3950                                                      VETOES

THE AFFAIRS OF THE ASSOCIATION WOULD BE ADMINISTERED BY A
LICENSED INSURER OR BY THE JOINT INSURANCE ASSOCIATION.

(2) ANY CONTRACT MADE UNDER THIS SUBSECTION MAY NOT
EXCEED 3 YEARS IN DURATION.

(3) NOTWITHSTANDING THE PROVISIONS OF ANY CONTRACT
MADE UNDER THIS SUBSECTION, THE CONTRACTUAL' ADMINISTRATION OF THE
AFFAIRS OF THE ASSOCIATION SHALL BE SUBJECT TO CONTINUING
DIRECTION BY THE BOARD OF GOVERNORS AS SET OUT IN THIS SUBTITLE
AND IN THE PROGRAM OF OPERATION.

(K) (1) THE PROGRAM OF OPERATION SHALL PROVIDE FOR A METHOD
OF RECOUPMENT WHEREBY MEMBER INSURERS MAY RECOVER LOSSES AND
EXPENSES INCURRED BY THE ASSOCIATION FOR WHICH THE ASSOCIATION
HAS ASSESSED THE MEMBER INSURERS.

(2) TO RECOUP LOSS AND EXPENSE ASSESSMENTS, THE
PROGRAM OF OPERATION SHALL PROVIDE FOR:

(I) THE CALCULATION OF THE SURCHARGE OR RATING
FACTORS THAT ARE TO BE ADDED TO DIRECT WRITTEN PREMIUMS FOR ALL
CASUALTY INSURANCE, INCLUDING PREMIUMS WRITTEN BY THE
ASSOCIATION, EXCEPT:

1. PROPERTY AND HOMEOWNER INSURANCE;

2. MEDICAL MALPRACTICE INSURANCE; AND

3. MOTOR VEHICLE INSURANCE; AND

4. WORKERS' COMPENSATION INSURANCE; AND

(II) THE ADJUSTMENT EACH YEAR OF THE SURCHARGE
OR RATING FACTORS TO REFLECT ANY PREVIOUS OVER OR UNDER

RECOUPMENT OF ASSESSMENT.

601. 602.

(A) THE ASSOCIATION SHALL BE ACTIVATED ISSUE POLICIES OF
INSURANCE ONLY IF, AFTER A HEARING, THE COMMISSIONER FINDS THAT
COMMERCIAL CASUALTY INSURANCE IS UNAVAILABLE FOR A PARTICULAR
SUBPOOL AND THAT:

(1)  A SUBSTANTIAL NUMBER OF COMMERCIAL ENTITIES
WITHIN ANY SUBPOOL ARE OR WITHIN 6 MONTHS WILL BE UNABLE TO
OBTAIN COMMERCIAL CASUALTY INSURANCE FROM AN INSURER AUTHORIZED
TO DO BUSINESS IN THIS STATE INCLUDING OR AN APPROVED SURPLUS

LINES INSURERS LINE INSURER;

(2)  THE LACK OF COMMERCIAL CASUALTY LIABILITY
INSURANCE SEVERELY HAMPERS THE OPERATION OF THE COMMERCIAL
ENTITIES IN THIS SUBPOOL;