EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. Green numbers along left margin indicate location on the printed bill (e.g., 5-15 indicates page 5, line 15).

1-1 Section 1. NRS 687A.033 is hereby amended to read as follows:

1-2 687A.033 1. "Covered claim" means an unpaid claim or judgment,

1-3 including a claim for unearned premiums, which arises out of and is within

1-4 the coverage of an insurance policy to which this chapter applies issued by

1-5 an insurer which becomes an insolvent insurer , if one of the following

1-6 conditions exists:

1-7 (a) The claimant or insured, if a natural person, is a resident of this state

1-8 at the time of the insured event.

1-9 (b) The claimant or insured, if other than a natural person, maintains its

1-10 principal place of business in this state at the time of the insured event.

1-11 (c) The property from which the first party property damage claim arises

1-12 is permanently located in this state.

1-13 (d) The claim is not a covered claim pursuant to the laws of any other

1-14 state and the premium tax imposed on the insurance policy is payable in

1-15 this state pursuant to NRS 680B.027.

2-1 2. The term does not include:

2-2 (a) [Any] An amount that is directly or indirectly due [any] a reinsurer,

2-3 insurer, insurance pool or underwriting association, as recovered by

2-4 subrogation [recoveries] , indemnity or contribution, or otherwise.

2-5 (b) That part of a loss which would not be payable because of a

2-6 provision for a deductible or a self-insured retention specified in the

2-7 policy.

2-8 (c) [Any] Except as otherwise provided in this paragraph, any claim

2-9 filed with the association after [the] :

2-10 (1) Eighteen months after the date of the order of liquidation; or

2-11 (2) The final date set by the court for the filing of claims against the

2-12 liquidator or receiver of the insolvent insurer [.] ,

2-13 whichever is earlier. The provisions of this paragraph do not apply to a

2-14 claim for workers’ compensation that is reopened pursuant to the

2-15 provisions of NRS 616C.390.

2-16 (d) [Any] A claim filed with the association for a loss that is incurred

2-17 but is not reported to the association before the expiration of the period

2-18 specified in subparagraph (1) or (2) of paragraph (c).

2-19 (e) An obligation to make a supplementary payment for adjustment or

2-20 attorney’s fees and expenses, court costs or interest and bond premiums

2-21 incurred by the insolvent insurer before the appointment of a liquidator ,

2-22 unless the expenses would also be a valid claim against the insured.

2-23 (f) A first party or third party claim brought by or against an insured,

2-24 if the aggregate net worth of the insured and any affiliate of the insured,

2-25 as determined on a consolidated basis, is more than $25,000,000 on

2-26 December 31 of the year immediately preceding the date the insurer

2-27 becomes an insolvent insurer.

2-28 Sec. 2. NRS 687A.060 is hereby amended to read as follows:

2-29 687A.060 1. The association:

2-43 to pay a covered claim is limited to the payment of:

3-1 (1) The entire amount of the claim, if the claim is for workers’

3-2 compensation pursuant to the provisions of chapters 616A to 616D,

3-3 inclusive, or chapter 617 of NRS;

3-4 (2) More than $100 but not more than $300,000 for each policy, if

3-5 the claim is for the return of unearned premiums; or

3-6 (3) The limit specified in a policy or $300,000, whichever is less, for

3-7 each occurrence for any covered claim other than a covered claim

3-8 specified in subparagraph (1) or (2).

3-9 (b) Shall be deemed the insurer to the extent of its obligations on the

3-10 covered claims and to [such extent shall have all] that extent has any

3-11 rights, duties and obligations of the insolvent insurer as if the insurer had

3-12 not become insolvent. The rights include, without limitation, the right to

3-13 seek and obtain any recoverable salvage and to subrogate a covered

3-14 claim, to the extent that the association has paid its obligation under the

3-15 claim.

3-16 (c) Shall assess member insurers amounts necessary to pay the

3-17 obligations of the association pursuant to paragraph (a) after an insolvency,

3-18 the expenses of handling covered claims subsequent to an insolvency, the

3-19 cost of examinations pursuant to NRS 687A.110, and other expenses

3-20 authorized by this chapter. The assessment of each member insurer must be

3-21 in the proportion that the net direct written premiums of the member insurer

3-22 for the calendar year preceding the assessment bear to the net direct written

3-23 premiums of all member insurers for the same calendar year. Each member

3-24 insurer must be notified of the assessment not later than 30 days before it is

3-25 due. No member insurer may be assessed in any year an amount greater

3-26 than 2 percent of [that member insurer’s] the net direct written premiums of

3-27 that member insurer for the calendar year preceding the assessment. If the

3-28 maximum assessment, together with the other assets of the association, does

3-29 not provide in any 1 year an amount sufficient to make all necessary

3-30 payments, the money available may be prorated and the unpaid portion

3-31 must be paid as soon as money becomes available. The association may pay

3-32 claims in any order , including the order in which [they] the claims are

3-33 received or in groups or categories. The association may exempt or defer,

3-34 in whole or in part, the assessment of any member insurer if the assessment

3-35 would cause the [member insurer’s] financial statement of the member

3-36 insurer to reflect amounts of capital or surplus less than the minimum

3-37 amounts required for a certificate of authority by any jurisdiction in which

3-38 the member insurer is authorized to transact insurance. During the period of

3-39 deferment, no dividends may be paid to shareholders or policyholders.

3-40 Deferred assessments must be paid when payment will not reduce capital or

3-41 surplus below required minimums. Payments must be refunded to those

3-42 companies receiving larger assessments [by virtue] because of deferment,

3-43 or, in the discretion of [any such] the company, credited against future

4-1 assessments. Each member insurer must be allowed a premium tax credit

4-2 for any amounts paid [under] pursuant to the provisions of this chapter:

4-3 (1) For assessments made before January 1, 1993, at the rate of 10

4-4 percent per year for 10 successive years beginning March 1, 1996; or

4-5 (2) For assessments made on or after January 1, 1993, at the rate of

4-6 20 percent per year for 5 successive years beginning with the calendar year

4-7 following the calendar year in which [such] the assessments are paid.

4-8 (d) Shall investigate claims brought against the fund and adjust,

4-9 compromise, settle and pay covered claims to the extent of the

4-10 [association’s] obligation of the association and deny [all] any other

4-11 claims.

4-12 (e) Shall notify such persons as the commissioner directs pursuant to

4-13 paragraph (a) of subsection 2 of NRS 687A.080.

4-14 (f) Shall act on claims through its employees or through one or more

4-15 member insurers or other persons designated as servicing facilities.

4-16 Designation of a servicing facility is subject to the approval of the

4-17 commissioner, but the designation may be declined by a member insurer.

4-18 (g) Shall reimburse each servicing facility for obligations of the

4-19 association paid by the facility and for expenses incurred by the facility

4-20 while handling claims on behalf of the association, and pay the other

4-21 expenses of the association authorized by this chapter.

4-22 2. The association may:

4-23 (a) Appear in, defend and appeal any action on a claim brought against

4-24 the association.

4-25 (b) Employ or retain persons necessary to handle claims and perform

4-26 other duties of the association.

4-27 (c) Borrow money necessary to carry out the purposes of this chapter in

4-28 [accord] accordance with the plan of operation.

4-29 (d) Sue or be sued.

4-30 (e) Negotiate and become a party to contracts necessary to carry out the

4-31 purposes of this chapter.

4-32 (f) Perform other acts necessary or proper to effectuate the purposes of

4-33 this chapter.

4-34 (g) If, at the end of any calendar year, the board of directors finds that

4-35 the assets of the association exceed its liabilities as estimated by the board

4-36 of directors for the coming year, refund to the member insurers in

4-37 proportion to the contribution of each that amount by which the assets of

4-38 the association exceed the liabilities.

4-39 (h) Assess each member insurer equally [no] not more than $100 per

4-40 year for administrative expenses not related to the insolvency of any

4-41 [particular] insurer.

5-1 Sec. 3. NRS 696B.415 is hereby amended to read as follows:

5-2 696B.415 1. Upon the issuance of an order of liquidation with a

5-31 services performed.]

5-32 Sec. 4. NRS 696B.420 is hereby amended to read as follows:

5-33 696B.420 1. The order of distribution of claims from the [insurer’s]

5-43 subsection 2, the order of distribution and of priority must be as follows:

6-1 (a) Administration costs and expenses, including, but not limited to, the

6-2 following:

6-3 (1) The actual and necessary costs of preserving or recovering the

6-4 assets of the insurer;

6-5 (2) Compensation for [all] any services rendered in the liquidation;

6-6 (3) Any necessary filing fees;

6-7 (4) The fees and mileage payable to witnesses; and

6-8 (5) Reasonable attorney’s fees.

6-9 (b) Loss claims, including [all] any claims under policies for losses

6-10 incurred, including third party claims, [all] any claims against the insurer

6-11 for liability for bodily injury or for injury to or destruction of tangible

6-12 property which are not under policies, and [all] any claims of the Nevada

6-13 insurance guaranty association, the Nevada life and health insurance

6-14 guaranty association, and other similar statutory organizations in other

6-15 jurisdictions . [, except the first $200 of losses otherwise payable to any

6-16 claimant under this paragraph. All] Any claims under life insurance and

6-17 annuity policies, whether for death proceeds, annuity proceeds or

6-18 investment values, must be treated as loss claims. [Claims may not be

6-19 cumulated by assignment to avoid application of the $200 deductible

6-20 provision.] That portion of any loss for which indemnification is provided

6-21 by other benefits or advantages recovered or recoverable by the claimant

6-22 may not be included in this class, other than benefits or advantages

6-23 recovered or recoverable in discharge of familial obligations of support or

6-24 [by way] because of succession at death or as proceeds of life insurance, or

6-25 as gratuities. No payment made by an employer to his employee may be

6-26 treated as a gratuity.

6-27 (c) Unearned premiums and small loss claims, including claims under

6-28 nonassessable policies for unearned premiums or other premium refunds .

6-29 [and the first $200 of loss excepted by the deductible provision in

6-30 paragraph (b).]

6-31 (d) Claims of the Federal Government . [and]

6-32 (e) Claims of any state or local government, including, but not limited

6-33 to, a claim of [any governmental body] a state or local government for a

6-34 penalty or forfeiture.

6-35 [(e)] (f) Wage debts due employees for services performed, not to

6-36 exceed $1,000 to each employee, that have been earned within 1 year

6-37 before the filing of the petition for liquidation. Officers of the insurer are

6-38 not entitled to the benefit of this priority. The priority set forth in this

6-39 paragraph must be in lieu of any other similar priority authorized by law as

6-40 to wages or compensation of employees.

6-41 [(f)] (g) Residual classification, including [all] any other claims not

6-42 falling within other classes [under] pursuant to the provisions of this

6-43 section. Claims for a penalty or forfeiture must be allowed in this class only

7-1 to the extent of the pecuniary loss sustained from the act, transaction or

7-2 proceeding out of which the penalty or forfeiture arose, with reasonable and

7-3 actual costs occasioned thereby. The remainder of [such] the claims must

7-4 be postponed to the class of claims [under paragraph (i).

7-5 (g)] specified in paragraph (j).

7-6 (h) Judgment claims based solely on judgments. If a claimant files a

7-7 claim and bases [it both] the claim on the judgment and on the underlying

7-8 facts, the claim must be considered by the liquidator, who shall give the

7-9 judgment such weight as he deems appropriate. The claim as allowed must

7-10 receive the priority it would receive in the absence of the judgment. If the

7-11 judgment is larger than the allowance on the underlying claim, the

7-12 remaining portion of the judgment must be treated as if it were a claim

7-13 based solely on a judgment.

7-14 [(h)] (i) Interest on claims already paid, which must be calculated at the

7-15 legal rate compounded annually on [all] any claims in the classes [under]

7-16 specified in paragraphs (a) to [(g),] (h), inclusive, from the date of the

7-17 petition for liquidation or the date on which the claim becomes due,

7-18 whichever is later, until the date on which the dividend is declared. The

7-19 liquidator, with the approval of the court, may [make] :

7-20 (1) Make reasonable classifications of claims for purposes of

7-21 computing interest [, may make] ;

7-22 (2) Make approximate computations ; and [may ignore]

7-23 (3) Ignore certain classifications and periods as de minimis.

7-24 [(i)] (j) Miscellaneous subordinated claims, [including the remaining

7-25 claims or portions of claims not already paid,] with interest as provided in

7-26 paragraph [(h):

7-27 (1) The first $50 of each claim in the classes under paragraphs (b) to

7-28 (g), inclusive, subordinated under this section;

7-29 (2)] (i):

7-30 (1) Claims subordinated by NRS 696B.430;

7-31 [(3)] (2) Claims filed late;

7-32 [(4)] (3) Portions of claims subordinated [under paragraph (f);

7-33 (5)] pursuant to the provisions of paragraph (g);

7-34 (4) Claims or portions of claims the payment of which is provided by

7-35 other benefits or advantages recovered or recoverable by the claimant; and

7-36 [(6)] (5) Claims not otherwise provided for in this section.

7-37 [(j)] (k) Preferred ownership claims, including surplus or contribution

7-38 notes, or similar obligations, and premium refunds on assessable policies.

7-39 Interest at the legal rate must be added to each claim, as provided in

7-40 paragraphs [(h) and (i).

7-41 (k)] (i) and (j).

7-42 (l) Proprietary claims of shareholders or other owners.

8-1 2. If there are no existing or potential claims of the government against

8-2 the estate, claims for wages have priority over [all] any claims set forth in

8-3 paragraphs (c) to [(j),] (k), inclusive, of subsection 1. The provisions of this

8-4 subsection must not be construed to require the [deduction of $50 or the]

8-5 accumulation of interest for claims as described in paragraph [(h)] (i) of

8-6 subsection 1.

8-7 Sec. 5. NRS 696B.430 is hereby amended to read as follows:

8-8 696B.430 If an ancillary receiver in another state or foreign country,