20-665. Plan of operation

A. The board shall submit to the director a fund plan of operation and any amendments necessary or suitable to assure the fair, reasonable and equitable administration of the fund. The plan of operation and any amendments shall become effective upon approval in writing by the director.

B. If the board fails to submit a suitable plan of operation or if at any time the board fails to submit suitable amendments to the plan, the director shall adopt any plan or amendment that is necessary or advisable to effectuate the provisions of this article and the plan or amendment shall continue in force until modified by the director or superseded by a plan submitted by the board and approved by the director. All member insurers shall comply with the plan of operation.

C. The plan of operation shall:

1. Establish the procedures for execution of all powers and duties of the board.

2. Establish procedures for handling assets of the fund.

3. Establish the amount and method of reimbursing members of the board pursuant to section 20-663.

4. Establish procedures by which claims may be filed with the fund and establish acceptable forms of proof of covered claims. Notice of claims to the receiver, conservator or liquidator of the insolvent insurer shall be deemed notice to the fund or its agents and a list of such claims shall be periodically submitted to the fund or similar organization in another state by the receiver or liquidator.

5. Establish regular places and times for meetings of the board.

6. Establish procedures for records to be kept of all financial transactions of the fund, the board and its agents.

7. Provide that any member insurer aggrieved by any final action or decision of the fund may appeal to the director within thirty days after the action or decision.

8. Establish the procedures for recommendations to the director for selections to the board.

9. Contain additional provisions that are necessary or proper for the execution of the powers and duties of the board.

D. In regard to the prevention and detection of insolvencies the board shall:

1. Notify the director of any information indicating that any member insurer may be insolvent or in a financial condition that is hazardous to the policyholders or to the public.

2. Notify the director of any information indicating that a member insurer may be unable to fulfill its contractual obligations and request a meeting with the director.

3. Upon request of the director, attend hearings before the director and meet with and advise the director or the receiver, conservator or liquidator appointed by the director on matters relating to the affairs of an insolvent insurer and relating to action which may be taken by the director, receiver, conservator or liquidator to best protect the interests of persons holding covered claims against the insolvent insurer and relating to the amount and timing of partial assessments and the marshalling of assets and the processing and handling of covered claims.

4. At the conclusion of any insurer insolvency in which the fund was obligated to pay covered claims, prepare a report on the history and causes of such insolvency, based on the information available to the board and submit such report to the director.

E. In regard to the prevention and detection of insolvencies the board may, on majority vote:

1. Request that the director make available to the board any information in the director's possession relative to the financial condition of any member insurer, including the power to pursue officially any operational records or activity of the member insurer wherever deemed necessary.

2. Request that the director order an examination of any member insurer which the board in good faith believes may be in a financial condition hazardous to the policyholders or to the public.

3. Make recommendations and reports to the director upon any matter germane to the solvency, liquidation, rehabilitation or conservation of any member insurer. Such reports and recommendations shall not be considered public documents.

4. Make recommendations to the director for the detection and prevention of insurer insolvencies.

F. The plan of operation may provide that any or all powers and duties of the board, except those pursuant to section 20-664, subsection A, paragraphs 3 and 4 and subsection B, are delegated to a corporation, association or other organization which performs or will perform functions similar to those of this fund, or its equivalent, in two or more states. Such a corporation, association or organization shall be reimbursed as a servicing facility and shall be paid for its performance of any other function of the fund. A delegation pursuant to this subsection shall take effect only with the approval of both the board and the director and may be made only to a corporation, association or organization which extends protection not substantially less favorable and effective than that provided by this article.