§ 27-5-22 - Application of special reserve fund to protection of policyholders.
SECTION 27-5-22
§ 27-5-22 Application of special reservefund to protection of policyholders. – Whenever the claims upon a fire insurance company shall exceed the amount ofits capital stock and of the guaranty surplus fund provided for by thischapter, the company shall notify the insurance commissioner of the fact, whoshall then make or cause to be made an examination of the company, and shallissue his or her certificate of the result, showing the amounts of capital, ofguaranty surplus fund, of special reserve fund, of reinsurance liability, andof other assets. Upon the issuing of that certificate in duplicate, one copy tobe given to the company and one to be recorded in the office of the insurancecommissioner, the special reserve fund shall be immediately held to protect allpolicyholders of the company other than those that are claimants upon it at thedate of the certificate, and the special reserve fund together with otherassets, certified by the insurance commissioner as equal in value to the amountof the unearned premiums of the company, to be ascertained as provided in thischapter, shall constitute the capital and assets of the company for theprotection of policyholders other than the claimants and for the furtherconduct of its business, and any official certificate of the insurancecommissioner shall be binding and conclusive upon all parties interested in thecompany, whether as stockholders, creditors, or policyholders. Upon the paymentto the claimants, who are claimants at the date of the certificate, of the fullsum of the capital of the company and of its guaranty surplus fund and of itsassets at that date, excepting only the special reserve fund and an amount ofits assets equal to the liability of the company for unearned premiums, ascertified in this manner by the insurance commissioner, the company shall beforever discharged from any and all further liability to the claimants and toeach of them, and the insurance commissioner shall, after issuing his or hercertificate, upon the demand of the company, transfer to it all securities thathave been deposited with the commissioner by the company as the special reservefund, and if the amount of the special reserve fund is less than fifty percent(50%) of the full amount of the capital of the company, a requisition shall beissued by the insurance commissioner upon the stockholders to make up thecapital to that proportion of its full amount; provided, that any capitalimpaired in this manner shall be made up at least to the sum of two hundredthousand dollars ($200,000), and in case the company, after the requisition,shall fail to make up its capital at least to the sum of two hundred thousanddollars ($200,000), the special reserve fund shall still be held as securityand liable for any and all losses occurring upon policies of the company.