Okla. Stat. tit. 36, § 36-2028

A. If a member insurer is an impaired insurer, the Oklahoma

Life and Health Insurance Guaranty Association may, in its

discretion, and subject to any conditions imposed by the Association

that do not impair the contractual obligations of the impaired

insurer and that are approved by the Insurance Commissioner:

1. Guarantee, assume, reissue or reinsure, or cause to be

guaranteed, assumed, reissued or reinsured, any or all of the

policies or contracts of the impaired insurer; or

2. Provide monies, pledges, notes, guarantees or other means as

are proper to effectuate paragraph 1 of this subsection, and assure

payment of the contractual obligations of the impaired insurer

pending action under paragraph 1 of this subsection.

B. If a member insurer is an insolvent insurer, the Association

shall, in its discretion, either:

1. a. (1) guarantee, assume, reissue or reinsure, or cause

to be guaranteed, assumed, reissued or reinsured,

the policies or contracts of the insolvent

insurer, or

(2) assure payment of the contractual obligations of

the insolvent insurer, and

b. provide monies, pledges, loans, notes, guarantees or

other means as are reasonably necessary to discharge

the duties of the Association; or

2. Provide benefits and coverages in accordance with the

following provisions:

a. with respect to policies and contracts, assure payment

of benefits that would have been payable under the

Oklahoma Statutes - Title 36. Insurance Page 603

policies or contracts of the insolvent insurer for

claims incurred:

(1) with respect to group policies and contracts, not

later than the earlier of the next renewal date

under those policies or contracts or forty-five

(45) days, but in no event less than thirty (30)

days, after the date on which the Association

becomes obligated with respect to the policies

and contracts, or

(2) with respect to non-group policies, contracts,

and annuities not later than the earlier of the

next renewal date, if any, under the policies or

contracts for one (1) year, but in no event less

than thirty (30) days, from the date on which the

Association becomes obligated with respect to the

policies or contracts,

b. make diligent efforts to provide all known insureds,

enrollees or annuitants for non-group policies and

contracts, or group policy or contract owners with

respect to group policies and contracts, thirty (30)

days' notice of the termination of the benefits

provided pursuant to subparagraph a of this paragraph,

c. with respect to non-group policies and contracts

covered by the Association, make available to each

known insured, enrollee or annuitant, or owner if

other than the insured, enrollee or annuitant, and

with respect to an individual formerly an insured,

enrollee or annuitant under a group policy or contract

who is not eligible for replacement group coverage,

make available substitute coverage on an individual

basis in accordance with the provisions of

subparagraph d of this paragraph, if the insureds,

enrollees or annuitants had a right under law or the

terminated policy, contract or annuity to convert

coverage to individual coverage or to continue an

individual policy, contract or annuity in force until

a specified age or for a specified time, during which

the insurer or health maintenance organization had no

right unilaterally to make changes in any provision of

the policy, contract or annuity or had a right only to

make changes in premium by class,

d. (1) in providing the substitute coverage required

under subparagraph c of this paragraph, the

Association may offer either to reissue the

terminated coverage or to issue an alternative

policy or contract at actuarially justified

Oklahoma Statutes - Title 36. Insurance Page 604

rates, subject to the prior approval of the

Insurance Commissioner,
only to

make changes in premium by class,

d. (1) in providing the substitute coverage required

under subparagraph c of this paragraph, the

Association may offer either to reissue the

terminated coverage or to issue an alternative

policy or contract at actuarially justified

Oklahoma Statutes - Title 36. Insurance Page 604

rates, subject to the prior approval of the

Insurance Commissioner,

(2) alternative or reissued policies or contracts

shall be offered without requiring evidence of

insurability, and shall not provide for any

waiting period or exclusion that would not have

applied under the terminated policy or contract,

and

(3) the Association may reinsure any alternative or

reissued policy or contract,

e. (1) alternative policies or contracts adopted by the

Association shall be subject to the approval of

the Insurance Commissioner. The Association may

adopt alternative policies or contracts of

various types for future issuance without regard

to any particular impairment or insolvency,

(2) alternative policies or contracts shall contain

at least the minimum statutory provisions

required in this state and provide benefits that

shall not be unreasonable in relation to the

premium charged. The Association shall set the

premium in accordance with a table of rates that

it shall adopt. The premium shall reflect the

amount of insurance to be provided and the age

and class of risk of each insured, but shall not

reflect any changes in the health of the insured

after the original policy or contract was last

underwritten,

(3) any alternative policy or contract issued by the

Association shall provide coverage of a type

similar to that of the policy or contract issued

by the impaired or insolvent insurer, as

determined by the Association,

f. if the Association elects to reissue terminated

coverage at a premium rate different from that charged

under the terminated policy or contract, the premium

shall be actuarially justified and set by the

Association in accordance with the amount of insurance

or coverage provided and the age and class of risk,

subject to prior approval of the Insurance

Commissioner,

g. the obligations of the Association with respect to

coverage under any policy or contract of the impaired

or insolvent insurer or under any reissued or

alternative policy or contract shall cease on the date

the coverage or policy or contract is replaced by

another similar policy or contract by the policy or

Oklahoma Statutes - Title 36. Insurance Page 605

contract owner, the insured, enrollee or the

Association,

h. when proceeding under paragraph 2 of subsection B of

this section with respect to a policy or contract

carrying guaranteed minimum interest rates, the

Association shall assure the payment or crediting of a

rate of interest consistent with subparagraph c of

paragraph 2 of subsection B of Section 2025 of this

title.

C. Nonpayment of premiums within thirty-one (31) days after the

date required under the terms of any guaranteed, assumed,

alternative or reissued policy or contract or substitute coverage

shall terminate the Association's obligations under the policy,

contract or coverage under the Oklahoma Life and Health Insurance

Guaranty Association Act with respect to the policy, contract or

coverage, except with respect to any claims incurred or any net cash

surrender value which may be due in accordance with the provisions

of the Oklahoma Life and Health Insurance Guaranty Association Act.

D. Premiums due for coverage after entry of an order of

liquidation of an insolvent insurer shall belong to and be payable

at the direction of the Association. If the liquidator of an

insolvent insurer requests, the Association shall provide a report

to the liquidator regarding the premium collected by the

Association. The Association shall be liable for unearned premiums

due to policy or contract owners arising after the entry of the

order.
of

liquidation of an insolvent insurer shall belong to and be payable

at the direction of the Association. If the liquidator of an

insolvent insurer requests, the Association shall provide a report

to the liquidator regarding the premium collected by the

Association. The Association shall be liable for unearned premiums

due to policy or contract owners arising after the entry of the

order.

E. The protection provided by the Oklahoma Life and Health

Insurance Guaranty Association Act shall not apply where any

guaranty protection is provided to residents of this state by the

laws of the domiciliary state or jurisdiction of the impaired or

insolvent insurer other than this state.

F. In carrying out its duties under subsection B of this

section the Association may, subject to approval by a court in this

state:

1. Impose permanent policy or contract liens in connection with

a guarantee, assumption or reinsurance agreement, if the Association

finds that the amounts which can be assessed under this act are less

than the amounts needed to assure full and prompt performance of the

duties of the Association under the Oklahoma Life and Health

Insurance Guaranty Association Act, or that the economic or

financial conditions as they affect member insurers are sufficiently

adverse to render the imposition of permanent policy or contract

liens, to be in the public interest; and

2. Impose temporary moratoriums or liens on payments of cash

values and policy loans, or any other right to withdraw funds held

in conjunction with policies or contracts, in addition to any

contractual provisions for deferral of cash or policy loan value.

Oklahoma Statutes - Title 36. Insurance Page 606

In addition, in the event of a temporary moratorium or moratorium

charge imposed by the receivership court on payment of cash values

or policy loans, or on any other right to withdraw funds held in

conjunction with policies or contracts, out of the assets of the

impaired or insolvent insurer, the Association may defer the payment

of cash values, policy loans or other rights by the Association for

the period of the moratorium or moratorium charge imposed by the

receivership court, except for claims covered by the Association to

be paid in accordance with a hardship procedure established by the

liquidator or rehabilitator and approved by the receivership court.

G. A deposit in this state, held pursuant to law or required by

the Commissioner for the benefit of creditors, including but not

limited to policy or contract owners, not turned over to the

domiciliary liquidator upon the entry of a final order of

liquidation or order approving a rehabilitation plan of a member

insurer domiciled in this state or in a reciprocal state, shall be

promptly paid by the Association. The Association shall be entitled

to retain a portion of any amount so paid to it equal to the

percentage determined by dividing the aggregate amount of policy or

contract owners claims related to that insolvency for which the

Association has provided statutory benefits by the aggregate amount

of all claims by the policy or contract owners in this state related

to that insolvency and shall remit to the domiciliary receiver the

amount so paid to the Association less the amount retained pursuant

to this subsection. Any amount so paid to the Association and

retained by it shall be treated as a distribution of estate assets

pursuant to applicable state receivership laws dealing with early

access disbursements.

H. If the Association fails to act within a reasonable period

of time with respect to an insolvent insurer, as provided in

subsection B of this section, the Commissioner shall have the powers

and duties of the Association under the Oklahoma Life and Health

Insurance Guaranty Association Act with respect to the insolvent

insurer.

I. The Association may render assistance and advice to the
ts.

H. If the Association fails to act within a reasonable period

of time with respect to an insolvent insurer, as provided in

subsection B of this section, the Commissioner shall have the powers

and duties of the Association under the Oklahoma Life and Health

Insurance Guaranty Association Act with respect to the insolvent

insurer.

I. The Association may render assistance and advice to the

Commissioner, upon the request of the Commissioner, concerning

rehabilitation, payment of claims, continuance of coverage, or the

performance of other contractual obligations of an impaired or

insolvent insurer.

J. The Association shall have standing to appear or intervene

before a court or agency in this state which has jurisdiction over

an impaired or insolvent insurer concerning which the Association is

or may become obligated under the Oklahoma Life and Health Insurance

Guaranty Association Act or with jurisdiction over any person or

property against which the Association may have rights through

subrogation or otherwise. Standing shall extend to all matters

germane to the powers and duties of the Association including, but

Oklahoma Statutes - Title 36. Insurance Page 607

not limited to, proposals for reinsuring, reissuing, modifying or

guaranteeing the policies or contracts of the impaired or insolvent

insurer and the determination of the policies or contracts and

contractual obligations. The Association shall also have the right

to appear or intervene before a court or agency in another state

with jurisdiction over an impaired or insolvent insurer for which

the Association is or may become obligated or with jurisdiction over

any person or property against whom the Association may have rights

through subrogation or otherwise.

K. 1. Any person receiving benefits under the Oklahoma Life

and Health Insurance Guaranty Association Act shall be deemed to

have assigned the rights under, and any causes of action against any

person for losses arising under, resulting from or otherwise

relating to, the covered policy or contract to the Association to

the extent of the benefits received because of this act, whether the

benefits are payments of or on account of contractual obligations,

continuation of coverage or provision of substitute or alternative

policies, contracts or coverages. The Association may require an

assignment to it of the rights and cause of action by any enrollee,

payee, policy or contract owner, beneficiary, insured or annuitant

as a condition precedent to the receipt of any rights or benefits

conferred by this act upon the person.

2. The subrogation rights of the Association under this

subsection shall have the same priority against the assets of the

impaired or insolvent insurer as that possessed by the person

entitled to receive benefits under the Oklahoma Life and Health

Insurance Guaranty Association Act.

3. In addition to paragraphs 1 and 2 of this subsection, the

Association shall have all common law rights of subrogation and any

other equitable or legal remedy that would have been available to

the impaired or insolvent insurer or owner, beneficiary, enrollee or

payee of a policy or contract with respect to the policy or

contracts, including without limitation, in the case of a structured

settlement annuity, any rights of the owner, beneficiary or payee of

the annuity, to the extent of benefits received pursuant to the

Oklahoma Life and Health Insurance Guaranty Association Act, against

a person originally or by succession responsible for the losses

arising from the personal injury relating to the annuity or payment

therefor, excepting any person responsible solely by reason of

serving as an assignee in respect of a qualified assignment under

Internal Revenue Code Section 130.

4. If paragraphs 1 through 3 of this subsection are invalid or

ineffective with respect to any person or claim for any reason, the
sion responsible for the losses

arising from the personal injury relating to the annuity or payment

therefor, excepting any person responsible solely by reason of

serving as an assignee in respect of a qualified assignment under

Internal Revenue Code Section 130.

4. If paragraphs 1 through 3 of this subsection are invalid or

ineffective with respect to any person or claim for any reason, the

amount payable by the Association with respect to the related

covered obligations shall be reduced by the amount realized by any

other person with respect to the person or claim that is

Oklahoma Statutes - Title 36. Insurance Page 608

attributable to the policies or contracts, or portion thereof,

covered by the Association.

5. If the Association has provided benefits with respect to a

covered obligation and a person recovers amounts as to which the

Association has rights as described in paragraphs 1 through 4 of

this subsection, the person shall pay to the Association the portion

of the recovery attributable to the policies or contracts, or

portion thereof, covered by the Association.

L. In addition to the rights and powers specified in the

Oklahoma Life and Health Insurance Guaranty Association Act, the

Association may:

1. Enter into contracts as are necessary or proper to carry out

the provisions and purposes of the Oklahoma Life and Health

Insurance Guaranty Association Act;

2. Sue or be sued, including, but not limited to, taking any

legal actions necessary or proper to recover any unpaid assessments

under Section 2030 of this title and to settle claims or potential

claims against it;

3. Borrow money to effect the purposes of the Oklahoma Life and

Health Insurance Guaranty Association Act. Any notes or other

evidence of indebtedness of the Association not in default shall be

legal investments for domestic member insurers and may be carried as

admitted assets;

4. Employ or retain persons as are necessary or appropriate to

handle the financial transactions of the Association, and to perform

other functions as become necessary or proper under the Oklahoma

Life and Health Insurance Guaranty Association Act;

5. Take any legal action as may be necessary or appropriate to

avoid or recover payment of improper claims;

6. Exercise, for the purposes of the Oklahoma Life and Health

Insurance Guaranty Association Act and to the extent approved by the

Commissioner, the powers of a domestic life insurer, health insurer

or health maintenance organization, but in no case may the

Association issue policies or contracts other than those issued to

perform its obligations under the Oklahoma Life and Health Insurance

Guaranty Association Act;

7. Organize itself as a corporation or in other legal form

permitted by the laws of the state;

8. Request information from a person seeking coverage from the

Association in order to aid the Association in determining its

obligations under the Oklahoma Life and Health Insurance Guaranty

Association Act with respect to the person, and the person shall

promptly comply with the request;

9. Unless prohibited by law, in accordance with the terms and

conditions of the policy or contract, file for actuarially justified

rate or premium increases for any policy or contract for which it

Oklahoma Statutes - Title 36. Insurance Page 609

provides coverage under the Oklahoma Life and Health Insurance

Guaranty Association Act; and

10. Take other necessary or appropriate action to discharge its

duties and obligations under the Oklahoma Life and Health Insurance

Guaranty Association Act or to exercise its powers under the

Oklahoma Life and Health Insurance Guaranty Association Act.

M. The Association may join an organization of one or more

other state associations of similar purposes, to further the

purposes and administer the powers and duties of the Association.

N. 1. a. At any time within one hundred eighty (180) days of
Life and Health Insurance

Guaranty Association Act or to exercise its powers under the

Oklahoma Life and Health Insurance Guaranty Association Act.

M. The Association may join an organization of one or more

other state associations of similar purposes, to further the

purposes and administer the powers and duties of the Association.

N. 1. a. At any time within one hundred eighty (180) days of

the date of the order of liquidation, the Association

may elect to succeed to the rights and obligations of

the ceding member insurer that relate to policies,

contracts or annuities covered, in whole or in part,

by the Association, in each case under any one or more

reinsurance contracts entered into by the insolvent

insurer and its reinsurers and selected by the

Association. Any assumption shall be effective as of

the date of the order of liquidation. The election

shall be effected by the Association or the National

Organization of Life and Health Insurance Guaranty

Associations (NOLHGA) on its behalf sending written

notice, return receipt requested, to the affected

reinsurers.

b. To facilitate the earliest practicable decision about

whether to assume any of the contracts of reinsurance,

and in order to protect the financial position of the

estate, the receiver and each reinsurer of the ceding

member insurer shall make available upon request to

the Association or to NOLHGA on its behalf as soon as

possible after commencement of formal delinquency

proceedings, copies of in-force contracts of

reinsurance and all related files and records relevant

to the determination of whether the contracts should

be assumed, and notices of any defaults under the

reinsurance contacts or any known event or condition

which with the passage of time could become a default

under the reinsurance contracts.

c. The requirements provided in this subparagraph shall

apply to reinsurance contracts assumed by the

Association:

(1) the Association shall be responsible for all

unpaid premiums due under the reinsurance

contracts for periods both before and after the

date of the order of liquidation, and shall be

responsible for the performance of all other

obligations to be performed after the date of the

Oklahoma Statutes - Title 36. Insurance Page 610

order of liquidation, in each case which relate

to policies, contracts or annuities covered, in

whole or in part, by the Association. The

Association may charge policies, contracts or

annuities covered in part by the Association,

through reasonable allocation methods, the costs

for reinsurance in excess of the obligations of

the Association and shall provide notice and an

accounting of these charges to the liquidator,

(2) the Association shall be entitled to any amounts

payable by the reinsurer under the reinsurance

contracts with respect to losses or events that

occur in periods after the date of the order of

liquidation and that relate to policies,

contracts or annuities covered, in whole or in

part, by the Association, provided that, upon

receipt of any of these amounts, the Association

shall be obliged to pay to the beneficiary under

the policy, contract or annuity on account of

which the amounts were paid a portion of the

amount equal to the lesser of:

(a) the amount received by the Association, or
ion and that relate to policies,

contracts or annuities covered, in whole or in

part, by the Association, provided that, upon

receipt of any of these amounts, the Association

shall be obliged to pay to the beneficiary under

the policy, contract or annuity on account of

which the amounts were paid a portion of the

amount equal to the lesser of:

(a) the amount received by the Association, or

(b) the excess of the amount received by the

Association over the amount equal to the

benefits paid by the Association on account

of the policy, contract or annuity less the

retention of the insurer applicable to the

loss or event,

(3) within thirty (30) days following the election

date of the Association, the Association and each

reinsurer under contracts assumed by the

Association shall calculate the net balance due

to or from the Association under each reinsurance

contract as of the election date with respect to

policies, contracts or annuities covered, in

whole or in part, by the Association, which

calculation shall give full credit to all items

paid by either the member insurer or its receiver

or the reinsurer prior to the election date. The

reinsurer shall pay the receiver any amounts due

for losses or events prior to the date of the

order of liquidation, subject to any set-off for

premiums unpaid for periods prior to the date,

and the Association or reinsurer shall pay any

remaining balance due the other, in each case

within five (5) days of the completion of the

aforementioned calculation. Any disputes over

Oklahoma Statutes - Title 36. Insurance Page 611

the amounts due to either the Association or the

reinsurer shall be resolved by arbitration

pursuant to the terms of the affected reinsurance

contracts or, if the contract contains no

arbitration clause, as otherwise provided by law.

If the receiver has received any amounts due the

Association pursuant to division (2) of this

subparagraph, the receiver shall remit the same

to the Association as promptly as practicable,

and

(4) if the Association or receiver, on the behalf of

the Association, within sixty (60) days of the

election date, pays the unpaid premiums due for

periods both before and after the election date

that relate to policies, contracts or annuities

covered, in whole or in part, by the Association,

the reinsurer shall not be entitled to terminate

the reinsurance contracts for failure to pay the

premium insofar as the reinsurance contracts

relate to policies, contracts or annuities

covered, in whole or in part, by the Association,

and shall not be entitled to set off any unpaid

amounts due under other contracts, or unpaid

amounts due from parties other than the

Association, against amounts due the Association.

2. During the period from the date of the order of liquidation

until the election date, or if the election date does not occur,

until one hundred eighty (180) days after the date of the order of

liquidation:

a. (1) neither the Association nor the reinsurer shall

have any rights or obligations under reinsurance

contracts that the Association has the right to

assume under paragraph 1 of this subsection,

whether for periods prior to or after the date of

the order of liquidation, and
f the election date does not occur,

until one hundred eighty (180) days after the date of the order of

liquidation:

a. (1) neither the Association nor the reinsurer shall

have any rights or obligations under reinsurance

contracts that the Association has the right to

assume under paragraph 1 of this subsection,

whether for periods prior to or after the date of

the order of liquidation, and

(2) the reinsurer, the receiver and the Association

shall, to the extent practicable, provide each

other data and records reasonably requested.

b. Provided that once the Association has elected to

assume a reinsurance contract, the rights and

obligations of the parties shall be governed by

paragraph 1 of this subsection.

3. If the Association does not elect to assume a reinsurance

contract by the election date pursuant to paragraph 1 of this

subsection, the Association shall have no rights or obligations, in

each case for periods both before and after the date of the order of

liquidation, with respect to the reinsurance contract.

Oklahoma Statutes - Title 36. Insurance Page 612

4. When policies, contracts or annuities, or covered

obligations with respect thereto, are transferred to an assuming

insurer, reinsurance on the policies, contracts or annuities may

also be transferred by the Association, in the case of contracts

assumed under paragraph 1 of this subsection, subject to the

following:

a. unless the reinsurer and the assuming insurer agree

otherwise, the reinsurance contract transferred shall

not cover any new policies, contracts of insurance or

annuities in addition to those transferred,

b. the obligations described in paragraph 1 of this

subsection shall no longer apply with respect to

matters arising after the effective date of the

transfer, and

c. notice shall be given in writing, return receipt

requested, by the transferring party to the affected

reinsurer not less than thirty (30) days prior to the

effective date of the transfer.

5. The provisions of this subsection shall govern any affected

reinsurance contract that provides for or requires any payment of

reinsurance proceeds, on account of losses or events that occur in

periods after the date of the order of liquidation, to the receiver

of the insolvent insurer or any other person. The receiver shall

remain entitled to any amounts payable by the reinsurer under the

reinsurance contracts with respect to losses or events that occur in

periods prior to the date of the order of liquidation, subject to

applicable setoff provisions.

6. Except as otherwise provided in this section, nothing in

this subsection shall alter or modify the terms and conditions of

any reinsurance contract. Nothing in this section shall abrogate or

limit any rights of any reinsurer to claim that it is entitled to

rescind a reinsurance contract. Nothing in this section shall give

a policyholder, contract owner, enrollee, certificate holder or

beneficiary an independent cause of action against a reinsurer that

is not otherwise set forth in the reinsurance contract. Nothing in

this section shall limit or affect the rights of the Association as

a creditor of the estate against the assets of the state. Nothing

in this section shall apply to reinsurance agreements covering

property or casualty risks.

O. The Board of Directors of the Association shall have

discretion and may exercise reasonable business judgment to

determine the means by which the Association is to provide the

benefits of the Oklahoma Life and Health Insurance Guaranty

Association Act in an economical and efficient manner.

P. Where the Association has arranged or offered to provide the

benefits of the Oklahoma Life and Health Insurance Guaranty

Association Act to a covered person under a plan or arrangement that

Oklahoma Statutes - Title 36. Insurance Page 613

fulfills the obligations of the Association under the Oklahoma Life
and Health Insurance Guaranty

Association Act in an economical and efficient manner.

P. Where the Association has arranged or offered to provide the

benefits of the Oklahoma Life and Health Insurance Guaranty

Association Act to a covered person under a plan or arrangement that

Oklahoma Statutes - Title 36. Insurance Page 613

fulfills the obligations of the Association under the Oklahoma Life

and Health Insurance Guaranty Association Act, the person shall not

be entitled to benefits from the Association in addition to or other

than those provided under the plan or arrangement.

Q. Venue in a suit against the Association arising under the

Oklahoma Life and Health Insurance Guaranty Association Act shall be

in Oklahoma County. The Association shall not be required to give

an appeal bond in an appeal that relates to a cause of action

arising under the Oklahoma Life and Health Insurance Guaranty

Association Act.

R. In carrying out its duties in connection with guaranteeing,

assuming or reinsuring policies or contracts under subsection A or B

of this section, the Association may, subject to approval of the

receivership court, issue substitute coverage for a policy or

contract that provides an interest rate, crediting rate or similar

factor determined by use of an index or other external reference

stated in the policy or contract employed in calculating returns or

changes in value by issuing an alternative policy or contract in

accordance with the following provisions:

1. In lieu of the index or other external reference provided

for in the original policy or contract, the alternative policy or

contract provides for:

a. a fixed interest rate,

b. payment of dividends with minimum guarantees, or

c. a different method for calculating interest or changes

in value;

2. There is no requirement for evidence of insurability,

waiting period or other exclusion that would not have applied under

the replaced policy or contract; and

3. The alternative policy or contract is substantially similar

to the replaced policy or contract in all other material terms.