§431:21-106 Plan of operation. (a) The association shall submit to the commissioner a plan of operation and any amendments to the plan necessary or suitable to ensure the fair, reasonable, and equitable administration of the association. The plan of operation and any amendment shall become effective upon approval in writing by the commissioner. If the association fails to submit a suitable plan of operation or if at any time the association fails to submit suitable amendments to the plan, the commissioner shall adopt the rules necessary to carry out this article. The rules shall continue in force until modified by the commissioner or superseded by a plan submitted by the association and approved in writing by the commissioner.

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

(1) Shall establish procedures for performance of all the powers and duties of the association under section 431:21-105;

(2) Shall establish maximum limits of liability to be placed through the association;

(3) Shall establish reasonable underwriting standards for determining insurability of a risk that are comparable to the standards used to determine insurability of a risk located outside the area designated by the commissioner as eligible for association coverage;

(4) Shall establish a schedule of deductibles, if appropriate;

(5) Shall establish a maximum period of time during which a high-rise condominium may be eligible to be insured by the association, which shall not exceed sixty months;

(6) Shall establish the commission to be paid to licensed producers;

(7) Shall establish the rates to be charged for the insurance coverages, so that the total premium income from all association policies, when combined with the investment income, shall annually fund the administration of the association. The administration of the association shall include the expenses incurred in processing applications, conducting inspections, issuing and servicing policies, paying commissions, and paying claims, but shall not include assessments approved by the commissioner;

(8) Shall establish the manner and scope of the inspection and the form of the inspection report. The inspection guidelines may include setting minimum conditions the property must meet before an inspection is required;

(9) Shall establish procedures whereby selections for the board of directors will be submitted to the commissioner for the commissioner's information;

(10) Shall establish procedures for records to be kept of all financial transactions of the association, its producers, and its board of directors;

(11) Shall establish procedures by which applications will be received and serviced by the association;

(12) Shall establish guidelines for the investigation and payment of claims;

(13) Shall establish procedures whereby the association may assume and cede reinsurance on risks written through the association;

(14) Shall include the following:

(A) Coverage forms, endorsements, limits, and deductibles for the covered condominium; provided that the association may categorize these forms, endorsements, limits, and deductibles by the type of peril being covered;

(B) Rate tiers, including potential high deductible options and surcharges for condominiums that remain in the plan of operation;

(D) Potential annual premium rate increases; and

(E) Establishment of adequate rates to avoid assessment of the voluntary market;

(15) Shall require, prior to issuance or renewal of coverage, the applicant for condominium property insurance coverage or renewal to:

(A) Provide the following to the association:

(i) The condominium association's declarations, bylaws, or other documents that describe the condominium association's process for paying claims, including the portion of the claim to be paid by the condominium association and the portion to be paid by each unit owner; and

(ii) The condominium association's declarations, bylaws, or other documents that describe the condominium association's process for handling losses both pursuant to the applicable master policy and by the applicable condominium association;

(B) Cause to be completed an inspection of the applicable condominium; provided that the inspection shall be consistent with any inspection and reporting standards established by the board of directors of the association and incorporated into the plan of operation pursuant to paragraph (8); and

(C) Satisfy any relevant requirements established by the board of directors of the association and incorporated into the plan of operation;

(16) May prohibit coverage under this article for any high-rise condominium for which the association or its servicing entities or any agents thereof have identified maintenance issues that materially affect the insurability of the high-rise condominium for the type of coverage being sought; and

(17) Shall adopt procedures, guidelines, installment amounts, and a timetable for the repayment of any general fund moneys that are loaned to sufficiently capitalize the reserve trust fund established pursuant to section 431:21-105(b)(9) and deposited into the separate account within the reserve trust fund; provided that the repayment shall not commence until the reserve trust fund is sufficiently capitalized as determined by the board of directors. [L 1991, c 284, pt of §2; am L 1992, c 143, §5; am L 2002, c 155, §97; am L 2003, c 212, §119; am L 2025, c 296, §4]