Sec. 38a-409. Use of reserve on liquidation, dissolution or insolvency.
Sec. 38a-409. Use of reserve on liquidation, dissolution or insolvency. (a) If a
domestic title insurer becomes insolvent, is in the process of liquidation or dissolution
or is in the possession of the commissioner:
(1) Such amount of the assets of such title insurance company equal to the reserve
then remaining may be used by or with the written approval of the commissioner to pay
for reinsurance of the liability of such title insurer upon all outstanding title insurance
policies or reinsurance agreements to the extent for which claims for losses by the holders
thereof are not then pending. The balance of such assets, if any, equal to the reserve
may then be transferred to the general assets of the title insurer.
(2) The assets net of the reserve shall be available to pay claims for losses sustained
by holders of title insurance policies then pending or arising up to the time reinsurance
is effected. If claims for losses exceed such other assets of the title insurer such claims,
when established, shall be paid pro rata out of the surplus assets attributable to the
reserve, to the extent of such surplus, if any.
(b) If reinsurance is not obtained, assets equal to the reserve and assets constituting
minimum capital, or so much as remains thereof after outstanding claims have been
paid, shall constitute a trust fund to be held and invested by the commissioner for twenty
years, out of which claims of policyholders shall be paid as they arise. The balance, if
any, of the trust fund shall, at the expiration of twenty years, revert to the general assets
of the title insurer.
(P.A. 90-218, S. 10.)