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56-12-108. Plan of operation - Requirements of plan - Delegation of authority.


  1. The association shall submit to the commissioner a plan of operation and any amendments thereto necessary or suitable to assure the fair, reasonable, and equitable administration of the association. The plan of operation and any amendments thereto shall become effective upon approval in writing by the commissioner.

  2. If the association fails to submit suitable amendments to the plan, the commissioner shall, after notice and hearing, adopt and promulgate such reasonable rules as are necessary or advisable to effectuate the provisions of this part. Such rules shall continue in force until modified by the commissioner or superseded by a plan submitted by the association and approved by the commissioner.

(b) All member insurers shall comply with the plan of operation.

(c) The plan of operation shall:

  1. Establish the procedures whereby all the powers and duties of the association under 56-12-107 will be performed;

  2. Establish procedures for handling assets of the association;

  3. Establish the amount and method of reimbursing members of the board of directors under 56-12-106;

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

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

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

  7. Provide that any member insurer aggrieved by any final action or decision of the association may appeal to the commissioner within thirty (30) days after the action or decision;

  8. Establish the procedures whereby selections for the board of directors will be submitted to the commissioner;

  9. Contain additional provisions necessary or proper for the execution of the powers and duties of the association; and

  10. Establish procedures for the disposition of liquidating dividends or other moneys received from the estate of the insolvent insurer.

(d) The Plan of operation may provide that any or all powers and duties of the association, except those under 56-12-107(a)(3) and (b)(3), are delegated to a corporation, association, or other organization which performs or will perform functions similar to those of this association, or its equivalent, in two (2) or more states. Such a corporation, association, or organization shall be reimbursed as a servicing facility would be reimbursed and shall be paid for its performance of any other functions of the association. A delegation under this subsection (d) shall take effect only with the approval of both the board of directors and the commissioner, and may be made only to a corporation, association, or organization that extends protection not substantially less favorable and effective than that provided by this part.

[Acts 1971, ch. 180, 8; T.C.A., 56-4008; Acts 1999, ch. 48, 7.]

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