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(126th General Assembly)
(Substitute Senate Bill Number 279)
To amend sections 3955.01, 3955.05, and 3955.12 of the Revised Code to exempt the Ohio Insurance Guaranty Association from being obligated to pay more than a single three hundred thousand dollar claim for injury or death to any one person and a claim of an insured whose net worth exceeds fifty million dollars and to exempt certain reciprocal insurers from participation in the Ohio Insurance Guaranty Association.
Be it enacted by the General Assembly of the State of Ohio:
SECTION 1. That sections 3955.01, 3955.05, and 3955.12 of the Revised Code be amended to read as follows:
Sec. 3955.01. As used in sections 3955.01 to 3955.19 of
the Revised Code:
(A) "Account" means either of the two accounts created by
division (B) of section 3955.06 of the Revised Code.
(B) "Affiliate" means a person that, directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, an insolvent
insurer on the thirty-first day of December of the year next
preceding the date the insurer becomes an insolvent insurer.
(C) "Control" means the possession, direct or indirect, of
the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting
securities, by contract other than a commercial contract for
goods or nonmanagement services, or otherwise, unless the power
is the result of an official position with, or corporate office
held by, the person.
"Control" shall be presumed to exist if any person,
directly or indirectly, owns, controls, holds with the power to
vote, or holds proxies representing, ten per cent or more of the
voting securities of any other person. This presumption may be
rebutted by a showing that control does not exist in fact.
(D)(1) "Covered claim" means an unpaid claim, including
one for unearned premiums, which arises out of and is within the
coverage of an insurance policy or policies to which sections 3955.01 to
3955.19 of the Revised Code apply, when issued by an insurer
which becomes an insolvent insurer on or after September 4, 1970,
and either of the following applies:
(a) The claimant or insured is a resident of this state at
the time of the insured event, provided that for the purpose of
determining the place of residence of a claimant or insured that
is an entity other than a natural person, the state in which its
principal place of business is located at the time of the insured
event shall be considered the residence of such claimant or
(b) The claim is a first-party claim for property damage
to an insured's property that is permanently located in this
(2) "Covered claim" does not include any amount:
(a) In excess of ten thousand dollars on any unearned
(b) In excess of three hundred thousand dollars on any
;. For purposes of this division, all claims arising out of bodily injury or death to any one person shall constitute a single claim regardless of the number of insurance policies issued or the number of derivative claims made, including, but not limited to, claims for loss of consortium, for injury to the relationship, for survivorship, or arising out of wrongful death.
(c) Due any reinsurer, insurer, insurance pool, or
underwriting association through subrogation or otherwise;
provided, that when such reinsurer, insurer, insurance pool, or
underwriting association has paid a claim and thereby becomes
subrogated to the amount of that claim, such subrogated claim may
be asserted only against the receiver of the insolvent insurer
and in no event against the insured of the insolvent insurer;
(d) Awarded as punitive or exemplary damages;
(e) Sought as a return of premium under any retrospective
(f) Due any person that is an affiliate of the insolvent
(g) Due on any one claim that does not exceed one hundred
(h) Due under any policy of insurance issued to an insured whose net worth exceeds fifty million dollars on the last day of the insured's fiscal year next preceding the date the insurer becomes an insolvent insurer. An insured's net worth described in this division shall equal the aggregate of the net worth of the insured and all of the insured's subsidiaries. The exclusion under this division shall not apply in any of the following situations:
(i) The insured has applied for or consented to the appointment of a receiver, trustee, or liquidator for all or a substantial part of the insured's assets.
(ii) The insured has filed a voluntary petition in bankruptcy.
(iii) The insured has filed a petition or answer seeking a reorganization or arrangement with creditors or seeking to take advantage of any insolvency law.
(iv) A court of competent jurisdiction has entered an order, judgment, or decree concerning the insured's bankruptcy, insolvency, or reorganization petition.
(E) "Insolvent insurer" means an insurer licensed to
transact insurance in this state either at the time the policy
was issued or when the insured event occurred, decreed by a court
of competent jurisdiction of the state of such insurer's domicile
to be insolvent, and ordered by or pursuant to the authority of
such court to be liquidated.
(F) "Member insurer" means any person that writes any kind
of insurance to which this chapter applies, as prescribed in
section 3955.05 of the Revised Code, including the exchange of
reciprocal or interinsurance contracts, and is licensed to
transact any insurance in this state.
(G) "Net direct written premiums" means direct gross
premiums written in this state on insurance policies to which
sections 3955.01 to 3955.19 of the Revised Code apply, less
return premiums thereon and dividends paid or credited to
policyholders on such direct business, but does not include
premiums on contracts between insurers or reinsurers.
(H) "Net worth" means the amount by which the value of all assets exceeds all liabilities and includes, but is not limited to, such accounting terms as owners equity, partnership equity, shareholders equity, net assets, and fund balances.
(I) "Person" has the same meaning as in section 1.59 of
the Revised Code.
Sec. 3955.05. Sections 3955.01 to 3955.19 of the Revised
Code apply to all kinds of direct insurance, except:
(A) Title insurance;
(B) Fidelity or surety bonds, or any other bonding
(C) Credit insurance, vendors' single interest insurance,
collateral protection insurance, or any similar insurance
protecting the interests of a creditor arising out of a
(D) Mortgage guaranty, financial guaranty, residual value,
or other forms of insurance offering protection against investment risks;
(E) Ocean marine insurance;
(F) Any insurance provided by or guaranteed by government,
including, but not limited to, any department, board, office,
commission, agency, institution, or other instrumentality or
entity of any branch of state government, any political
subdivision of this state, the United States or any agency of the
United States, or any separate or joint governmental
self-insurance or risk-pooling program, plan, or pool;
(G) Contracts of any corporation by which health services
are to be provided to its subscribers;
(H) Life, annuity, health, or disability insurance,
including sickness and accident insurance written pursuant to
Chapter 3923. of the Revised Code;
(I) Fraternal benefit insurance;
(J) Mutual protective insurance of persons or property;
(K) Reciprocal or interinsurance contracts written
pursuant to Chapter 3931. of the Revised Code for medical
malpractice insurance if the reciprocal exchange or interinsurance exchange is not subject to the risk-based capital requirements in effect in the state of domicile of the reciprocal exchange or interinsurance exchange. As used in this division, "medical malpractice insurance" means insurance coverage against the legal liability of the insured and against loss, damage, or expense incident to a claim arising out of the death, disease, or injury of any person as the result of negligence or malpractice in rendering professional service by any licensed physician, podiatrist, or hospital, as those terms are defined in section 2305.113 of the Revised Code.
(L) Any political subdivision self-insurance program or
joint political subdivision self-insurance pool established under
Chapter 2744. of the Revised Code;
(M) Warranty or service contracts, or the insurance of
(N) Any state university or college self-insurance program
established under section 3345.202 of the Revised Code;
(O) Any transaction, or combination of transactions,
between a person, including affiliates of such person, and an
insurer, including affiliates of such insurer, that involves the
transfer of investment or credit risk unaccompanied by a transfer
of insurance risk;
(P) Credit union share guaranty insurance issued pursuant
to Chapter 1761. of the Revised Code;
(Q) Insurance issued by risk retention groups as defined
in Chapter 3960. of the Revised Code;
(R) Workers' compensation insurance, including any
contract indemnifying an employer who pays compensation directly
Sec. 3955.12. (A) The Ohio insurance guaranty association
shall be subrogated to the rights of any person recovering under
sections 3955.01 to 3955.19 of the Revised Code to the extent of
his the person's recovery from the association. Every insured
seeking the protection of sections 3955.01 to 3955.19 of the
Revised Code shall cooperate with the association to the same
extent as such person would have been required to cooperate with
the insolvent insurer. Except as provided in division (B) of
this section, the association shall have no cause of action
against the insured of the insolvent insurer for any sums the
association has paid out.
(B)(1) The association has the right to recover from the
following insureds or persons the amount of any covered claim
paid to or on behalf of those insureds or persons:
Any insured whose net worth exceeds fifty million
dollars on the last day of the insured's fiscal year next
preceding the date the insurer becomes an insolvent insurer and
whose liability obligations to other persons are satisfied in
whole or in part by payments made under sections 3955.01 to
3955.19 of the Revised Code; (b) Any insured who is not a resident of this state at the
time of the insured event, except for first-party claims for
property damage to an insured's property that is permanently
located in this state; (c)(b) Any person that is an affiliate of the insolvent
(2) The association has the right to recover from any
insured of an insolvent insurer for any sums the association has
paid out as the result of an error.
(C) The receiver, liquidator, or statutory successor of an
insolvent insurer shall be bound by settlements of covered claims
by the association or a similar organization in another state.
The court having jurisdiction shall grant such claim priority
equal to that which the claimant would have been entitled in the
absence of sections 3955.01 to 3955.19 of the Revised Code
against the assets of the insolvent insurer. The expenses of the
association or similar organization in handling claims shall be
accorded the same priority as the liquidator's expenses.
(D) The association periodically shall file with the
receiver or liquidator of an insolvent insurer reports of the
covered claims paid by the association and estimates of
anticipated claims on the association, which shall preserve the
right to the association against the assets of the insolvent
SECTION 2. That existing sections 3955.01, 3955.05, and 3955.12 of the Revised Code are hereby repealed.