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existing prior to the determination of insolvency and arising within thirty days after the determination of insolvency, or before the policy expiration date if less than thirty days after the determination, or before the insured replaces the policy or causes its cancellation, if he does so within thirty days of the determination, but such obligation shall include only that amount of each

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covered claim which is in excess of $100 and is less

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than $300,000, except that the Association shall pay the full amount of any covered claim arising out of a

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workmen's compensation policy; except in no event shall the Association be obligated to a policyholder or claimant in an amount in excess of the obligation of the

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insolvent insurer under the policy from which the claim

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(2) be deemed the insurer to the extent of its obliga

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tion on the covered claims and to such extent shall have

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all rights, duties, and obligations of the insolvent insurer

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as if the insurer had not become insolvent:

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(3) allocate claims paid and expenses incurred among the three accounts separately, and assess mem

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ber insurers separately, according to subsection (b) of

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this section, for each account amounts necessary to pay the obligations of the Association under paragraph (1) of this subsection subsequent to an insolvency, the ex

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penses of handling covered claims subsequent to an insolvency, the cost of examinations under section 112

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and other expenses authorized by this title;

(4) investigate claims brought against the Association and adjust, compromise, settle, and pay covered claims to the extent of the Association's obligation and deny all other claims and may review settlements, releases and judgments to which the insolvent insurer or

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its insureds were parties to determine the extent to

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which such settlements, releases and judgments may be

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properly contested;

(5) notify such persons as the Commissioner di

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rects under section 109 (b) (1);

(6) handle claims through its employees or through one or more insurers or other persons designated, subject to the approval of the Commissioner, as servicing facilities, except such designation may be declined by a member insurer; and

(7) reimburse each servicing facility for obligations of the Association paid by the facility and for expenses incurred by the facility while handling claims on behalf of the Association, and pay the other expenses of the Association authorized by this title. (b) The assessments of each member insurer under

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25 paragraph (2) of subsection (a) of this section shall be in

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1 the proportion that the net direct written premiums of the 2 member insurer for the preceding calendar year on the kinds

3 of insurance in the account bears to the net direct written

4 premiums of all member insurers for the preceding calendar

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year on the kinds of insurance in the account. Each member

6 insurer shall be notified of the assessment not later than

7 thirty days before it is due. No member insurer may be 8 assessed in any year on any account an amount greater than

9 2 per centum of that member insurer's net direct written

10 premiums for the preceding calendar year on the kinds of 11 insurance in the account. If the maximum assessment, to12 gether with the other assets of the Association in any account, 13 does not provide in any one year in any account an amount 14 sufficient to make all necessary payments from that account, 15 the funds available shall be prorated and the unpaid portion 16 shall be paid as soon thereafter as funds become available. 17 The Association may exempt or defer, in whole or in part, 18 the assessment of any member insurer, if the assessment

19 would cause the member insurer's financial statement to

20 reflect amounts of capital or surplus less than the minimum

21 amounts required for a certificate of authority by any juris

22 diction in which the member insurer is authorized to transact

23 insurance. Each member insurer may set off against any 24 assessment, authorized payments made on covered claims and 25 expenses incurred in the payment of such claims by the

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member insurer if they are chargeable to the account for

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(c) The Association may

(1) employ or retain such persons as are necessary

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to handle claims and perform other duties of the Asso

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(2) borrow funds necessary to effect the purposes

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of this title in accord with the plan of operation;

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(4) negotiate and become a party to such contracts

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as are necessary to carry out the purpose of this title;

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(5) perform such other acts as are necessary or

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proper to effectuate the purpose of this title; and

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(6) refund to the member insurers in proportion

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to the contribution of each member insurer to that ac

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count that amount by which the assets of the account

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exceed the liabilities, if, at the end of any calendar year,

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the Board finds that the assets of the Association in any

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account exceed the liabilities of that account as estimated

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by the Board for the coming year.

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SEC. 108. (a) (1) The Board shall submit to the Com

22 missioner a plan of operation and any amendments thereto

23 necessary or suitable to assure the fair, reasonable, and

24 equitable administration of the Association. The plan of op

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eration and any amendments thereto shall become effective

2 upon approval in writing by the Commissioner.

3 (2) If the Board fails to submit a suitable plan of op4 eration within ninety days following the effective date of 5 this title or if at any time thereafter the Board fails to sub6 mit suitable amendments to the plan, the Commissioner shall,

7 after notice and hearing, adopt and promulgate such reason

8 able rules as are necessary or advisable to effectuate the pro

g visions of this title. Such rules shall continue in force until

10 modified by the Commissioner or superseded by a plan sub11 mitted by the Board and approved by the Commissioner. 12

(b) All member insurers shall comply with the plan of 13 operation.

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(c) The plan of operation shall

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(1) establish the procedures whereby all the pow

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ers and duties of the Association under section 107 will

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be performed;

(2) establish procedures for handling assets of the

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Association;

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(3) establish the amount and method of reimburs

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ing members of the Board under section 106;

(4) establish procedures by which claims may be

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filed with the Association and establish acceptable forms

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