinsurance contract. Nothing in this section shall give a policy holder, contract owner, enrollee, certificate holder, or beneficiary an independent cause of action against a reinsurer that is not otherwise set forth in the reinsurance contract. Nothing in this section shall limit or affect the Association’s rights as a creditor of the estate against the assets of the estate. Nothing in this section shall apply to reinsurance agreements covering property or casualty risks.O\n\nThe board of directors of the Association shall have discretion and may exercise good faith business judgment to determine the means by which the Association is to provide the benefits of this chapter in an economical and efficient manner.P\n\nWhere the Association has arranged or offered to provide the benefits of this chapter to a covered person under a plan or arrangement that fulfills the Association’s obligations under this chapter, the person shall not be entitled to benefits from the Association in addition to or other than those provided under the plan or arrangement.Q\n\nVenue in a suit against the Association arising under this chapter shall be in the circuit court of the city or county in which the Association has its principal place of business except that any suit to which the Commission is a party shall be brought before the Commission. The Association shall not be required to give an appeal bond in an appeal that relates to a cause of action arising under this chapter.R\n\nIn carrying out its duties in connection with guaranteeing, assuming, reissuing, or reinsuring policies or contracts under subsection A or B, the Association may issue substitute coverage for a policy or contract that provides an interest rate, crediting rate or similar factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value by issuing an alternative policy or contract in accordance with the following provisions:1\n\nIn lieu of the index or other external reference provided for in the original policy or contract, the alternative policy or contract provides for (i) a fixed interest rate, (ii) payment of dividends with minimum guarantees, or (iii) a different method for calculating interest or changes in value;2\n\nThere is no requirement for evidence of insurability, waiting period, or other exclusion that would not have applied under the replaced policy or contract; and3\n\nThe alternative policy or contract is similar to the replaced policy or contract in all other material terms.","order_by":null,"text":{"0":{"id":237718,"text":"In addition to the powers and duties enumerated in other sections of this chapter:","type":"section","prefixes":[""],"prefix":"","entire_prefix":"","prefix_anchor":"","level":1,"next_prefix":"A"},"1":{"id":237719,"text":"If the member insurer is an impaired insurer, the Association may, in its discretion and subject to any conditions imposed by the Association that do not impair the contractual obligations of the impaired insurer and that are approved by the Commission:","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"prior_prefix":"","next_prefix":"A1"},"2":{"id":237720,"text":"Guarantee, assume, reissue, or reinsure, or cause to be guaranteed, assumed, reissued, or reinsured, any or all of the policies or contracts of the impaired insurer; and","type":"section","prefixes":["A","1"],"prefix":"1","entire_prefix":"A1","prefix_anchor":"A1","level":2,"prior_prefix":"A","next_prefix":"A2"},"3":{"id":237721,"text":"Provide moneys, pledges, loans, notes, guarantees or other means as are proper to effectuate subdivision 1 and assure payment of the contractual obligations of the impaired insurer pending action under that subdivision.","type":"section","prefixes":["A","2"],"prefix":"2","entire_prefix":"A2","prefix_anchor":"A2","level":2,"prior_prefix":"A1","next_prefix":"B"},"4":{"id":237722,"text":"If the member insurer is an insolvent insurer, the Association shall, in its discretion and subject to the approval of the Commission, either:","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A2","next_prefix":"B1"},"5":{"id":237723,"text":"a. Guarantee, assume, reissue, or reinsure or cause to be guaranteed, assumed, reissued, or reinsured the covered policies of the insolvent insurer or assure payment of the contractual obligations of the insolvent insurer; and\n\t\t\t\tb. Provide moneys, pledges, notes, guarantees, or other means reasonably necessary to discharge its duties; or","type":"section","prefixes":["B","1"],"prefix":"1","entire_prefix":"B1","prefix_anchor":"B1","level":2,"prior_prefix":"B","next_prefix":"B2"},"6":{"id":237724,"text":"Provide benefits and coverages in accordance with the following provisions:\n\t\t\t\ta. With respect to policies and contracts, assure payment of benefits that would have been payable under the policies or contracts of the insolvent insurer, for claims incurred:","type":"section","prefixes":["B","2"],"prefix":"2","entire_prefix":"B2","prefix_anchor":"B2","level":2,"prior_prefix":"B1","next_prefix":"B21"},"7":{"id":237725,"text":"With respect to group policies and contracts, not later than the earlier of the next renewal date under those policies or contracts or 45 days, but in no event less than 30 days, after the date on which the Association becomes obligated with respect to the policies and contracts;","type":"section","prefixes":["B","2","1"],"prefix":"1","entire_prefix":"B21","prefix_anchor":"B21","level":3,"prior_prefix":"B2","next_prefix":"B22"},"8":{"id":237726,"text":"With respect to nongroup policies, contracts, and annuities, not later than the earlier of the next renewal date, if any, under the policies or contracts or one year, but in no event less than 30 days, from the date on which the Association becomes obligated with respect to the policies or contracts;\n\t\t\t\t\tb. Make diligent efforts to provide all known insureds, enrollees, or annuitants (for nongroup policies and contracts), or group policy or contract owners with respect to group policies and contracts, 30 days’ notice of the termination, pursuant to subdivision 2 a, of the benefits provided;\n\t\t\t\t\tc. With respect to nongroup policies and contracts covered by the Association, make available to each known insured, enrollee, or annuitant, or owner if other than the insured, enrollee, or annuitant, and with respect to an individual formerly an insured, enrollee, or annuitant under a group policy or contract who is not eligible for replacement group coverage, make available substitute coverage on an individual basis in accordance with the provisions of subdivision 2 d, if the insureds, enrollees, or annuitants had a right under law or the terminated policy or annuity to convert coverage to individual coverage or to continue an individual policy, contract, or annuity in force until a specified age or for a specified time, during which the insurer or health maintenance organization had no right unilaterally to make changes in any provision of the policy, contract, or annuity or had a right only to make changes in premium by class;\n\t\t\t\t\td. In providing the substitute coverage required under subdivision 2 c, the Association may offer either to reissue the terminated coverage or to issue an alternative policy or contract at actuarially justified rates, subject to the prior approval of the Commission. Alternative or reissued policies shall be offered without requiring evidence of insurability, and shall not provide for any waiting period or exclusion that would not have applied under the terminated policy or contract. The Association may reinsure any alternative or reissued policy or contract;\n\t\t\t\t\te. Alternative policies or contracts adopted by the Association shall be subject to the approval of the Commission. The Association may adopt alternative policies or contracts of various types for future issuance without regard to any particular impairment or insolvency. Alternative policies or contracts shall contain at least the minimum statutory provisions required in the Commonwealth and provide benefits that shall not be unreasonable in relation to the premium charged. The Association shall set the premium in accordance with a table of rates that it shall adopt. The premium shall reflect the amount of insurance to be provided and the age and class of risk of each insured, but shall not reflect any changes in the health of the insured after the original policy or contract was last underwritten. Any alternative policy or contract issued by the Association shall provide coverage of a type similar to that of the policy or contract issued by the impaired or insolvent insurer, as determined by the Association;\n\t\t\t\t\tf. If the Association elects to reissue terminated coverage at a premium rate different from that charged under the terminated policy or contract, the premium shall be actuarially justified and set by the Association in accordance with the amount of insurance or coverage provided and the age and class of risk, subject to approval of the Commission;\n\t\t\t\t\tg. The Association’s obligations with respect to coverage under any policy or contract of the impaired or insolvent insurer or under any reissued or alternative policy or contract shall cease on the date the coverage or policy or contract is replaced by another similar policy or contract by the policy or contract owner, the insured, the enrollee, or the Association; and\n\t\t\t\t\th. When proceeding under subdivision B 2 with respect to a policy or contract carrying guaranteed minimum interest rates, the Association shall assure the payment or crediting of a rate of interest consistent with subdivision C 2 c of § 38.2-1700.","type":"section","prefixes":["B","2","2"],"prefix":"2","entire_prefix":"B22","prefix_anchor":"B22","level":3,"prior_prefix":"B21","next_prefix":"C"},"9":{"id":237727,"text":"Nonpayment of premiums within 31 days after the date required under the terms of any guaranteed, assumed, alternative, or reissued policy or contract or substitute coverage shall terminate the Association’s obligations under the policy or contract or coverage under this chapter with respect to the policy, contract, or coverage, except with respect to any claims incurred or any net cash surrender value that may be due in accordance with the provisions of this chapter.","type":"section","prefixes":["C"],"prefix":"C","entire_prefix":"C","prefix_anchor":"C","level":1,"prior_prefix":"B22","next_prefix":"D"},"10":{"id":237728,"text":"Premiums due for coverage after entry of an order of liquidation of an insolvent insurer shall belong to and be payable at the direction of the Association. If the liquidator of an insolvent insurer requests, the Association shall provide a report to the liquidator regarding such premium collected by the Association. The Association shall be liable for unearned premiums due to policy or contract owners arising after the entry of the order.","type":"section","prefixes":["D"],"prefix":"D","entire_prefix":"D","prefix_anchor":"D","level":1,"prior_prefix":"C","next_prefix":"E"},"11":{"id":237729,"text":"The protection provided by this chapter shall not apply where the Commission has determined that the foreign or alien insurer’s domiciliary jurisdiction or state of entry provides substantially similar protection by statute or regulation for residents of the Commonwealth.","type":"section","prefixes":["E"],"prefix":"E","entire_prefix":"E","prefix_anchor":"E","level":1,"prior_prefix":"D","next_prefix":"F"},"12":{"id":237730,"text":"In carrying out its duties under subsection B, the Association may:","type":"section","prefixes":["F"],"prefix":"F","entire_prefix":"F","prefix_anchor":"F","level":1,"prior_prefix":"E","next_prefix":"F1"},"13":{"id":237731,"text":"Subject to approval by the Commission, impose permanent policy contract liens in connection with a guarantee, assumption, or reinsurance agreement, if the Association finds that the amounts that can be assessed under this chapter are less than the amounts needed to assure full and prompt performance of the Association’s duties under this chapter, or that economic or financial conditions as they affect member insurers are sufficiently adverse to render the imposition of such permanent policy or contract liens to be in the public interest; and","type":"section","prefixes":["F","1"],"prefix":"1","entire_prefix":"F1","prefix_anchor":"F1","level":2,"prior_prefix":"F","next_prefix":"F2"},"14":{"id":237732,"text":"Subject to approval by the Commission, impose temporary moratoriums or liens on payments of cash values and policy loans or any other right to withdraw funds held in conjunction with policies or contracts, in addition to any contractual provisions for deferral of cash or policy loan values. In addition, in the event of a temporary moratorium or moratorium charge imposed by the receivership court on payment of cash values or policy loans, or on any other right to withdraw funds held in conjunction with policies or contracts, out of the assets of the impaired or insolvent insurer, the Association may defer the payment of cash values, policy loans, or other rights by the Association for the period of the moratorium or moratorium charge imposed by the receivership court, except for claims covered by the Association to be paid in accordance with a hardship procedure established by the liquidator or rehabilitator and approved by the receivership court.","type":"section","prefixes":["F","2"],"prefix":"2","entire_prefix":"F2","prefix_anchor":"F2","level":2,"prior_prefix":"F1","next_prefix":"G"},"15":{"id":237733,"text":"A deposit in the Commonwealth, held pursuant to law or required by the Commission for the benefit of creditors, including policy or contract owners, not turned over to the domiciliary liquidator upon the entry of a final order of liquidation or order approving a rehabilitation plan of a member insurer domiciled in the Commonwealth or in a reciprocal state, pursuant to Article 7 (§ 38.2-1045 et seq.) of Chapter 10 shall be promptly paid to the Association. The Association shall be entitled to retain a portion of any amount so paid to it equal to the percentage determined by dividing the aggregate amount of policy or contract owners’ claims related to that insolvency for which the Association has provided statutory benefits by the aggregate amount of all policy or contract owners’ claims in the Commonwealth related to that insolvency and shall remit to the domiciliary receiver the amount so paid to the Association less the amount retained pursuant to this subsection. Any amount so paid to the Association and retained by it shall be treated as a distribution of estate assets pursuant to applicable state receivership law dealing with early access disbursements.","type":"section","prefixes":["G"],"prefix":"G","entire_prefix":"G","prefix_anchor":"G","level":1,"prior_prefix":"F2","next_prefix":"H"},"16":{"id":237734,"text":"If the Association fails to act within a reasonable period of time with respect to an insolvent insurer, as provided in subsection B, the Commission shall have the powers and duties of the Association under this chapter with respect to the insolvent insurer.","type":"section","prefixes":["H"],"prefix":"H","entire_prefix":"H","prefix_anchor":"H","level":1,"prior_prefix":"G","next_prefix":"I"},"17":{"id":237735,"text":"The Association may render assistance and advice to the Commission, upon the Commission’s request, concerning rehabilitation, payment of claims, continuation of coverage, or the performance of other contractual obligations of an impaired or insolvent insurer.","type":"section","prefixes":["I"],"prefix":"I","entire_prefix":"I","prefix_anchor":"I","level":1,"prior_prefix":"H","next_prefix":"J"},"18":{"id":237736,"text":"The Association shall have standing to appear or intervene before the Commission or any court or agency in the Commonwealth with jurisdiction over an impaired or insolvent insurer concerning which the Association is or may become obligated under this chapter or with jurisdiction over any person or property against which the Association may have rights through subrogation or otherwise. Standing shall extend to all matters germane to the powers and duties of the Association, including proposals for reinsuring, reissuing, modifying, or guaranteeing the policies or contracts of the impaired or insolvent insurer and the determination of the policies or contracts and contractual obligations. The Association shall also have the right to appear or intervene before a court or agency in another state with jurisdiction over an impaired or insolvent insurer for which the Association is or may become obligated or with jurisdiction over any person or property against whom the Association may have rights through subrogation or otherwise.","type":"section","prefixes":["J"],"prefix":"J","entire_prefix":"J","prefix_anchor":"J","level":1,"prior_prefix":"I","next_prefix":"K"},"19":{"id":237737,"text":"1. Any person receiving benefits under this chapter shall be deemed to have assigned the rights under, and any causes of action against any person for losses arising under, resulting from, or otherwise relating to, the covered policy or contract to the Association to the extent of the benefits received because of this chapter, whether the benefits are payments of or on account of contractual obligations, continuation of coverage, or provision of substitute or alternative policies, contracts, or coverages. The Association may require an assignment to it of such rights and causes of action by any enrollee, payee, policy or contract owner, beneficiary, insured, or annuitant as a condition precedent to the receipt of any right or benefits conferred by this chapter upon the person.","type":"section","prefixes":["K"],"prefix":"K","entire_prefix":"K","prefix_anchor":"K","level":1,"prior_prefix":"J","next_prefix":"K2"},"20":{"id":237738,"text":"The subrogation rights of the Association under this subsection shall have the same priority against the assets of the insolvent insurer as that possessed by the person entitled to receive benefits under this chapter.","type":"section","prefixes":["K","2"],"prefix":"2","entire_prefix":"K2","prefix_anchor":"K2","level":2,"prior_prefix":"K","next_prefix":"K3"},"21":{"id":237739,"text":"In addition to the rights provided by subdivisions K 1 and K 2, the Association shall have all common law rights of subrogation and any other equitable or legal remedy that would have been available to the impaired or insolvent insurer or owner, beneficiary, enrollee, or payee of a policy or contract with respect to the policy or contract, including, in the case of a structured settlement annuity, any rights of the owner, beneficiary, or payee of the annuity, to the extent of benefits received pursuant to this chapter, against a person originally or by succession responsible for the losses arising from the personal injury relating to the annuity or payment therefor, excepting any such person responsible solely by reason of serving as an assignee in respect of a qualified assignment under § 130 of the Internal Revenue Code.","type":"section","prefixes":["K","3"],"prefix":"3","entire_prefix":"K3","prefix_anchor":"K3","level":2,"prior_prefix":"K2","next_prefix":"K4"},"22":{"id":237740,"text":"If subdivisions K 1, 2, and 3 are invalid or ineffective with respect to any person or claim for any reason, the amount payable by the Association with respect to the related covered obligations shall be reduced by the amount realized by any other person with respect to the person or claim that is attributable to the policies or contracts, or portion thereof, covered by the Association.","type":"section","prefixes":["K","4"],"prefix":"4","entire_prefix":"K4","prefix_anchor":"K4","level":2,"prior_prefix":"K3","next_prefix":"K5"},"23":{"id":237741,"text":"If the Association has provided benefits with respect to a covered obligation and a person recovers amounts to which the Association has rights as described in subdivisions K 1 through K 4, the person shall pay to the Association the portion of the recovery attributable to the policies or contracts, or portion thereof, covered by the Association.","type":"section","prefixes":["K","5"],"prefix":"5","entire_prefix":"K5","prefix_anchor":"K5","level":2,"prior_prefix":"K4","next_prefix":"L"},"24":{"id":237742,"text":"In addition to the rights and powers granted to it elsewhere in this chapter, the Association may:","type":"section","prefixes":["L"],"prefix":"L","entire_prefix":"L","prefix_anchor":"L","level":1,"prior_prefix":"K5","next_prefix":"L1"},"25":{"id":237743,"text":"Enter into such contracts as are necessary or proper to carry out the provisions and purposes of this chapter;","type":"section","prefixes":["L","1"],"prefix":"1","entire_prefix":"L1","prefix_anchor":"L1","level":2,"prior_prefix":"L","next_prefix":"L2"},"26":{"id":237744,"text":"Sue or be sued, including taking any legal actions necessary or proper to recover any unpaid assessments under § 38.2-1705 and to settle any claims or potential claims against it;","type":"section","prefixes":["L","2"],"prefix":"2","entire_prefix":"L2","prefix_anchor":"L2","level":2,"prior_prefix":"L1","next_prefix":"L3"},"27":{"id":237745,"text":"Borrow money to effect the purposes of this chapter. Any notes or other evidence of indebtedness of the Association not in default shall be Category 1 investments, as defined in § 38.2-1401, for domestic member insurers;","type":"section","prefixes":["L","3"],"prefix":"3","entire_prefix":"L3","prefix_anchor":"L3","level":2,"prior_prefix":"L2","next_prefix":"L4"},"28":{"id":237746,"text":"Employ or retain such persons as are necessary or appropriate to handle the financial transactions of the Association, and to perform other functions as become necessary or proper under this chapter;","type":"section","prefixes":["L","4"],"prefix":"4","entire_prefix":"L4","prefix_anchor":"L4","level":2,"prior_prefix":"L3","next_prefix":"L5"},"29":{"id":237747,"text":"Negotiate and contract with any liquidator, rehabilitator, conservator, or ancillary receiver to carry out the powers and duties of the Association;","type":"section","prefixes":["L","5"],"prefix":"5","entire_prefix":"L5","prefix_anchor":"L5","level":2,"prior_prefix":"L4","next_prefix":"L6"},"30":{"id":237748,"text":"Take such legal action as may be necessary or appropriate to avoid or recover payment of improper claims;","type":"section","prefixes":["L","6"],"prefix":"6","entire_prefix":"L6","prefix_anchor":"L6","level":2,"prior_prefix":"L5","next_prefix":"L7"},"31":{"id":237749,"text":"Exercise, for the purposes of this chapter and to the extent approved by the Commission, the powers of a domestic life insurer, accident and sickness insurer, or health maintenance organization, but in no case may the Association issue policies or contracts other than those issued to perform its obligations under this chapter;","type":"section","prefixes":["L","7"],"prefix":"7","entire_prefix":"L7","prefix_anchor":"L7","level":2,"prior_prefix":"L6","next_prefix":"L8"},"32":{"id":237750,"text":"Organize itself as a corporation or in other legal form permitted by the laws of the Commonwealth;","type":"section","prefixes":["L","8"],"prefix":"8","entire_prefix":"L8","prefix_anchor":"L8","level":2,"prior_prefix":"L7","next_prefix":"L9"},"33":{"id":237751,"text":"Request information from a person seeking coverage from the Association in order to aid the Association in determining its obligations under this chapter with respect to the person, and the person shall promptly comply with the request;","type":"section","prefixes":["L","9"],"prefix":"9","entire_prefix":"L9","prefix_anchor":"L9","level":2,"prior_prefix":"L8","next_prefix":"L10"},"34":{"id":237752,"text":"In accordance with the terms and conditions of the policy or contract, file for actuarially justified rate or premium increases for any policy or contract for which it provides coverage under this chapter; and","type":"section","prefixes":["L","10"],"prefix":"10","entire_prefix":"L10","prefix_anchor":"L10","level":2,"prior_prefix":"L9","next_prefix":"L11"},"35":{"id":237753,"text":"Take other necessary or appropriate action to discharge its duties and obligations under this chapter or to exercise its powers under this chapter.","type":"section","prefixes":["L","11"],"prefix":"11","entire_prefix":"L11","prefix_anchor":"L11","level":2,"prior_prefix":"L10","next_prefix":"M"},"36":{"id":237754,"text":"The Association may join an organization of one or more other state associations of similar purposes, to further the purposes and administer the powers and duties of the Association.","type":"section","prefixes":["M"],"prefix":"M","entire_prefix":"M","prefix_anchor":"M","level":1,"prior_prefix":"L11","next_prefix":"N"},"37":{"id":237755,"text":"1. a. At any time within 180 days of the date of the order of liquidation, the Association may elect to succeed to the rights and obligations of the ceding member insurer that relate to policies, contracts, or annuities covered, in whole or in part, by the Association, in each case under any one or more reinsurance contracts entered into by the insolvent insurer and its reinsurers and selected by the Association. Any such assumption shall be effective as of the date of the order of liquidation. The election shall be effected by the Association or any agent of the Association on the Association’s behalf sending written notice, return receipt requested, to the affected reinsurers.\n\t\t\tb. To facilitate the earliest practicable decision about whether to assume any of the contracts of reinsurance, and in order to protect the financial position of the estate, the receiver and each reinsurer of the ceding member insurer shall make available upon request to the Association or to any agent of the Association on the Association’s behalf as soon as possible after commencement of formal delinquency proceedings (i) copies of in-force contracts of reinsurance and all related files and records relevant to the determination of whether such contracts should be assumed and (ii) notices of any defaults under the reinsurance contracts or any known event or condition which with the passage of time could become a default under the reinsurance contracts.\n\t\t\tc. The following shall apply to reinsurance contracts so assumed by the Association:","type":"section","prefixes":["N"],"prefix":"N","entire_prefix":"N","prefix_anchor":"N","level":1,"prior_prefix":"M","next_prefix":"N1"},"38":{"id":237756,"text":"The Association shall be responsible for all unpaid premiums due under the reinsurance contracts for periods both before and after the date of the order of liquidation, and shall be responsible for the performance of all other obligations to be performed after the date of the order of liquidation, in each case which relate to policies, contracts, or annuities covered, in whole or in part, by the Association. The Association may charge policies, contracts, or annuities covered in part by the Association, through reasonable allocation methods, the costs for reinsurance in excess of the obligations of the Association and shall provide notice and an accounting of these charges to the liquidator;","type":"section","prefixes":["N","1"],"prefix":"1","entire_prefix":"N1","prefix_anchor":"N1","level":2,"prior_prefix":"N","next_prefix":"N2"},"39":{"id":237757,"text":"The Association shall be entitled to any amounts payable by the reinsurer under the reinsurance contracts with respect to losses or events that occur in periods after the date of the order of liquidation and that relate to policies, contracts, or annuities covered, in whole or in part, by the Association, provided that, upon receipt of any such amounts, the Association shall be obliged to pay to the beneficiary, under the policy, contract, or annuity on account of which the amounts were paid, a portion of the amount equal to the lesser of (i) the amount received by the Association and (ii) the excess of the amount received by the Association over the amount equal to the benefits paid by the Association on account of the policy, contract, or annuity less the retention of the insurer applicable to the loss or event;","type":"section","prefixes":["N","2"],"prefix":"2","entire_prefix":"N2","prefix_anchor":"N2","level":2,"prior_prefix":"N1","next_prefix":"N3"},"40":{"id":237758,"text":"Within 30 days following the Association’s election (the election date), the Association and each reinsurer under contracts assumed by the Association shall calculate the net balance due to or from the Association under each reinsurance contract as of the election date with respect to policies, contracts, or annuities covered, in whole or in part, by the Association, which calculation shall give full credit to all items paid by either the member insurer or its receiver or the reinsurer prior to the election date. The reinsurer shall pay the receiver any amounts due for losses or events prior to the date of the order of liquidation, subject to any set-off for premiums unpaid for periods prior to the date, and the Association or reinsurer shall pay any remaining balance due the other, in each case within five days of the completion of the aforementioned calculation. Any disputes over the amounts due to either the Association or the reinsurer shall be resolved by arbitration pursuant to the terms of the affected reinsurance contract or, if the contract contains no arbitration clause, as otherwise provided by law. If the receiver has received any amounts due the Association pursuant to subdivision N 1 c (2), the receiver shall remit the same to the Association as promptly as practicable; and","type":"section","prefixes":["N","3"],"prefix":"3","entire_prefix":"N3","prefix_anchor":"N3","level":2,"prior_prefix":"N2","next_prefix":"N4"},"41":{"id":237759,"text":"If the Association or receiver, on the Association’s behalf, within 60 days of the election date, pays the unpaid premiums due for periods both before and after the election date that relate to policies, contracts, or annuities covered, in whole or in part, by the Association, the reinsurer shall not be entitled to terminate the reinsurance contracts for failure to pay premium insofar as the reinsurance contracts related to policies, contracts, or annuities covered, in whole or in part, by the Association, and shall not be entitled to set off any unpaid amounts due under other contracts, or unpaid amounts due from parties other than the Association, against amounts due the Association.","type":"section","prefixes":["N","4"],"prefix":"4","entire_prefix":"N4","prefix_anchor":"N4","level":2,"prior_prefix":"N3","next_prefix":"N2"},"42":{"id":237760,"text":"During the period from the date of the order of liquidation until the election date (or, if the election date does not occur, until 180 days after the date of the order of liquidation),\n\t\t\t\ta. Neither the Association nor the reinsurer shall have any rights or obligations under reinsurance contracts that the Association has the right to assume under subdivision N 1, whether for periods prior to or after the date of the order of liquidation; and the reinsurer, the receiver, and the Association shall, to the extent practicable, provide each other data and records reasonably requested;\n\t\t\t\tb. Provided that once the Association has elected to assume a reinsurance contract, the parties’ rights and obligations shall be governed by subdivision N 1.","type":"section","prefixes":["N","2"],"prefix":"2","entire_prefix":"N2","prefix_anchor":"N2","level":2,"prior_prefix":"N4","next_prefix":"N3"},"43":{"id":237761,"text":"If the Association does not elect to assume a reinsurance contract by the election date pursuant to subdivision N 1, the Association shall have no rights or obligations, in each case for periods both before and after the date of the order of liquidation, with respect to the reinsurance contract.","type":"section","prefixes":["N","3"],"prefix":"3","entire_prefix":"N3","prefix_anchor":"N3","level":2,"prior_prefix":"N2","next_prefix":"N4"},"44":{"id":237762,"text":"When policies, contracts, or annuities, or covered obligations with respect thereto, are transferred to an assuming insurer, reinsurance on the policies, contracts, or annuities may also be transferred by the Association, in the case of contracts assumed under subdivision N 1, subject to the following:\n\t\t\t\ta. Unless the reinsurer and the assuming insurer agree otherwise, the reinsurance contract transferred shall not cover any new policies of insurance, contracts, or annuities in addition to those transferred;\n\t\t\t\tb. The obligations described in subdivision N 1 shall no longer apply with respect to matters arising after the effective date of the transfer; and\n\t\t\t\tc. Notice shall be given in writing, return receipt requested, by the transferring party to the affected reinsurer not less than 30 days prior to the effective date of the transfer.","type":"section","prefixes":["N","4"],"prefix":"4","entire_prefix":"N4","prefix_anchor":"N4","level":2,"prior_prefix":"N3","next_prefix":"N5"},"45":{"id":237763,"text":"The provisions of this subsection shall supersede the provisions of any Commonwealth law or of any affected reinsurance contract that provides for or requires any payment of reinsurance proceeds, on account of losses or events that occur in periods after the date of the order of liquidation, to the receiver of the insolvent insurer or any other person. The receiver shall remain entitled to any amounts payable by the reinsurer under the reinsurance contracts with respect to losses or events that occur in periods prior to the date of the order of liquidation, subject to applicable setoff provisions.","type":"section","prefixes":["N","5"],"prefix":"5","entire_prefix":"N5","prefix_anchor":"N5","level":2,"prior_prefix":"N4","next_prefix":"N6"},"46":{"id":237764,"text":"Except as otherwise provided in this section, nothing in this subsection shall alter or modify the terms and conditions of any reinsurance contract. Nothing in this section shall abrogate or limit any rights of any reinsurer to claim that it is entitled to rescind a reinsurance contract. Nothing in this section shall give a policy holder, contract owner, enrollee, certificate holder, or beneficiary an independent cause of action against a reinsurer that is not otherwise set forth in the reinsurance contract. Nothing in this section shall limit or affect the Association’s rights as a creditor of the estate against the assets of the estate. Nothing in this section shall apply to reinsurance agreements covering property or casualty risks.","type":"section","prefixes":["N","6"],"prefix":"6","entire_prefix":"N6","prefix_anchor":"N6","level":2,"prior_prefix":"N5","next_prefix":"O"},"47":{"id":237765,"text":"The board of directors of the Association shall have discretion and may exercise good faith business judgment to determine the means by which the Association is to provide the benefits of this chapter in an economical and efficient manner.","type":"section","prefixes":["O"],"prefix":"O","entire_prefix":"O","prefix_anchor":"O","level":1,"prior_prefix":"N6","next_prefix":"P"},"48":{"id":237766,"text":"Where the Association has arranged or offered to provide the benefits of this chapter to a covered person under a plan or arrangement that fulfills the Association’s obligations under this chapter, the person shall not be entitled to benefits from the Association in addition to or other than those provided under the plan or arrangement.","type":"section","prefixes":["P"],"prefix":"P","entire_prefix":"P","prefix_anchor":"P","level":1,"prior_prefix":"O","next_prefix":"Q"},"49":{"id":237767,"text":"Venue in a suit against the Association arising under this chapter shall be in the circuit court of the city or county in which the Association has its principal place of business except that any suit to which the Commission is a party shall be brought before the Commission. The Association shall not be required to give an appeal bond in an appeal that relates to a cause of action arising under this chapter.","type":"section","prefixes":["Q"],"prefix":"Q","entire_prefix":"Q","prefix_anchor":"Q","level":1,"prior_prefix":"P","next_prefix":"R"},"50":{"id":237768,"text":"In carrying out its duties in connection with guaranteeing, assuming, reissuing, or reinsuring policies or contracts under subsection A or B, the Association may issue substitute coverage for a policy or contract that provides an interest rate, crediting rate or similar factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value by issuing an alternative policy or contract in accordance with the following provisions:","type":"section","prefixes":["R"],"prefix":"R","entire_prefix":"R","prefix_anchor":"R","level":1,"prior_prefix":"Q","next_prefix":"R1"},"51":{"id":237769,"text":"In lieu of the index or other external reference provided for in the original policy or contract, the alternative policy or contract provides for (i) a fixed interest rate, (ii) payment of dividends with minimum guarantees, or (iii) a different method for calculating interest or changes in value;","type":"section","prefixes":["R","1"],"prefix":"1","entire_prefix":"R1","prefix_anchor":"R1","level":2,"prior_prefix":"R","next_prefix":"R2"},"52":{"id":237770,"text":"There is no requirement for evidence of insurability, waiting period, or other exclusion that would not have applied under the replaced policy or contract; and","type":"section","prefixes":["R","2"],"prefix":"2","entire_prefix":"R2","prefix_anchor":"R2","level":2,"prior_prefix":"R1","next_prefix":"R3"},"53":{"id":237771,"text":"The alternative policy or contract is similar to the replaced policy or contract in all other material terms.","type":"section","prefixes":["R","3"],"prefix":"3","entire_prefix":"R3","prefix_anchor":"R3","level":2,"prior_prefix":"R2"}},"ancestry":[{"id":14902,"edition_id":1,"name":"Establishment and Operation of the Association","identifier":"1","label":"article","depth":3,"order_by":1,"parent_id":14649,"metadata":{},"date_created":"2026-06-26 03:50:41","date_modified":"2026-06-26 03:50:41","permalink":{"id":212319,"object_type":"structure","relational_id":14902,"identifier":"1","token":"38.2\/17\/1","url":"\/38.2\/17\/1\/","edition_id":1,"permalink":0,"preferred":1}},{"id":14649,"edition_id":1,"name":"Virginia Life, Accident and Sickness Insurance Guaranty Association","identifier":"17","label":"chapter","depth":2,"order_by":1,"parent_id":12698,"metadata":{},"date_created":"2026-06-26 03:49:08","date_modified":"2026-06-26 03:49:08","permalink":{"id":212317,"object_type":"structure","relational_id":14649,"identifier":"17","token":"38.2\/17","url":"\/38.2\/17\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12698,"edition_id":1,"name":"Insurance","identifier":"38.2","label":"title","depth":1,"order_by":1,"parent_id":null,"metadata":{},"date_created":"2026-06-26 03:43:49","date_modified":"2026-06-26 03:43:49","permalink":{"id":210661,"object_type":"structure","relational_id":12698,"identifier":"38.2","token":"38.2","url":"\/38.2\/","edition_id":1,"permalink":0,"preferred":1}}],"structure_contents":[{"id":85176,"structure_id":14902,"section_number":"38.2-1700","catch_line":"Purpose and applicability of chapter","url":"\/38.2-1700\/","token":"38.2\/17\/1\/38.2-1700","metadata":false},{"id":79730,"structure_id":14902,"section_number":"38.2-1701","catch_line":"Definitions","url":"\/38.2-1701\/","token":"38.2\/17\/1\/38.2-1701","metadata":false},{"id":62816,"structure_id":14902,"section_number":"38.2-1702","catch_line":"Association; creation; memberships; accounts; supervision","url":"\/38.2-1702\/","token":"38.2\/17\/1\/38.2-1702","metadata":false},{"id":72232,"structure_id":14902,"section_number":"38.2-1703","catch_line":"Board of directors of Association","url":"\/38.2-1703\/","token":"38.2\/17\/1\/38.2-1703","metadata":false},{"id":65404,"structure_id":14902,"section_number":"38.2-1704","catch_line":"Powers and duties of Association","url":"\/38.2-1704\/","token":"38.2\/17\/1\/38.2-1704","metadata":false},{"id":59600,"structure_id":14902,"section_number":"38.2-1705","catch_line":"Assessments","url":"\/38.2-1705\/","token":"38.2\/17\/1\/38.2-1705","metadata":false},{"id":74544,"structure_id":14902,"section_number":"38.2-1706","catch_line":"Plan of operation","url":"\/38.2-1706\/","token":"38.2\/17\/1\/38.2-1706","metadata":false},{"id":64107,"structure_id":14902,"section_number":"38.2-1707","catch_line":"Duties and powers of the Commission","url":"\/38.2-1707\/","token":"38.2\/17\/1\/38.2-1707","metadata":false},{"id":65805,"structure_id":14902,"section_number":"38.2-1708","catch_line":"Detection and prevention of insolvencies","url":"\/38.2-1708\/","token":"38.2\/17\/1\/38.2-1708","metadata":false},{"id":69918,"structure_id":14902,"section_number":"38.2-1709","catch_line":"Tax write-offs of certificates of contributions","url":"\/38.2-1709\/","token":"38.2\/17\/1\/38.2-1709","metadata":false},{"id":56896,"structure_id":14902,"section_number":"38.2-1710","catch_line":"Miscellaneous provisions","url":"\/38.2-1710\/","token":"38.2\/17\/1\/38.2-1710","metadata":false},{"id":61703,"structure_id":14902,"section_number":"38.2-1711","catch_line":"Examination of the Association; annual report","url":"\/38.2-1711\/","token":"38.2\/17\/1\/38.2-1711","metadata":false},{"id":57475,"structure_id":14902,"section_number":"38.2-1712","catch_line":"Tax exemptions","url":"\/38.2-1712\/","token":"38.2\/17\/1\/38.2-1712","metadata":false},{"id":77644,"structure_id":14902,"section_number":"38.2-1713","catch_line":"Immunity","url":"\/38.2-1713\/","token":"38.2\/17\/1\/38.2-1713","metadata":false},{"id":59069,"structure_id":14902,"section_number":"38.2-1714","catch_line":"Stay of proceedings; reopening default judgments","url":"\/38.2-1714\/","token":"38.2\/17\/1\/38.2-1714","metadata":false},{"id":59869,"structure_id":14902,"section_number":"38.2-1715","catch_line":"Prohibited advertisement of Association coverage in insurance sales; notice to policy owners","url":"\/38.2-1715\/","token":"38.2\/17\/1\/38.2-1715","metadata":false}],"previous_section":{"id":72232,"structure_id":14902,"section_number":"38.2-1703","catch_line":"Board of directors of Association","url":"\/38.2-1703\/","token":"38.2\/17\/1\/38.2-1703","metadata":false},"next_section":{"id":59600,"structure_id":14902,"section_number":"38.2-1705","catch_line":"Assessments","url":"\/38.2-1705\/","token":"38.2\/17\/1\/38.2-1705","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/38.2-1704\/","history_text":"

This law was first created in 1976. The record of its establishment is cataloged in chapter 330 of that year\u2019s edition of \u201cActs of Assembly,\u201d the annual state publication listing all changes made to the Code of Virginia in that year. Unfortunately, the 1976 \u201cActs\u201d aren\u2019t available online. It has been modified 6 times. Those modifications are cataloged by \u201cThe Acts of Assembly,\u201d a state publication, by year and chapter. Those modifications that can be read on the General Assembly\u2019s website will be linked accordingly. Those modifications are as follows: in 1986, chapter 562; in 1991, chapter 340; in 1993, chapter 142; in 2007, chapter 482<\/a>; in 2010, chapter 510<\/a>; in 2018, chapter 706<\/a>.<\/p>","references":[{"id":58210,"section_number":"38.2-1442","catch_line":"Guaranty association obligations","order_by":null,"url":"\/38.2-1442\/"},{"id":85176,"section_number":"38.2-1700","catch_line":"Purpose and applicability of chapter","order_by":null,"url":"\/38.2-1700\/"},{"id":59600,"section_number":"38.2-1705","catch_line":"Assessments","order_by":null,"url":"\/38.2-1705\/"},{"id":74544,"section_number":"38.2-1706","catch_line":"Plan of operation","order_by":null,"url":"\/38.2-1706\/"},{"id":56896,"section_number":"38.2-1710","catch_line":"Miscellaneous provisions","order_by":null,"url":"\/38.2-1710\/"}],"refers_to":[{"id":57089,"section_number":"38.2-1045","catch_line":"Deposits required of insurers generally","order_by":null,"url":"\/38.2-1045\/"},{"id":57145,"section_number":"38.2-1401","catch_line":"Definitions","order_by":null,"url":"\/38.2-1401\/"},{"id":59600,"section_number":"38.2-1705","catch_line":"Assessments","order_by":null,"url":"\/38.2-1705\/"}],"permalink":{"id":212337,"object_type":"law","relational_id":65404,"identifier":"38.2-1704","token":"38.2\/17\/1\/38.2-1704","url":"\/38.2-1704\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/38.2-1704\/","token":"38.2\/17\/1\/38.2-1704","dublin_core":{"Title":"Powers and duties of Association","Type":"Text","Format":"text\/html","Identifier":"\u00a7 38.2-1704","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

In addition to the powers and duties enumerated in other sections of this chapter:<\/p><\/section>\n\t\t\t\t\t\t

A.<\/span> If the member insurer<\/span> is an impaired insurer<\/span>, the Association<\/span> may, in its discretion and subject to any conditions imposed by the Association<\/span> that do not impair the contractual obligations<\/span> of the impaired insurer<\/span> and that are approved by the Commission<\/span>: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> Guarantee, assume, reissue, or reinsure, or cause to be guaranteed, assumed, reissued, or reinsured, any or all of the policies or contracts<\/span> of the impaired insurer<\/span>; and <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> Provide moneys, pledges, loans, notes, guarantees or other means as are proper to effectuate subdivision 1 and assure payment of the contractual obligations<\/span> of the impaired insurer<\/span> pending action under that subdivision. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> If the member insurer<\/span> is an insolvent insurer<\/span>, the Association<\/span> shall, in its discretion and subject to the approval of the Commission<\/span>, either: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> a. Guarantee, assume, reissue, or reinsure or cause to be guaranteed, assumed, reissued, or reinsured the covered policies of the insolvent insurer<\/span> or assure payment of the contractual obligations<\/span> of the insolvent insurer<\/span>; and\n\t\t\t\tb. Provide moneys, pledges, notes, guarantees, or other means reasonably necessary to discharge its duties; or <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> Provide benefits and coverages in accordance with the following provisions:\n\t\t\t\ta. With respect to policies and contracts<\/span>, assure payment of benefits that would have been payable under the policies or contracts<\/span> of the insolvent insurer<\/span>, for claims incurred: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> With respect to group policies and contracts<\/span>, not later than the earlier of the next renewal date under those policies or contracts<\/span> or 45 days, but in no event less than 30 days, after the date on which the Association<\/span> becomes obligated with respect to the policies and contracts<\/span>; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> With respect to nongroup policies, contracts<\/span>, and annuities, not later than the earlier of the next renewal date, if any, under the policies or contracts<\/span> or one year, but in no event less than 30 days, from the date on which the Association<\/span> becomes obligated with respect to the policies or contracts<\/span>;\n\t\t\t\t\tb. Make diligent efforts to provide all known insureds, enrollees, or annuitants (for nongroup policies and contracts<\/span>), or group policy or contract owners<\/span> with respect to group policies and contracts<\/span>, 30 days’ notice of the termination, pursuant to subdivision 2 a, of the benefits provided;\n\t\t\t\t\tc. With respect to nongroup policies and contracts<\/span> covered by the Association<\/span>, make available to each known insured, enrollee, or annuitant, or owner if other than the insured, enrollee, or annuitant, and with respect to an individual formerly an insured, enrollee, or annuitant under a group policy or contract who is not eligible for replacement group coverage, make available substitute coverage on an individual basis in accordance with the provisions of subdivision 2 d, if the insureds, enrollees, or annuitants had a right under law<\/span> or the terminated policy or annuity to convert coverage to individual coverage or to continue an individual policy, contract, or annuity in force until a specified age or for a specified time, during which the insurer or health maintenance organization had no right unilaterally to make changes in any provision of the policy, contract, or annuity or had a right only to make changes in premium by class;\n\t\t\t\t\td. In providing the substitute coverage required under subdivision 2 c, the Association<\/span> may offer either to reissue the terminated coverage or to issue<\/span> an alternative policy or contract at actuarially justified rates<\/span><\/span>, subject to the prior approval of the Commission<\/span>. Alternative or reissued policies shall be offered without requiring evidence<\/span> of insurability, and shall not provide for any waiting period or exclusion that would not have applied under the terminated policy or contract. The Association<\/span> may reinsure any alternative or reissued policy or contract;\n\t\t\t\t\te. Alternative policies or contracts<\/span> adopted by the Association<\/span> shall be subject to the approval of the Commission<\/span>. The Association<\/span> may adopt alternative policies or contracts<\/span> of various types for future issuance without regard to any particular impairment or insolvency. Alternative policies or contracts<\/span> shall contain at least the minimum statutory provisions required in the Commonwealth and provide benefits that shall not be unreasonable in relation to the premium charged. The Association<\/span> shall set the premium in accordance with a table of rates<\/span><\/span> that it shall adopt. The premium shall reflect the amount of insurance<\/span> to be provided and the age and class of risk of each insured, but shall not reflect any changes in the health of the insured after the original policy or contract was last underwritten. Any alternative policy or contract issued by the Association<\/span> shall provide coverage of a type similar to that of the policy or contract issued by the impaired or insolvent insurer<\/span>, as determined by the Association<\/span>;\n\t\t\t\t\tf. If the Association<\/span> elects to reissue terminated coverage at a premium rate<\/span> different from that charged under the terminated policy or contract, the premium shall be actuarially justified and set by the Association<\/span> in accordance with the amount of insurance<\/span> or coverage provided and the age and class of risk, subject to approval of the Commission<\/span>;\n\t\t\t\t\tg. The Association<\/span>’s obligations with respect to coverage under any policy or contract of the impaired or insolvent insurer<\/span> or under any reissued or alternative policy or contract shall cease on the date the coverage or policy or contract is replaced by another similar policy or contract by the policy or contract owner<\/span>, the insured, the enrollee, or the Association<\/span>; and\n\t\t\t\t\th. When proceeding under subdivision B 2 with respect to a policy or contract carrying guaranteed minimum interest rates<\/span><\/span>, the Association<\/span> shall assure the payment or crediting of a rate<\/span> of interest consistent with subdivision C 2 c of § 38.2-1700<\/a>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

C.<\/span> Nonpayment of premiums<\/span> within 31 days after the date required under the terms of any guaranteed, assumed, alternative, or reissued policy or contract or substitute coverage shall terminate the Association<\/span>’s obligations under the policy or contract or coverage under this chapter with respect to the policy, contract, or coverage, except with respect to any claims incurred or any net cash surrender value that may be due in accordance with the provisions of this chapter. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

D.<\/span> Premiums<\/span> due for coverage after entry of an order<\/span> of liquidation<\/span> of an insolvent insurer<\/span> shall belong to and be payable at the direction of the Association<\/span>. If the liquidator of an insolvent insurer<\/span> requests, the Association<\/span> shall provide a report to the liquidator regarding such premium collected by the Association<\/span>. The Association<\/span> shall be liable for unearned premiums<\/span> due to policy or contract owners<\/span> arising after the entry of the order<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

E.<\/span> The protection provided by this chapter shall not apply where the Commission<\/span> has determined that the foreign or alien insurer’s domiciliary jurisdiction<\/span> or state<\/span> of entry provides substantially similar protection by statute<\/span> or regulation for residents<\/span> of the Commonwealth. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

F.<\/span> In carrying out its duties under subsection B, the Association<\/span> may: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> Subject to approval by the Commission<\/span>, impose permanent policy contract liens<\/span> in connection with a guarantee, assumption, or reinsurance agreement, if the Association<\/span> finds that the amounts that can be assessed under this chapter are less than the amounts needed to assure full and prompt performance of the Association<\/span>’s duties under this chapter, or that economic or financial conditions as they affect member insurers<\/span> are sufficiently adverse to render the imposition of such permanent policy or contract liens<\/span> to be in the public interest; and <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> Subject to approval by the Commission<\/span>, impose temporary moratoriums or liens<\/span> on payments of cash values and policy loans or any other right to withdraw funds held in conjunction with policies or contracts<\/span>, in addition to any contractual provisions for deferral of cash or policy loan values. In addition, in the event of a temporary moratorium or moratorium charge imposed by the receivership court<\/span> on payment of cash values or policy loans, or on any other right to withdraw funds held in conjunction with policies or contracts<\/span>, out of the assets<\/span> of the impaired or insolvent insurer<\/span>, the Association<\/span> may defer the payment of cash values, policy loans, or other rights by the Association<\/span> for the period of the moratorium or moratorium charge imposed by the receivership court<\/span>, except for claims covered by the Association<\/span> to be paid in accordance with a hardship procedure established by the liquidator or rehabilitator and approved by the receivership court<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

G.<\/span> A deposit in the Commonwealth, held pursuant to law<\/span> or required by the Commission<\/span> for the benefit of creditors<\/span>, including policy or contract owners<\/span>, not turned over to the domiciliary liquidator upon the entry of a final order<\/span> of liquidation<\/span> or order approving a rehabilitation plan of a member insurer<\/span> domiciled in the Commonwealth or in a reciprocal state<\/span>, pursuant to Article 7 (§ 38.2-1045<\/a> et seq.) of Chapter 10 shall be promptly paid to the Association<\/span>. The Association<\/span> shall be entitled to retain a portion of any amount so paid to it equal to the percentage determined by dividing the aggregate amount of policy or contract owners<\/span>’ claims related to that insolvency for which the Association<\/span> has provided statutory benefits by the aggregate amount of all policy or contract owners<\/span>’ claims in the Commonwealth related to that insolvency and shall remit to the domiciliary receiver the amount so paid to the Association<\/span> less the amount retained pursuant to this subsection. Any amount so paid to the Association<\/span> and retained by it shall be treated as a distribution of estate assets<\/span> pursuant to applicable state<\/span> receivership law<\/span> dealing with early access disbursements. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

H.<\/span> If the Association<\/span> fails to act within a reasonable period of time with respect to an insolvent insurer<\/span>, as provided in subsection B, the Commission<\/span> shall have the powers and duties of the Association<\/span> under this chapter with respect to the insolvent insurer<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

I.<\/span> The Association<\/span> may render assistance and advice to the Commission<\/span>, upon the Commission<\/span>’s request, concerning rehabilitation, payment of claims, continuation of coverage, or the performance of other contractual obligations<\/span> of an impaired or insolvent insurer<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

J.<\/span> The Association<\/span> shall have standing to appear or intervene before the Commission<\/span> or any court or agency in the Commonwealth with jurisdiction<\/span> over an impaired or insolvent insurer<\/span> concerning which the Association<\/span> is or may become obligated under this chapter or with jurisdiction<\/span> over any person<\/span> or property against which the Association<\/span> may have rights through subrogation or otherwise. Standing shall extend to all matters germane to the powers and duties of the Association<\/span>, including proposals for reinsuring, reissuing, modifying, or guaranteeing the policies or contracts<\/span> of the impaired or insolvent insurer<\/span> and the determination of the policies or contracts<\/span> and contractual obligations<\/span>. The Association<\/span> shall also have the right to appear or intervene before a court or agency in another state<\/span> with jurisdiction<\/span> over an impaired or insolvent insurer<\/span> for which the Association<\/span> is or may become obligated or with jurisdiction<\/span> over any person<\/span> or property against whom the Association<\/span> may have rights through subrogation or otherwise. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

K.<\/span> 1. Any person<\/span> receiving benefits under this chapter shall be deemed to have assigned the rights under, and any causes of action against any person<\/span> for losses arising under, resulting from, or otherwise relating to, the covered policy<\/span> or contract to the Association<\/span> to the extent of the benefits received because of this chapter, whether the benefits are payments of or on account<\/span> of contractual obligations<\/span>, continuation of coverage, or provision of substitute or alternative policies, contracts<\/span>, or coverages. The Association<\/span> may require an assignment to it of such rights and causes of action by any enrollee, payee, policy or contract owner<\/span>, beneficiary, insured, or annuitant as a condition precedent<\/span> to the receipt of any right or benefits conferred by this chapter upon the person<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> The subrogation rights of the Association<\/span> under this subsection shall have the same priority against the assets<\/span> of the insolvent insurer<\/span> as that possessed by the person<\/span> entitled to receive benefits under this chapter. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> In addition to the rights provided by subdivisions K 1 and K 2, the Association<\/span> shall have all common law<\/span> rights of subrogation and any other equitable<\/span> or legal remedy that would have been available to the impaired or insolvent insurer<\/span> or owner, beneficiary, enrollee, or payee of a policy or contract with respect to the policy or contract, including, in the case of a structured settlement annuity<\/span>, any rights of the owner, beneficiary, or payee of the annuity, to the extent of benefits received pursuant to this chapter, against a person<\/span> originally or by succession responsible for the losses arising from the personal injury relating to the annuity or payment therefor, excepting any such person<\/span> responsible solely by reason of serving as an assignee in respect of a qualified assignment under § 130 of the Internal Revenue Code. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

4.<\/span> If subdivisions K 1, 2, and 3 are invalid or ineffective with respect to any person<\/span> or claim for any reason, the amount payable by the Association<\/span> with respect to the related covered obligations shall be reduced by the amount realized by any other person<\/span> with respect to the person<\/span> or claim that is attributable to the policies or contracts<\/span>, or portion thereof, covered by the Association<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

5.<\/span> If the Association<\/span> has provided benefits with respect to a covered obligation and a person<\/span> recovers amounts to which the Association<\/span> has rights as described in subdivisions K 1 through K 4, the person<\/span> shall pay to the Association<\/span> the portion of the recovery attributable to the policies or contracts<\/span>, or portion thereof, covered by the Association<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

L.<\/span> In addition to the rights and powers granted to it elsewhere in this chapter, the Association<\/span> may: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> Enter into such contracts<\/span> as are necessary or proper to carry out the provisions and purposes of this chapter; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> Sue or be sued, including taking any legal actions necessary or proper to recover any unpaid assessments under § 38.2-1705<\/a> and to settle any claims or potential claims against it; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> Borrow money to effect the purposes of this chapter. Any notes or other evidence<\/span> of indebtedness of the Association<\/span> not in default<\/span> shall be Category 1 investments, as defined in § 38.2-1401<\/a>, for domestic member insurers<\/span>; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

4.<\/span> Employ or retain such persons<\/span> as are necessary or appropriate to handle the financial transactions of the Association<\/span>, and to perform other functions as become necessary or proper under this chapter; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

5.<\/span> Negotiate and contract with any liquidator, rehabilitator, conservator, or ancillary receiver to carry out the powers and duties of the Association<\/span>; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

6.<\/span> Take such legal action as may be necessary or appropriate to avoid or recover payment of improper claims; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

7.<\/span> Exercise, for the purposes of this chapter and to the extent approved by the Commission<\/span>, the powers of a domestic life insurer, accident and sickness insurer, or health maintenance organization, but in no case may the Association<\/span> issue<\/span> policies or contracts<\/span> other than those issued to perform its obligations under this chapter; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

8.<\/span> Organize itself as a corporation or in other legal form permitted by the laws<\/span> of the Commonwealth; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

9.<\/span> Request information from a person<\/span> seeking coverage from the Association<\/span> in order to aid the Association<\/span> in determining its obligations under this chapter with respect to the person<\/span>, and the person<\/span> shall promptly comply with the request; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

10.<\/span> In accordance with the terms and conditions of the policy or contract, file for actuarially justified rate<\/span> or premium increases for any policy or contract for which it provides coverage under this chapter; and <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

11.<\/span> Take other necessary or appropriate action to discharge its duties and obligations under this chapter or to exercise its powers under this chapter. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

M.<\/span> The Association<\/span> may join an organization of one or more other state<\/span> associations<\/span> of similar purposes, to further the purposes and administer the powers and duties of the Association<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

N.<\/span> 1. a. At any time within 180 days of the date of the order of liquidation<\/span>, the Association<\/span> may elect to succeed to the rights and obligations of the ceding member insurer<\/span> that relate to policies, contracts<\/span>, or annuities covered, in whole or in part, by the Association<\/span>, in each case under any one or more reinsurance contracts<\/span> entered into by the insolvent insurer<\/span> and its reinsurers and selected by the Association<\/span>. Any such assumption shall be effective as of the date of the order of liquidation<\/span>. The election shall be effected by the Association<\/span> or any agent of the Association<\/span> on the Association<\/span>’s behalf sending written notice, return receipt requested, to the affected reinsurers.\n\t\t\tb. To facilitate the earliest practicable decision about whether to assume any of the contracts<\/span> of reinsurance, and in order to protect the financial position of the estate, the receiver and each reinsurer of the ceding member insurer<\/span> shall make available upon request to the Association<\/span> or to any agent of the Association<\/span> on the Association<\/span>’s behalf as soon as possible after commencement of formal delinquency proceedings (i) copies of in-force contracts<\/span> of reinsurance and all related files and records relevant to the determination of whether such contracts<\/span> should be assumed and (ii) notices of any defaults<\/span> under the reinsurance contracts<\/span> or any known event or condition which with the passage of time could become a default<\/span> under the reinsurance contracts<\/span>.\n\t\t\tc. The following shall apply to reinsurance contracts<\/span> so assumed by the Association<\/span>: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> The Association<\/span> shall be responsible for all unpaid premiums<\/span> due under the reinsurance contracts<\/span> for periods both before and after the date of the order of liquidation<\/span>, and shall be responsible for the performance of all other obligations to be performed after the date of the order of liquidation<\/span>, in each case which relate to policies, contracts<\/span>, or annuities covered, in whole or in part, by the Association<\/span>. The Association<\/span> may charge policies, contracts<\/span>, or annuities covered in part by the Association<\/span>, through reasonable allocation methods, the costs for reinsurance in excess of the obligations of the Association<\/span> and shall provide notice and an accounting of these charges to the liquidator; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> The Association<\/span> shall be entitled to any amounts payable by the reinsurer under the reinsurance contracts<\/span> with respect to losses or events that occur in periods after the date of the order of liquidation<\/span> and that relate to policies, contracts<\/span>, or annuities covered, in whole or in part, by the Association<\/span>, provided that, upon receipt of any such amounts, the Association<\/span> shall be obliged to pay to the beneficiary, under the policy, contract, or annuity on account<\/span> of which the amounts were paid, a portion of the amount equal to the lesser of (i) the amount received by the Association<\/span> and (ii) the excess of the amount received by the Association<\/span> over the amount equal to the benefits paid by the Association<\/span> on account<\/span> of the policy, contract, or annuity less the retention of the insurer applicable to the loss or event; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> Within 30 days following the Association<\/span>’s election (the election date), the Association<\/span> and each reinsurer under contracts<\/span> assumed by the Association<\/span> shall calculate the net balance due to or from the Association<\/span> under each reinsurance contract as of the election date with respect to policies, contracts<\/span>, or annuities covered, in whole or in part, by the Association<\/span>, which calculation shall give full credit to all items paid by either the member insurer<\/span> or its receiver or the reinsurer prior to the election date. The reinsurer shall pay the receiver any amounts due for losses or events prior to the date of the order of liquidation<\/span>, subject to any set-off for premiums<\/span> unpaid for periods prior to the date, and the Association<\/span> or reinsurer shall pay any remaining balance due the other, in each case within five days of the completion of the aforementioned calculation. Any disputes over the amounts due to either the Association<\/span> or the reinsurer shall be resolved by arbitration pursuant to the terms of the affected reinsurance contract or, if the contract contains no arbitration clause, as otherwise provided by law. If the receiver has received any amounts due the Association<\/span> pursuant to subdivision N 1 c (2), the receiver shall remit the same to the Association<\/span> as promptly as practicable; and <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

4.<\/span> If the Association<\/span> or receiver, on the Association<\/span>’s behalf, within 60 days of the election date, pays the unpaid premiums<\/span> due for periods both before and after the election date that relate to policies, contracts<\/span>, or annuities covered, in whole or in part, by the Association<\/span>, the reinsurer shall not be entitled to terminate the reinsurance contracts<\/span> for failure to pay premium insofar as the reinsurance contracts<\/span> related to policies, contracts<\/span>, or annuities covered, in whole or in part, by the Association<\/span>, and shall not be entitled to set off any unpaid amounts due under other contracts<\/span>, or unpaid amounts due from parties other than the Association<\/span>, against amounts due the Association<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> During the period from the date of the order of liquidation<\/span> until the election date (or, if the election date does not occur, until 180 days after the date of the order of liquidation<\/span>),\n\t\t\t\ta. Neither the Association<\/span> nor the reinsurer shall have any rights or obligations under reinsurance contracts<\/span> that the Association<\/span> has the right to assume under subdivision N 1, whether for periods prior to or after the date of the order of liquidation<\/span>; and the reinsurer, the receiver, and the Association<\/span> shall, to the extent practicable, provide each other data and records reasonably requested;\n\t\t\t\tb. Provided that once the Association<\/span> has elected to assume a reinsurance contract, the parties’ rights and obligations shall be governed by subdivision N 1. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> If the Association<\/span> does not elect to assume a reinsurance contract by the election date pursuant to subdivision N 1, the Association<\/span> shall have no rights or obligations, in each case for periods both before and after the date of the order of liquidation<\/span>, with respect to the reinsurance contract. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

4.<\/span> When policies, contracts<\/span>, or annuities, or covered obligations with respect thereto, are transferred to an assuming insurer, reinsurance on the policies, contracts<\/span>, or annuities may also be transferred by the Association<\/span>, in the case of contracts<\/span> assumed under subdivision N 1, subject to the following:\n\t\t\t\ta. Unless the reinsurer and the assuming insurer agree otherwise, the reinsurance contract transferred shall not cover any new policies of insurance<\/span>, contracts<\/span>, or annuities in addition to those transferred;\n\t\t\t\tb. The obligations described in subdivision N 1 shall no longer apply with respect to matters arising after the effective date of the transfer; and\n\t\t\t\tc. Notice shall be given in writing, return receipt requested, by the transferring party<\/span> to the affected reinsurer not less than 30 days prior to the effective date of the transfer. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

5.<\/span> The provisions of this subsection shall supersede the provisions of any Commonwealth law or of any affected reinsurance contract that provides for or requires any payment of reinsurance proceeds, on account<\/span> of losses or events that occur in periods after the date of the order of liquidation<\/span>, to the receiver of the insolvent insurer<\/span> or any other person<\/span>. The receiver shall remain entitled to any amounts payable by the reinsurer under the reinsurance contracts<\/span> with respect to losses or events that occur in periods prior to the date of the order of liquidation<\/span>, subject to applicable setoff provisions. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

6.<\/span> Except as otherwise provided in this section, nothing in this subsection shall alter or modify the terms and conditions of any reinsurance contract. Nothing in this section shall abrogate or limit any rights of any reinsurer to claim that it is entitled to rescind a reinsurance contract. Nothing in this section shall give a policy holder, contract owner<\/span>, enrollee, certificate holder, or beneficiary an independent cause of action<\/span> against a reinsurer that is not otherwise set forth in the reinsurance contract. Nothing in this section shall limit or affect the Association<\/span>’s rights as a creditor<\/span> of the estate against the assets<\/span> of the estate. Nothing in this section shall apply to reinsurance agreements covering property or casualty risks. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

O.<\/span> The board of directors of the Association<\/span> shall have discretion and may exercise good faith business judgment<\/span> to determine the means by which the Association<\/span> is to provide the benefits of this chapter in an economical and efficient manner. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

P.<\/span> Where the Association<\/span> has arranged or offered to provide the benefits of this chapter to a covered person<\/span> under a plan or arrangement that fulfills the Association<\/span>’s obligations under this chapter, the person<\/span> shall not be entitled to benefits from the Association<\/span> in addition to or other than those provided under the plan or arrangement. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

Q.<\/span> Venue<\/span> in a suit against the Association<\/span> arising under this chapter shall be in the circuit<\/span> court of the city or county in which the Association<\/span> has its principal place of business<\/span> except that any suit to which the Commission<\/span> is a party<\/span> shall be brought before the Commission<\/span>. The Association<\/span> shall not be required to give an appeal<\/span> bond<\/span> in an appeal<\/span> that relates to a cause of action<\/span> arising under this chapter. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

R.<\/span> In carrying out its duties in connection with guaranteeing, assuming, reissuing, or reinsuring policies or contracts<\/span> under subsection A or B, the Association<\/span> may issue<\/span> substitute coverage for a policy or contract that provides an interest rate<\/span>, crediting rate<\/span> or similar factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value by issuing an alternative policy or contract in accordance with the following provisions: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> In lieu of the index or other external reference provided for in the original policy or contract, the alternative policy or contract provides for (i) a fixed interest rate<\/span>, (ii) payment of dividends with minimum guarantees, or (iii) a different method for calculating interest or changes in value; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> There is no requirement for evidence<\/span> of insurability, waiting period, or other exclusion that would not have applied under the replaced policy or contract; and <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> The alternative policy or contract is similar to the replaced policy or contract in all other material<\/span> terms. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nPOWERS AND DUTIES OF ASSOCIATION (\u00a7 38.2-1704)\n\nIn addition to the powers and duties enumerated in other sections of this\nchapter:\n\nA. If the member insurer is an impaired insurer, the Association may, in its\ndiscretion and subject to any conditions imposed by the Association that do not\nimpair the contractual obligations of the impaired insurer and that are approved\nby the Commission:\n\n 1. Guarantee, assume, reissue, or reinsure, or cause to be guaranteed,\n assumed, reissued, or reinsured, any or all of the policies or contracts of\n the impaired insurer; and\n\n 2. Provide moneys, pledges, loans, notes, guarantees or other means as are\n proper to effectuate subdivision 1 and assure payment of the contractual\n obligations of the impaired insurer pending action under that subdivision.\n\nB. If the member insurer is an insolvent insurer, the Association shall, in its\ndiscretion and subject to the approval of the Commission, either:\n\n 1. a. Guarantee, assume, reissue, or reinsure or cause to be guaranteed,\n assumed, reissued, or reinsured the covered policies of the insolvent insurer\n or assure payment of the contractual obligations of the insolvent insurer; and\n \t\t\t\tb. Provide moneys, pledges, notes, guarantees, or other means reasonably\n necessary to discharge its duties; or\n\n 2. Provide benefits and coverages in accordance with the following provisions:\n \t\t\t\ta. With respect to policies and contracts, assure payment of benefits that\n would have been payable under the policies or contracts of the insolvent\n insurer, for claims incurred:\n\n 1. With respect to group policies and contracts, not later than the earlier\n of the next renewal date under those policies or contracts or 45 days, but\n in no event less than 30 days, after the date on which the Association\n becomes obligated with respect to the policies and contracts;\n\n 2. With respect to nongroup policies, contracts, and annuities, not later\n than the earlier of the next renewal date, if any, under the policies or\n contracts or one year, but in no event less than 30 days, from the date on\n which the Association becomes obligated with respect to the policies or\n contracts;\n \t\t\t\t\tb. Make diligent efforts to provide all known insureds, enrollees, or\n annuitants (for nongroup policies and contracts), or group policy or\n contract owners with respect to group policies and contracts, 30 days’\n notice of the termination, pursuant to subdivision 2 a, of the benefits\n provided;\n \t\t\t\t\tc. With respect to nongroup policies and contracts covered by the\n Association, make available to each known insured, enrollee, or annuitant,\n or owner if other than the insured, enrollee, or annuitant, and with respect\n to an individual formerly an insured, enrollee, or annuitant under a group\n policy or contract who is not eligible for replacement group coverage, make\n available substitute coverage on an individual basis in accordance with the\n provisions of subdivision 2 d, if the insureds, enrollees, or annuitants had\n a right under law or the terminated policy or annuity to convert coverage to\n individual coverage or to continue an individual policy, contract, or\n annuity in force until a specified age or for a specified time, during which\n the insurer or health maintenance organization had no right unilaterally to\n make changes in any provision of the policy, contract, or annuity or had a\n right only to make changes in premium by class;\n \t\t\t\t\td. In providing the substitute coverage required under subdivision 2 c,\n the Association may offer either to reissue the terminated coverage or to\n issue an alternative policy or contract at actuarially justified rates,\n subject to the prior approval of the Commission. Alternative or reissued\n policies shall be offered without requiring evidence of insurability, and\n shall not provide for any waiting period or exclusion that would not have\n applied under the terminated policy or contract. The Association may\n reinsure any alternative or reissued policy or contract;\n \t\t\t\t\te. Alternative policies or contracts adopted by the Association shall\n be subject to the approval of the Commission. The Association may adopt\n alternative policies or contracts of various types for future issuance\n without regard to any particular impairment or insolvency. Alternative\n policies or contracts shall contain at least the minimum statutory\n provisions required in the Commonwealth and provide benefits that shall not\n be unreasonable in relation to the premium charged. The Association shall\n set the premium in accordance with a table of rates that it shall adopt. The\n premium shall reflect the amount of insurance to be provided and the age and\n class of risk of each insured, but shall not reflect any changes in the\n health of the insured after the original policy or contract was last\n underwritten. Any alternative policy or contract issued by the Association\n shall provide coverage of a type similar to that of the policy or contract\n issued by the impaired or insolvent insurer, as determined by the\n Association;\n \t\t\t\t\tf. If the Association elects to reissue terminated coverage at a\n premium rate different from that charged under the terminated policy or\n contract, the premium shall be actuarially justified and set by the\n Association in accordance with the amount of insurance or coverage provided\n and the age and class of risk, subject to approval of the Commission;\n \t\t\t\t\tg. The Association’s obligations with respect to coverage under\n any policy or contract of the impaired or insolvent insurer or under any\n reissued or alternative policy or contract shall cease on the date the\n coverage or policy or contract is replaced by another similar policy or\n contract by the policy or contract owner, the insured, the enrollee, or the\n Association; and\n \t\t\t\t\th. When proceeding under subdivision B 2 with respect to a policy or\n contract carrying guaranteed minimum interest rates, the Association shall\n assure the payment or crediting of a rate of interest consistent with\n subdivision C 2 c of § 38.2-1700.\n\nC. Nonpayment of premiums within 31 days after the date required under the terms\nof any guaranteed, assumed, alternative, or reissued policy or contract or\nsubstitute coverage shall terminate the Association’s obligations under\nthe policy or contract or coverage under this chapter with respect to the\npolicy, contract, or coverage, except with respect to any claims incurred or any\nnet cash surrender value that may be due in accordance with the provisions of\nthis chapter.\n\nD. Premiums due for coverage after entry of an order of liquidation of an\ninsolvent insurer shall belong to and be payable at the direction of the\nAssociation. If the liquidator of an insolvent insurer requests, the Association\nshall provide a report to the liquidator regarding such premium collected by the\nAssociation. The Association shall be liable for unearned premiums due to policy\nor contract owners arising after the entry of the order.\n\nE. The protection provided by this chapter shall not apply where the Commission\nhas determined that the foreign or alien insurer’s domiciliary\njurisdiction or state of entry provides substantially similar protection by\nstatute or regulation for residents of the Commonwealth.\n\nF. In carrying out its duties under subsection B, the Association may:\n\n 1. Subject to approval by the Commission, impose permanent policy contract\n liens in connection with a guarantee, assumption, or reinsurance agreement, if\n the Association finds that the amounts that can be assessed under this chapter\n are less than the amounts needed to assure full and prompt performance of the\n Association’s duties under this chapter, or that economic or financial\n conditions as they affect member insurers are sufficiently adverse to render\n the imposition of such permanent policy or contract liens to be in the public\n interest; and\n\n 2. Subject to approval by the Commission, impose temporary moratoriums or\n liens on payments of cash values and policy loans or any other right to\n withdraw funds held in conjunction with policies or contracts, in addition to\n any contractual provisions for deferral of cash or policy loan values. In\n addition, in the event of a temporary moratorium or moratorium charge imposed\n by the receivership court on payment of cash values or policy loans, or on any\n other right to withdraw funds held in conjunction with policies or contracts,\n out of the assets of the impaired or insolvent insurer, the Association may\n defer the payment of cash values, policy loans, or other rights by the\n Association for the period of the moratorium or moratorium charge imposed by\n the receivership court, except for claims covered by the Association to be\n paid in accordance with a hardship procedure established by the liquidator or\n rehabilitator and approved by the receivership court.\n\nG. A deposit in the Commonwealth, held pursuant to law or required by the\nCommission for the benefit of creditors, including policy or contract owners,\nnot turned over to the domiciliary liquidator upon the entry of a final order of\nliquidation or order approving a rehabilitation plan of a member insurer\ndomiciled in the Commonwealth or in a reciprocal state, pursuant to Article 7\n(§ 38.2-1045 et seq.) of Chapter 10 shall be promptly paid to the\nAssociation. The Association shall be entitled to retain a portion of any amount\nso paid to it equal to the percentage determined by dividing the aggregate\namount of policy or contract owners’ claims related to that insolvency for\nwhich the Association has provided statutory benefits by the aggregate amount of\nall policy or contract owners’ claims in the Commonwealth related to that\ninsolvency and shall remit to the domiciliary receiver the amount so paid to the\nAssociation less the amount retained pursuant to this subsection. Any amount so\npaid to the Association and retained by it shall be treated as a distribution of\nestate assets pursuant to applicable state receivership law dealing with early\naccess disbursements.\n\nH. If the Association fails to act within a reasonable period of time with\nrespect to an insolvent insurer, as provided in subsection B, the Commission\nshall have the powers and duties of the Association under this chapter with\nrespect to the insolvent insurer.\n\nI. The Association may render assistance and advice to the Commission, upon the\nCommission’s request, concerning rehabilitation, payment of claims,\ncontinuation of coverage, or the performance of other contractual obligations of\nan impaired or insolvent insurer.\n\nJ. The Association shall have standing to appear or intervene before the\nCommission or any court or agency in the Commonwealth with jurisdiction over an\nimpaired or insolvent insurer concerning which the Association is or may become\nobligated under this chapter or with jurisdiction over any person or property\nagainst which the Association may have rights through subrogation or otherwise.\nStanding shall extend to all matters germane to the powers and duties of the\nAssociation, including proposals for reinsuring, reissuing, modifying, or\nguaranteeing the policies or contracts of the impaired or insolvent insurer and\nthe determination of the policies or contracts and contractual obligations. The\nAssociation shall also have the right to appear or intervene before a court or\nagency in another state with jurisdiction over an impaired or insolvent insurer\nfor which the Association is or may become obligated or with jurisdiction over\nany person or property against whom the Association may have rights through\nsubrogation or otherwise.\n\nK. 1. Any person receiving benefits under this chapter shall be deemed to have\nassigned the rights under, and any causes of action against any person for\nlosses arising under, resulting from, or otherwise relating to, the covered\npolicy or contract to the Association to the extent of the benefits received\nbecause of this chapter, whether the benefits are payments of or on account of\ncontractual obligations, continuation of coverage, or provision of substitute or\nalternative policies, contracts, or coverages. The Association may require an\nassignment to it of such rights and causes of action by any enrollee, payee,\npolicy or contract owner, beneficiary, insured, or annuitant as a condition\nprecedent to the receipt of any right or benefits conferred by this chapter upon\nthe person.\n\n 2. The subrogation rights of the Association under this subsection shall have\n the same priority against the assets of the insolvent insurer as that\n possessed by the person entitled to receive benefits under this chapter.\n\n 3. In addition to the rights provided by subdivisions K 1 and K 2, the\n Association shall have all common law rights of subrogation and any other\n equitable or legal remedy that would have been available to the impaired or\n insolvent insurer or owner, beneficiary, enrollee, or payee of a policy or\n contract with respect to the policy or contract, including, in the case of a\n structured settlement annuity, any rights of the owner, beneficiary, or payee\n of the annuity, to the extent of benefits received pursuant to this chapter,\n against a person originally or by succession responsible for the losses\n arising from the personal injury relating to the annuity or payment therefor,\n excepting any such person responsible solely by reason of serving as an\n assignee in respect of a qualified assignment under § 130 of the Internal\n Revenue Code.\n\n 4. If subdivisions K 1, 2, and 3 are invalid or ineffective with respect to\n any person or claim for any reason, the amount payable by the Association with\n respect to the related covered obligations shall be reduced by the amount\n realized by any other person with respect to the person or claim that is\n attributable to the policies or contracts, or portion thereof, covered by the\n Association.\n\n 5. If the Association has provided benefits with respect to a covered\n obligation and a person recovers amounts to which the Association has rights\n as described in subdivisions K 1 through K 4, the person shall pay to the\n Association the portion of the recovery attributable to the policies or\n contracts, or portion thereof, covered by the Association.\n\nL. In addition to the rights and powers granted to it elsewhere in this chapter,\nthe Association may:\n\n 1. Enter into such contracts as are necessary or proper to carry out the\n provisions and purposes of this chapter;\n\n 2. Sue or be sued, including taking any legal actions necessary or proper to\n recover any unpaid assessments under § 38.2-1705 and to settle any claims\n or potential claims against it;\n\n 3. Borrow money to effect the purposes of this chapter. Any notes or other\n evidence of indebtedness of the Association not in default shall be Category 1\n investments, as defined in § 38.2-1401, for domestic member insurers;\n\n 4. Employ or retain such persons as are necessary or appropriate to handle the\n financial transactions of the Association, and to perform other functions as\n become necessary or proper under this chapter;\n\n 5. Negotiate and contract with any liquidator, rehabilitator, conservator, or\n ancillary receiver to carry out the powers and duties of the Association;\n\n 6. Take such legal action as may be necessary or appropriate to avoid or\n recover payment of improper claims;\n\n 7. Exercise, for the purposes of this chapter and to the extent approved by\n the Commission, the powers of a domestic life insurer, accident and sickness\n insurer, or health maintenance organization, but in no case may the\n Association issue policies or contracts other than those issued to perform its\n obligations under this chapter;\n\n 8. Organize itself as a corporation or in other legal form permitted by the\n laws of the Commonwealth;\n\n 9. Request information from a person seeking coverage from the Association in\n order to aid the Association in determining its obligations under this chapter\n with respect to the person, and the person shall promptly comply with the\n request;\n\n 10. In accordance with the terms and conditions of the policy or contract,\n file for actuarially justified rate or premium increases for any policy or\n contract for which it provides coverage under this chapter; and\n\n 11. Take other necessary or appropriate action to discharge its duties and\n obligations under this chapter or to exercise its powers under this chapter.\n\nM. The Association may join an organization of one or more other state\nassociations of similar purposes, to further the purposes and administer the\npowers and duties of the Association.\n\nN. 1. a. At any time within 180 days of the date of the order of liquidation,\nthe Association may elect to succeed to the rights and obligations of the ceding\nmember insurer that relate to policies, contracts, or annuities covered, in\nwhole or in part, by the Association, in each case under any one or more\nreinsurance contracts entered into by the insolvent insurer and its reinsurers\nand selected by the Association. Any such assumption shall be effective as of\nthe date of the order of liquidation. The election shall be effected by the\nAssociation or any agent of the Association on the Association’s behalf\nsending written notice, return receipt requested, to the affected reinsurers.\n\t\t\tb. To facilitate the earliest practicable decision about whether to assume\nany of the contracts of reinsurance, and in order to protect the financial\nposition of the estate, the receiver and each reinsurer of the ceding member\ninsurer shall make available upon request to the Association or to any agent of\nthe Association on the Association’s behalf as soon as possible after\ncommencement of formal delinquency proceedings (i) copies of in-force contracts\nof reinsurance and all related files and records relevant to the determination\nof whether such contracts should be assumed and (ii) notices of any defaults\nunder the reinsurance contracts or any known event or condition which with the\npassage of time could become a default under the reinsurance contracts.\n\t\t\tc. The following shall apply to reinsurance contracts so assumed by the\nAssociation:\n\n 1. The Association shall be responsible for all unpaid premiums due under the\n reinsurance contracts for periods both before and after the date of the order\n of liquidation, and shall be responsible for the performance of all other\n obligations to be performed after the date of the order of liquidation, in\n each case which relate to policies, contracts, or annuities covered, in whole\n or in part, by the Association. The Association may charge policies,\n contracts, or annuities covered in part by the Association, through reasonable\n allocation methods, the costs for reinsurance in excess of the obligations of\n the Association and shall provide notice and an accounting of these charges to\n the liquidator;\n\n 2. The Association shall be entitled to any amounts payable by the reinsurer\n under the reinsurance contracts with respect to losses or events that occur in\n periods after the date of the order of liquidation and that relate to\n policies, contracts, or annuities covered, in whole or in part, by the\n Association, provided that, upon receipt of any such amounts, the Association\n shall be obliged to pay to the beneficiary, under the policy, contract, or\n annuity on account of which the amounts were paid, a portion of the amount\n equal to the lesser of (i) the amount received by the Association and (ii) the\n excess of the amount received by the Association over the amount equal to the\n benefits paid by the Association on account of the policy, contract, or\n annuity less the retention of the insurer applicable to the loss or event;\n\n 3. Within 30 days following the Association’s election (the election\n date), the Association and each reinsurer under contracts assumed by the\n Association shall calculate the net balance due to or from the Association\n under each reinsurance contract as of the election date with respect to\n policies, contracts, or annuities covered, in whole or in part, by the\n Association, which calculation shall give full credit to all items paid by\n either the member insurer or its receiver or the reinsurer prior to the\n election date. The reinsurer shall pay the receiver any amounts due for losses\n or events prior to the date of the order of liquidation, subject to any\n set-off for premiums unpaid for periods prior to the date, and the Association\n or reinsurer shall pay any remaining balance due the other, in each case\n within five days of the completion of the aforementioned calculation. Any\n disputes over the amounts due to either the Association or the reinsurer shall\n be resolved by arbitration pursuant to the terms of the affected reinsurance\n contract or, if the contract contains no arbitration clause, as otherwise\n provided by law. If the receiver has received any amounts due the Association\n pursuant to subdivision N 1 c (2), the receiver shall remit the same to the\n Association as promptly as practicable; and\n\n 4. If the Association or receiver, on the Association’s behalf, within\n 60 days of the election date, pays the unpaid premiums due for periods both\n before and after the election date that relate to policies, contracts, or\n annuities covered, in whole or in part, by the Association, the reinsurer\n shall not be entitled to terminate the reinsurance contracts for failure to\n pay premium insofar as the reinsurance contracts related to policies,\n contracts, or annuities covered, in whole or in part, by the Association, and\n shall not be entitled to set off any unpaid amounts due under other contracts,\n or unpaid amounts due from parties other than the Association, against amounts\n due the Association.\n\n 2. During the period from the date of the order of liquidation until the\n election date (or, if the election date does not occur, until 180 days after\n the date of the order of liquidation),\n \t\t\t\ta. Neither the Association nor the reinsurer shall have any rights or\n obligations under reinsurance contracts that the Association has the right to\n assume under subdivision N 1, whether for periods prior to or after the date\n of the order of liquidation; and the reinsurer, the receiver, and the\n Association shall, to the extent practicable, provide each other data and\n records reasonably requested;\n \t\t\t\tb. Provided that once the Association has elected to assume a reinsurance\n contract, the parties’ rights and obligations shall be governed by\n subdivision N 1.\n\n 3. If the Association does not elect to assume a reinsurance contract by the\n election date pursuant to subdivision N 1, the Association shall have no\n rights or obligations, in each case for periods both before and after the date\n of the order of liquidation, with respect to the reinsurance contract.\n\n 4. When policies, contracts, or annuities, or covered obligations with respect\n thereto, are transferred to an assuming insurer, reinsurance on the policies,\n contracts, or annuities may also be transferred by the Association, in the\n case of contracts assumed under subdivision N 1, subject to the following:\n \t\t\t\ta. Unless the reinsurer and the assuming insurer agree otherwise, the\n reinsurance contract transferred shall not cover any new policies of\n insurance, contracts, or annuities in addition to those transferred;\n \t\t\t\tb. The obligations described in subdivision N 1 shall no longer apply with\n respect to matters arising after the effective date of the transfer; and\n \t\t\t\tc. Notice shall be given in writing, return receipt requested, by the\n transferring party to the affected reinsurer not less than 30 days prior to\n the effective date of the transfer.\n\n 5. The provisions of this subsection shall supersede the provisions of any\n Commonwealth law or of any affected reinsurance contract that provides for or\n requires any payment of reinsurance proceeds, on account of losses or events\n that occur in periods after the date of the order of liquidation, to the\n receiver of the insolvent insurer or any other person. The receiver shall\n remain entitled to any amounts payable by the reinsurer under the reinsurance\n contracts with respect to losses or events that occur in periods prior to the\n date of the order of liquidation, subject to applicable setoff provisions.\n\n 6. Except as otherwise provided in this section, nothing in this subsection\n shall alter or modify the terms and conditions of any reinsurance contract.\n Nothing in this section shall abrogate or limit any rights of any reinsurer to\n claim that it is entitled to rescind a reinsurance contract. Nothing in this\n section shall give a policy holder, contract owner, enrollee, certificate\n holder, or beneficiary an independent cause of action against a reinsurer that\n is not otherwise set forth in the reinsurance contract. Nothing in this\n section shall limit or affect the Association’s rights as a creditor of\n the estate against the assets of the estate. Nothing in this section shall\n apply to reinsurance agreements covering property or casualty risks.\n\nO. The board of directors of the Association shall have discretion and may\nexercise good faith business judgment to determine the means by which the\nAssociation is to provide the benefits of this chapter in an economical and\nefficient manner.\n\nP. Where the Association has arranged or offered to provide the benefits of this\nchapter to a covered person under a plan or arrangement that fulfills the\nAssociation’s obligations under this chapter, the person shall not be\nentitled to benefits from the Association in addition to or other than those\nprovided under the plan or arrangement.\n\nQ. Venue in a suit against the Association arising under this chapter shall be\nin the circuit court of the city or county in which the Association has its\nprincipal place of business except that any suit to which the Commission is a\nparty shall be brought before the Commission. The Association shall not be\nrequired to give an appeal bond in an appeal that relates to a cause of action\narising under this chapter.\n\nR. In carrying out its duties in connection with guaranteeing, assuming,\nreissuing, or reinsuring policies or contracts under subsection A or B, the\nAssociation may issue substitute coverage for a policy or contract that provides\nan interest rate, crediting rate or similar factor determined by use of an index\nor other external reference stated in the policy or contract employed in\ncalculating returns or changes in value by issuing an alternative policy or\ncontract in accordance with the following provisions:\n\n 1. In lieu of the index or other external reference provided for in the\n original policy or contract, the alternative policy or contract provides for\n (i) a fixed interest rate, (ii) payment of dividends with minimum guarantees,\n or (iii) a different method for calculating interest or changes in value;\n\n 2. There is no requirement for evidence of insurability, waiting period, or\n other exclusion that would not have applied under the replaced policy or\n contract; and\n\n 3. The alternative policy or contract is similar to the replaced policy or\n contract in all other material terms.\n\nHISTORY: 1976, c. 330, \u00a7 38.1-482.22; 1986, c. 562; 1991, c. 340; 1993, c. 142;\n2007, c. 482; 2010, c. 510; 2018, c. 706.","edition":{"id":1,"name":"2025","slug":"2025","date_created":"2026-06-21 22:39:22","date_modified":"2026-06-21 22:39:22","current":1,"order_by":1,"last_import":null}}