1496                             Laws of Maryland                      [Ch. 703

CHAPTER 703
(House Bill 529)

AN ACT to add new Sections 504 to 519, inclusive, to Article 48A
of the Annotated Code of Maryland (1968 Replacement Volume
and 1970 Supplement), title "Insurance Code," to follow immedi-
ately after Section 503 thereof and to be under the new subtitle
"Maryland Insurance Guaranty Association"; and to repeal and
re-enact, with amendments, Section 61 of said Article 48A, sub-
title "Insurers; Authorization and General Requirements," creating
the Maryland Insurance Guaranty Association; empowering the
Association to fund the Maryland Insurance Guaranty Association
subsequent to an insolvency by assessing licensed insurers issuing
policies covered by this Act; requiring the Association to assist
the Insurance Commissioner in the detection and prevention of
insurer insolvencies; and amending an existing section of the
Insurance Code for the purposes of this bilk; PROVIDING FOR
THE ULTIMATE PHASE OUT OF THE MOTOR VEHICLE
SECURITY FUND; AND PROVIDING FOR MATTERS GEN-
ERALLY RELATING THERETO.

Section 1. Be it enacted by the General Assembly of Maryland,
That Sections 504 through 519, inclusive, be and they are hereby
added to Article 48A of the Annotated Code of Maryland (1968
Replacement Volume and 1970 Supplement), title "Insurance Code,"
to follow immediately after Section 503 thereof, to be under the
new subtitle "Maryland Insurance Guaranty Association," and to
read as follows:

504.    Purpose and Scope.

(a)    Purpose.

The purposes of this Act are to provide a mechanism for the
prompt payment of covered claims under certain insurance policies
and to avoid financial loss to claimants or policyholders because of
the insolvency of an insurer; to assist in the detection and prevention
of insurer insolvencies; and to provide for the assessment of the
cost of such payments and protection among insurers.

(b)    Scope.

This Act shall apply to all kinds of direct insurance, except life
insurance, health insurance, workmen's compensation insurance, an-
nuities, and those kinds of insurance MOTOR VEHICLE SECURITY
FUND covered under Section 482A of Article 48A. THE PRESENT
MOTOR VEHICLE SECURITY FUND AS A PRE-ASSESSMENT
FUND WILL BE PHASED OUT OF EXISTENCE AS ITS CUR-
RENT FUNDS ARE DEPLETED AND ITS FUNCTIONS SHALL
BE ASSUMED BY THE APPROPRIATE ACCOUNT.

505.    Definitions. As used in this Act:

(a)    "Account" means any one of the three accounts created by
Section 506.

(b)    "Association" means the Maryland Insurance Guaranty Asso-
ciation created under Section 506.