Marvin Mandel, Governor                        1531

(c) Any such policy or contract issued by fraternal benefit
societies.

507.    Construction.

This Act shall be liberally construed to effect the purpose under
Section 505 which shall constitute an aid and guide to interpretation.

508.    Definitions.
As used in this Act:

(1)    "Account" means either of the three accounts created under
Section 509.

(2)    "Association" means the Maryland Life and Health Insur-
ance Guaranty Association created under Section 509.

(3)    "Contractual obligation" means any obligation under covered
policies.

(4) "Covered policy" means any policy or contract within the
scope of this Act under Section 506.

(5)    "Impaired insurer" means:

(a)    An insurer which, after the effective date of this Act,
becomes insolvent and is placed under a final order of liquidation,
rehabilitation, or conservation by a court of competent jurisdiction,
or

(b)    An insurer deemed by the Commissioner after the effective
date of this Act to be unable or potentially unable to fulfill its con-
tractual obligations.

(6)    "Member insurer" means any person authorized to transact
in this State any kind of insurance to which this Act applies under
Section 506.

(7)    "Premiums" means direct gross insurance premiums and
annuity considerations written on covered policies, less return pre-
miums and considerations thereon and dividends paid or credited to
policyholders on such direct business. "Premiums" do not include
premiums and considerations on contracts between insurers and
reinsurers. As used in Section 512,, "premiums" are those for the
calendar year preceding the determination of impairment.

(8)    "Resident" means any person who resides in this State at
the time the impairment is determined and to whom contractual
obligations are owed.

509.    Creation of the Association.

(1) There is created a non-profit legal entity to be known as the
Maryland Life and Health Insurance Guaranty Association. All
member insurers shall be and remain members of the Association as
a condition of their authority to transact insurance in this State.
The Association shall perform its functions under the plan of opera-
tion established and approved under Section 513 and shall exercise
its powers through a board of directors established under Section 510.
For purposes of administration and assessment, the Association shall
maintain three accounts: