§ 27-34.3-14 - Miscellaneous provisions.
SECTION 27-34.3-14
§ 27-34.3-14 Miscellaneous provisions.– (a) This chapter shall not be construed to reduce the liability for unpaidassessments of the insureds of an impaired or insolvent insurer operating undera plan with assessment liability.
(b) Records shall be kept of all meetings of the board ofdirectors to discuss the activities of the association in carrying out itspowers and duties under § 27-34.3-8. The records of the association withrespect to an impaired or insolvent insurer shall not be disclosed prior to thetermination of a liquidation, rehabilitation or conservation proceedinginvolving the impaired or insolvent insurer, upon the termination of theimpairment or insolvency of the insurer, or upon the order of a court ofcompetent jurisdiction. Nothing in this subsection shall limit the duty of theassociation to render a report of its activities under § 27-34.3-15.
(c) For the purpose of carrying out its obligations underthis chapter, the association shall be deemed to be a creditor of the impairedor insolvent insurer to the extent of assets attributable to covered policiesreduced by any amounts to which the association is entitled as subrogeepursuant to § 27-34.3-8(k). Assets of the impaired or insolvent insurerattributable to covered policies shall be used to continue all covered policiesand pay all contractual obligations of the impaired or insolvent insurer asrequired by this chapter. Assets attributable to covered policies, as used inthis subsection, are that proportion of the assets which the reserves thatshould have been established for covered policies bear to the reserves thatshould have been established for all policies of insurance written by theimpaired or insolvent insurer.
(d) As a creditor of the impaired or insolvent insurer asestablished in subsection (c) of this section and consistent with §27-14.3-38, the association and other similar associations shall be entitled toreceive a disbursement of assets out of the marshalled assets, from time totime as the assets become available to reimburse it, as a credit againstcontractual obligations under this chapter. If the liquidator has not, withinone hundred twenty (120) days of a final determination of insolvency of aninsurer by the receivership court, made an application to the court for theapproval of a proposal to disperse assets out of marshalled assets to guarantyassociations having obligations because of the insolvency, then the associationshall be entitled to make application to the receivership court for approval ofits own proposal to disburse these assets.
(e) Prior to the termination of any liquidation,rehabilitation or conservation proceeding, the court may take intoconsideration the contributions of the respective parties, including theassociation, the shareholders, and policy owners of the insolvent insurer, andany other party with a bona fide interest, in making an equitable distributionof the ownership rights of the insolvent insurer. In that determination,consideration shall be given to the welfare of the policy owners of thecontinuing or successor insurer.
(2) No distribution to stockholders, if any, of an impairedor insolvent insurer shall be made until and unless the total amount of validclaims of the association with interest on the claims for funds expended incarrying out its powers and duties under § 27-34.3-8 with respect to theinsurer have been fully recovered by the association.
(f) If an order for liquidation or rehabilitation of aninsurer domiciled in this state has been entered, the receiver appointed underthe order shall have a right to recover on behalf of the insurer, from anyaffiliate that controlled it, the amount of distributions, other than stockdividends paid by the insurer on its capital stock, made at any time during thefive (5) years preceding the petition for liquidation or rehabilitation subjectto the limitations of subdivisions (2) – (4) of this subsection.
(2) No distribution shall be recoverable if the insurer showsthat when paid the distribution was lawful and reasonable, and that the insurerdid not know and could not reasonably have known that the distribution mightadversely affect the ability of the insurer to fulfill its contractualobligations.
(3) Any person who was an affiliate that controlled theinsurer at the time the distributions were paid shall be liable up to theamount of distributions received. Any person who was an affiliate whocontrolled the insurer at the time the distributions were declared, shall beliable up to the amount of distributions which would have been received if theyhad been paid immediately. If two (2) or more persons are liable with respectto the same distributions, they shall be jointly and severally liable.
(4) The maximum amount recoverable under this subsectionshall be the amount needed in excess of all other available assets of theinsolvent insurer to pay the contractual obligations of the insolvent insurer.
(5) If any person liable under subdivision (3) of thissubsection is insolvent, all its affiliates that controlled it at the time thedistribution was paid, shall be jointly and severally liable for any resultingdeficiency in the amount recovered from the insolvent affiliate.