The bill introduces clarifications and protections regarding the Fair Access to Insurance Requirements (FAIR) Plan Association, which is designed to provide access to basic property insurance in areas where coverage is otherwise difficult to obtain. Here's a summary of the key points:
Clarifications About the FAIR Plan Association:
The association is explicitly stated to not be:
A department, unit, agency, political subdivision, or instrumentality of the state.
An insurance company or a person engaged in the business of insurance.
This distinction ensures that the FAIR Plan Association operates as a separate entity from state agencies and insurance businesses, likely affecting its regulatory treatment and scope of authority.
Immunity Protections:
The bill grants immunity to several entities and individuals involved in the FAIR Plan:
Member insurers.
The association, along with its agents or employees.
The board of directors of the association.
The commissioner of the Division of Insurance or the commissioner’s representatives.
This immunity applies to actions taken in good faith while performing duties related to the association’s operations.
Limitation on Legal Recourse for Policyholders:
The bill limits the causes of action available to policyholders who have a policy under the FAIR Plan:
Breach of contract.
Breach of the common law covenant of good faith and fair dealing.
This means that policyholders seeking to sue the association can only do so on these two grounds, potentially reducing legal liability for the association and its related entities.
This bill aims to define the FAIR Plan Association’s role more clearly, limit its exposure to legal action, and shield individuals involved in its operations from liability when acting within the scope of their duties. The changes streamline legal and operational boundaries while providing certain protections for the association and its personnel.
Summary
The bill clarifies that the fair access to insurance requirements plan
association (association) is not:
•
A department, unit, agency, political subdivision, or instrumentality of the state; or
•
An insurance company or a person engaged in the business of insurance. The bill also grants a member insurer, the association and its
agents or employees, the board of directors of the association, and the commissioner of the division of insurance or the commissioner's representatives immunity for any action taken by them in the performance of their powers and duties. The bill specifies that the only causes of action and remedies available to a policyholder of a fair access to insurance requirements plan policy against the association is for breach of contract or breach of the common law covenant of good faith and fair dealing.
