KRS 304.35-030: Requirements of plan and authority of association.

(1) The "FAIR" plan and articles of association shall make provision for a reinsurance

association having authority on behalf of its members as their agent to cause to be

issued property and casualty insurance policies, to reinsure in whole or in part any

such policies, and to cede any such reinsurance. The plan and articles of association

shall provide, among other things, for the lines of business to be written, policy

forms to be used, perils to be covered, geographical area of coverage, compensation

and commissions, assessments of members (which assessments annually shall not

exceed one percent (1%) of any such member's net direct premium written on a

voluntary basis in this state during the preceding year), participation in the writings,

expenses, income, and losses in the proportion each member's property and casualty

premiums written bear to the aggregate property and casualty premiums voluntarily

written by all members, the administration of the plan and association, and any

other matter necessary or conv enient for the purpose of assuring fair access to

insurance requirements.

(2) If the commissioner, in the fulfillment of the duties imposed on him or her by KRS

304.13-041, determines that a reasonable degree of competition does not exist in the

market for any lines of insurance, within the definitions of KRS 304.5 -050

(property insurance) and KRS 304.5-070 (casualty insurance), or either of them, and

issues an order to that effect, the commissioner shall order the governing committee

to promptly amend the plan to include such line or lines of business unless, in the

commissioner's opinion, an effective residual market mechanism as defined in KRS

304.13-011(8) is already then functioning to provide basic insurance requirements

to worthy applicants for reasonable amounts of coverage under such line or lines of

insurance with insurers licensed to do business in this state. For accounting and

rate-making purposes, the commissioner may require the plan to provide for the

establishment and maintenance of separate accounts for any line included in the

plan pursuant to this section.