§ 2697.8. Payment Plan Following Losses that Exceed the Authority's Available Assets.

(a) Upon the occurrence of any earthquake event in the State that is likely to give rise to significant covered losses, the staff of the Authority shall, within seven (7) calendar days of the date of the earthquake event, cause to be created a scientific model of anticipated, covered losses from that event. The output of the model for that event, as interpreted by Authority staff and retained actuary, shall be presented forthwith to the Board, which shall within 72 (seventy-two) hours of receipt of that output convene as a group in a formal meeting, either in person or by teleconference, to consider the information presented. At the outset of the Board meeting contemplated by this Section, the Board shall hold a vote to make a finding that the meeting about to occur as a result of an “emergency situation,” within the meaning of Government Code Section 11125.5, subdivisions (a) and (b). In the absence of a finding of an “emergency situation” for that meeting, the Board shall adjourn forthwith and reconvene after providing public notice of that reconvened meeting in accordance with Government Code Section 11125, subdivision (a).

(b) In the event the Board in its sole discretion determines that anticipated covered losses following an earthquake may exhaust the Authority's capital and that no additional source of funds such as available insurer assessments, proceeds of reinsurance contracts, proceeds of capital markets contracts, and all other funds available to or due the Authority, will be available to the Authority to pay policyholder claims, the Board shall draw up and present to the Insurance Commissioner a plan to pay covered earthquake claims against the Authority on a pro rata or installment basis.

(c) The payment plan shall ensure the equitable distribution of available CEA assets to all policyholders who have covered earthquake claims against the Authority. Upon approval of the plan by the Commissioner, the Board shall implement the plan. The plan shall be updated and resubmitted to the Commissioner for his or her approval at the end of every succeeding 30-day period until all outstanding CEA claims have been closed or otherwise discharged.

(d) The plan shall ensure the maintenance of sufficient capital to ensure the continued operation of the Authority for the purpose of paying claims; discharging Authority debts, including bonded indebtedness; and paying or providing for other obligations of the Authority.

(e) The Authority's Plan of Operation shall be consistent with the provisions of this Section.

HISTORY

1. New section filed 11-18-96 as an emergency; operative 11-18-96 (Register 96, No. 47). A Certificate of Compliance must be transmitted to OAL by 3-18-97 or emergency language will be repealed by operation of law on the following day.

2. Repealed by operation of Government Code section 11346.1(g) (Register 97, No. 14).

3. New section filed 4-1-97 as an emergency; operative 4-1-97 (Register 97, No. 14). A Certificate of Compliance must be transmitted to OAL by 7-30-97 or emergency language will be repealed by operation of law on the following day.

4. Repealed by operation of Government Code section 11346.1(g) (Register 97, No. 32).

5. New section filed 8-4-97 as an emergency; operative 8-4-97 (Register 97, No. 32). A Certificate of Compliance must be transmitted to OAL by 12-2-97 or emergency language will be repealed by operation of law on the following day.

6. Certificate of Compliance as to 8-4-97 order transmitted to OAL 11-26-97 and filed 1-13-98 (Register 98, No. 3).

Note

Note: Authority cited: Section 10089.11(b) and 10089.35(a), Insurance Code. Reference: Sections 10089.11 and 12921, Insurance Code.