KRS 304.39-290: Kentucky Insurance Arbitration Association -- Creation -- Membership

-- Powers -- Duties.

(1) There is created a nonprofit unincorporated legal entity to be known as the

Kentucky Insurance Arbitration Association to provide a mechanism for the

reimbursement, among reparation obligors of losses paid as basic or added

reparation benefits, based solely on the law of torts without regard to subsections

(1), (2), and (3) of KRS 304.39-060.

(2) All basic reparation obligors shall be and remain members of the association as a

condition of their authority to transact business in this Commonwealth.

(3) The association shall perform its functions under a plan of operation established and

approved under subsection (5) and shall exercise its powers through a boa rd of

directors established under subsection (4) hereof.

(4) The board of directors of the association shall consist of not less than five (5) nor

more than ten (10) persons serving terms as established in the plan of operation.

They shall be selected by m ember obligors subject to the approval of the

commissioner. If no members have been selected and approved prior to July 1,

1974, the commissioner shall appoint the initial members of the board. In approving

selections to the board, the commissioner shall c onsider, among other things,

whether all member obligors are fairly represented.

Each member of the board shall designate qualified experienced claimspersons from

the member's company, who upon approval by the commissioner, may serve as his

or her alternates for the purpose of claims arbitration.

(5) The association shall submit to the commissioner a plan of operation and any

amendments thereto necessary, or suitable to assure the fair, reasonable, and

equitable administration of the association. The plan shall become effective upon

approval in writing by the commissioner:

(a) All reparation obligors shall comply with the provisions of the plan of

operation;

(b) The plan of operation shall:

1. Establish procedures whereby all the powers and duties of the

association will be performed;

2. Establish minimum requirements for the initial submission of a case for

reimbursement or arbitration;

3. Establish minimum requirements beneath which reimbursements shall

not be made in order that there be fair allocation of significant losses and

the elimination of unnecessary costs in the reimbursement mechanism;

4. Encourage voluntary reimbursement procedures between reparation

obligors so that resort to arbitration shall be as infrequent as possible;

5. Recognize that fair allocation of loss between commercial and

noncommercial motor vehicles may require different minimum

requirements than when the loss is between two (2) or more

noncommercial vehicles;

6. Establish regular places and times for meetings;

7. Establish procedures for records to be maintained on all cases presented

for arbitration and dispositions thereof;

8. Establish procedures for compensation to reparation obligors for travel

related expense and the fair value of the time devoted by their employees

as a director or alternate in performance of duties for the association;

9. Establish procedures for adequately and equitably financing the cost of

the association among members; and

10. Contain additional provisions necessary or proper for exec ution of the

powers and duties of the association.

(6) The association shall be subject to examination and regulation by the commissioner:

(a) The board of directors shall submit to the commissioner, not later than March

30 of each year, a report on its activities for the preceding calendar year;

(b) The board of directors shall promptly notify the commissioner whenever it

appears that any member insurer has failed or refused to comply with an

arbitration decision or has shown a protracted tendency to decline a significant

number of meritorious claims presented to it prior to initiation of arbitration

proceedings.

(7) The association shall be exempt from payment of all fees, licenses, and taxes levied

by this Commonwealth or any of its subdivisions except ta xes on real or personal

property.

(8) There shall be no liability on the part of and no cause of action of any nature shall

arise against any member insurer, the association or its agents or employees, the

board of directors, or the commissioner or his or her representative for any action

taken by them in the performance of their powers and duties under this section.