S. B. No. 279 As Introduced

Senators Stivers, Cates, Spada

A BILL

To amend sections 3955.01 and 3955.12 of the Revised 1
Code to exempt the Ohio Insurance Guaranty 2
Association from being obligated to pay more than 3
a single three hundred thousand dollar claim for 4
injury or death to any one person and a claim of 5
an insured whose net worth exceeds fifty million 6
dollars. 7

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

       Section 1. That sections 3955.01 and 3955.12 of the Revised 8
Code be amended to read as follows: 9

       Sec. 3955.01. As used in sections 3955.01 to 3955.19 of the 10
Revised Code: 11

       (A) "Account" means either of the two accounts created by 12
division (B) of section 3955.06 of the Revised Code. 13

       (B) "Affiliate" means a person that, directly or indirectly, 14
through one or more intermediaries, controls, is controlled by, or 15
is under common control with, an insolvent insurer on the 16
thirty-first day of December of the year next preceding the date 17
the insurer becomes an insolvent insurer. 18

       (C) "Control" means the possession, direct or indirect, of 19
the power to direct or cause the direction of the management and 20
policies of a person, whether through the ownership of voting 21
securities, by contract other than a commercial contract for goods 22
or nonmanagement services, or otherwise, unless the power is the 23
result of an official position with, or corporate office held by, 24
the person. 25

       "Control" shall be presumed to exist if any person, directly 26
or indirectly, owns, controls, holds with the power to vote, or 27
holds proxies representing, ten per cent or more of the voting 28
securities of any other person. This presumption may be rebutted 29
by a showing that control does not exist in fact. 30

       (D)(1) "Covered claim" means an unpaid claim, including one 31
for unearned premiums, which arises out of and is within the 32
coverage of an insurance policy or policies to which sections 33
3955.01 to 3955.19 of the Revised Code apply, when issued by an 34
insurer which becomes an insolvent insurer on or after September 35
4, 1970, and either of the following applies: 36

       (a) The claimant or insured is a resident of this state at 37
the time of the insured event, provided that for the purpose of 38
determining the place of residence of a claimant or insured that 39
is an entity other than a natural person, the state in which its 40
principal place of business is located at the time of the insured 41
event shall be considered the residence of such claimant or 42
insured. 43

       (b) The claim is a first-party claim for property damage to 44
an insured's property that is permanently located in this state. 45

       (2) "Covered claim" does not include any amount: 46

       (a) In excess of ten thousand dollars on any unearned premium 47
claim; 48

       (b) In excess of three hundred thousand dollars on any 49
claim;. For purposes of this division, all claims arising out of 50
bodily injury or death to any one person shall constitute a single 51
claim regardless of the number of insurance policies issued or the 52
number of derivative claims made, including, but not limited to, 53
claims for loss of consortium, for injury to the relationship, or 54
arising out of wrongful death. 55

       (c) Due any reinsurer, insurer, insurance pool, or 56
underwriting association through subrogation or otherwise; 57
provided, that when such reinsurer, insurer, insurance pool, or 58
underwriting association has paid a claim and thereby becomes 59
subrogated to the amount of that claim, such subrogated claim may 60
be asserted only against the receiver of the insolvent insurer and 61
in no event against the insured of the insolvent insurer; 62

       (d) Awarded as punitive or exemplary damages; 63

       (e) Sought as a return of premium under any retrospective 64
rating plan; 65

       (f) Due any person that is an affiliate of the insolvent 66
insurer; 67

       (g) Due on any one claim that does not exceed one hundred 68
dollars; 69

       (h) Due under any policy of insurance issued to an insured 70
whose net worth exceeds fifty million dollars on the last day of 71
the insured's fiscal year next preceding the date the insurer 72
becomes an insolvent insurer. An insured's net worth described in 73
this division shall equal the aggregate of the net worth of the 74
insured and all of the insured's subsidiaries. The exclusion under 75
this division shall not apply in any of the following situations: 76

       (i) The insured has applied for or consented to the 77
appointment of a receiver, trustee, or liquidator for all or a 78
substantial part of the insured's assets. 79

       (ii) The insured has filed a voluntary petition in 80
bankruptcy. 81

       (iii) The insured has filed a petition or answer seeking a 82
reorganization or arrangement with creditors or seeking to take 83
advantage of any insolvency law. 84

       (iv) A court of competent jurisdiction has entered an order, 85
judgment, or decree concerning the insured's bankruptcy, 86
insolvency, or reorganization petition. 87

       (E) "Insolvent insurer" means an insurer licensed to transact 88
insurance in this state either at the time the policy was issued 89
or when the insured event occurred, decreed by a court of 90
competent jurisdiction of the state of such insurer's domicile to 91
be insolvent, and ordered by or pursuant to the authority of such 92
court to be liquidated. 93

       (F) "Member insurer" means any person that writes any kind of 94
insurance to which this chapter applies, as prescribed in section 95
3955.05 of the Revised Code, including the exchange of reciprocal 96
or interinsurance contracts, and is licensed to transact any 97
insurance in this state. 98

       (G) "Net direct written premiums" means direct gross premiums 99
written in this state on insurance policies to which sections 100
3955.01 to 3955.19 of the Revised Code apply, less return premiums 101
thereon and dividends paid or credited to policyholders on such 102
direct business, but does not include premiums on contracts 103
between insurers or reinsurers. 104

       (H) "Net worth" means the amount by which the value of all 105
assets exceeds all liabilities and includes, but is not limited 106
to, such accounting terms as owners equity, partnership equity, 107
shareholders equity, net assets, and fund balances. 108

       (I) "Person" has the same meaning as in section 1.59 of the 109
Revised Code. 110

       Sec. 3955.12. (A) The Ohio insurance guaranty association 111
shall be subrogated to the rights of any person recovering under 112
sections 3955.01 to 3955.19 of the Revised Code to the extent of 113
~~his~~the person's recovery from the association. Every insured or 114
claimant seeking the protection of sections 3955.01 to 3955.19 of 115
the Revised Code shall cooperate with the association to the same 116
extent as such person would have been required to cooperate with 117
the insolvent insurer. Except as provided in division (B) of this 118
section, the association shall have no cause of action against the 119
insured of the insolvent insurer for any sums the association has 120
paid out. 121

       (B)(1) The association has the right to recover from the 122
following insureds or persons the amount of any covered claim paid 123
to or on behalf of those insureds or persons: 124

       (a) ~~Any insured whose net worth exceeds fifty million dollars~~ 125
~~on the last day of the insured's fiscal year next preceding the~~ 126
~~date the insurer becomes an insolvent insurer and whose liability~~ 127
~~obligations to other persons are satisfied in whole or in part by~~ 128
~~payments made under sections 3955.01 to 3955.19 of the Revised~~ 129
~~Code;~~ 130

       ~~(b)~~ Any insured who is not a resident of this state at the 131
time of the insured event, except for first-party claims for 132
property damage to an insured's property that is permanently 133
located in this state; 134

       ~~(c)~~(b) Any person that is an affiliate of the insolvent 135
insurer. 136

       (2) The association has the right to recover from any insured 137
of an insolvent insurer for any sums the association has paid out 138
as the result of an error. 139

       (C) The receiver, liquidator, or statutory successor of an 140
insolvent insurer shall be bound by settlements of covered claims 141
by the association or a similar organization in another state. The 142
court having jurisdiction shall grant such claim priority equal to 143
that which the claimant would have been entitled in the absence of 144
sections 3955.01 to 3955.19 of the Revised Code against the assets 145
of the insolvent insurer. The expenses of the association or 146
similar organization in handling claims shall be accorded the same 147
priority as the liquidator's expenses. 148

       (D) The association periodically shall file with the receiver 149
or liquidator of an insolvent insurer reports of the covered 150
claims paid by the association and estimates of anticipated claims 151
on the association, which shall preserve the right to the 152
association against the assets of the insolvent insurer. 153

       Section 2. That existing sections 3955.01 and 3955.12 of the 154
Revised Code are hereby repealed. 155

Section 1. That sections 3955.01 and 3955.12 of the Revised	8
Code be amended to read as follows:	9

Sec. 3955.01. As used in sections 3955.01 to 3955.19 of the	10
Revised Code:	11

(A) "Account" means either of the two accounts created by	12
division (B) of section 3955.06 of the Revised Code.	13

(B) "Affiliate" means a person that, directly or indirectly,	14
through one or more intermediaries, controls, is controlled by, or	15
is under common control with, an insolvent insurer on the	16
thirty-first day of December of the year next preceding the date	17
the insurer becomes an insolvent insurer.	18

(C) "Control" means the possession, direct or indirect, of	19
the power to direct or cause the direction of the management and	20
policies of a person, whether through the ownership of voting	21
securities, by contract other than a commercial contract for goods	22
or nonmanagement services, or otherwise, unless the power is the	23
result of an official position with, or corporate office held by,	24
the person.	25

"Control" shall be presumed to exist if any person, directly	26
or indirectly, owns, controls, holds with the power to vote, or	27
holds proxies representing, ten per cent or more of the voting	28
securities of any other person. This presumption may be rebutted	29
by a showing that control does not exist in fact.	30

(D)(1) "Covered claim" means an unpaid claim, including one	31
for unearned premiums, which arises out of and is within the	32
coverage of an insurance policy or policies to which sections	33
3955.01 to 3955.19 of the Revised Code apply, when issued by an	34
insurer which becomes an insolvent insurer on or after September	35
4, 1970, and either of the following applies:	36

(a) The claimant or insured is a resident of this state at	37
the time of the insured event, provided that for the purpose of	38
determining the place of residence of a claimant or insured that	39
is an entity other than a natural person, the state in which its	40
principal place of business is located at the time of the insured	41
event shall be considered the residence of such claimant or	42
insured.	43

(b) The claim is a first-party claim for property damage to	44
an insured's property that is permanently located in this state.	45

(a) In excess of ten thousand dollars on any unearned premium	47
claim;	48

(b) In excess of three hundred thousand dollars on any	49
claim;. For purposes of this division, all claims arising out of	50
bodily injury or death to any one person shall constitute a single	51
claim regardless of the number of insurance policies issued or the	52
number of derivative claims made, including, but not limited to,	53
claims for loss of consortium, for injury to the relationship, or	54
arising out of wrongful death.	55

(c) Due any reinsurer, insurer, insurance pool, or	56
underwriting association through subrogation or otherwise;	57
provided, that when such reinsurer, insurer, insurance pool, or	58
underwriting association has paid a claim and thereby becomes	59
subrogated to the amount of that claim, such subrogated claim may	60
be asserted only against the receiver of the insolvent insurer and	61
in no event against the insured of the insolvent insurer;	62

(e) Sought as a return of premium under any retrospective	64
rating plan;	65

(f) Due any person that is an affiliate of the insolvent	66
insurer;	67

(g) Due on any one claim that does not exceed one hundred	68
dollars;	69

(h) Due under any policy of insurance issued to an insured	70
whose net worth exceeds fifty million dollars on the last day of	71
the insured's fiscal year next preceding the date the insurer	72
becomes an insolvent insurer. An insured's net worth described in	73
this division shall equal the aggregate of the net worth of the	74
insured and all of the insured's subsidiaries. The exclusion under	75
this division shall not apply in any of the following situations:	76

(i) The insured has applied for or consented to the	77
appointment of a receiver, trustee, or liquidator for all or a	78
substantial part of the insured's assets.	79

(ii) The insured has filed a voluntary petition in	80
bankruptcy.	81

(iii) The insured has filed a petition or answer seeking a	82
reorganization or arrangement with creditors or seeking to take	83
advantage of any insolvency law.	84

(iv) A court of competent jurisdiction has entered an order,	85
judgment, or decree concerning the insured's bankruptcy,	86
insolvency, or reorganization petition.	87

(E) "Insolvent insurer" means an insurer licensed to transact	88
insurance in this state either at the time the policy was issued	89
or when the insured event occurred, decreed by a court of	90
competent jurisdiction of the state of such insurer's domicile to	91
be insolvent, and ordered by or pursuant to the authority of such	92
court to be liquidated.	93

(F) "Member insurer" means any person that writes any kind of	94
insurance to which this chapter applies, as prescribed in section	95
3955.05 of the Revised Code, including the exchange of reciprocal	96
or interinsurance contracts, and is licensed to transact any	97
insurance in this state.	98

(G) "Net direct written premiums" means direct gross premiums	99
written in this state on insurance policies to which sections	100
3955.01 to 3955.19 of the Revised Code apply, less return premiums	101
thereon and dividends paid or credited to policyholders on such	102
direct business, but does not include premiums on contracts	103
between insurers or reinsurers.	104

(H) "Net worth" means the amount by which the value of all	105
assets exceeds all liabilities and includes, but is not limited	106
to, such accounting terms as owners equity, partnership equity,	107
shareholders equity, net assets, and fund balances.	108

(I) "Person" has the same meaning as in section 1.59 of the	109
Revised Code.	110

Sec. 3955.12. (A) The Ohio insurance guaranty association	111
shall be subrogated to the rights of any person recovering under	112
sections 3955.01 to 3955.19 of the Revised Code to the extent of	113
~~his~~the person's recovery from the association. Every insured or	114
claimant seeking the protection of sections 3955.01 to 3955.19 of	115
the Revised Code shall cooperate with the association to the same	116
extent as such person would have been required to cooperate with	117
the insolvent insurer. Except as provided in division (B) of this	118
section, the association shall have no cause of action against the	119
insured of the insolvent insurer for any sums the association has	120
paid out.	121

(B)(1) The association has the right to recover from the	122
following insureds or persons the amount of any covered claim paid	123
to or on behalf of those insureds or persons:	124

(a) ~~Any insured whose net worth exceeds fifty million dollars~~	125
~~on the last day of the insured's fiscal year next preceding the~~	126
~~date the insurer becomes an insolvent insurer and whose liability~~	127
~~obligations to other persons are satisfied in whole or in part by~~	128
~~payments made under sections 3955.01 to 3955.19 of the Revised~~	129
~~Code;~~	130

~~(b)~~ Any insured who is not a resident of this state at the	131
time of the insured event, except for first-party claims for	132
property damage to an insured's property that is permanently	133
located in this state;	134

~~(c)~~(b) Any person that is an affiliate of the insolvent	135
insurer.	136