Article 74 - Rehabilitation, Liquidation, Conservation, and Dissolution of Insurers
§7401 - Application of article; definitions.
§ 7401. Application of article; definitions.(a) This article shall apply to all corporations, associations, societies, orders, firms, and individuals to which this chapter is applicable, or which are subject to examination or supervision by the superintendent under this chapter or under any other law of this state, or which are doing or attempting to do or representing that they are doing the business of insurance in this state, or which are in process of organization for the purpose of or intending to do such business therein, anything in this chapter or any other law of this state to the contrary notwithstanding.
(b) In this article:
(1) "insurer" includes all corporations, associations, societies, orders, firms, and individuals specified in subsection (a) hereof;
(2) "assets" includes all deposits and funds of a special or trust nature.
§ 7402. Grounds for rehabilitation of domestic insurer.The superintendent may apply under this article for an order directing him to rehabilitate a domestic insurer which:
(a) Is insolvent within the meaning of section one thousand three hundred nine of this chapter.
(b) Has refused to submit its books, papers, accounts or affairs to the reasonable inspection of the superintendent, his deputy or examiner.
(c) Has failed or refused to comply, within the time designated by the superintendent, with an order of the superintendent, pursuant to law, to make good an impairment of its capital, or minimum surplus to policyholders, if a stock insurer, or of its minimum surplus, if a mutual insurer, a reciprocal insurer, Lloyds underwriters or a co-operative fire insurance corporation.
(d) Has transferred or attempted to transfer, by contract of reinsurance or otherwise, substantially its entire property or business, or entered into any transaction which merges substantially its entire property or business into the property or business of any other corporation, association, society, order, firm or individual, without having first obtained the approval of the superintendent.
(e) Is found, after examination, to be in such condition that its further transaction of business will be hazardous to its policyholders, creditors, or the public.
(f) Has wilfully violated its charter or any law of the state.
(g) Has an officer who refused to be examined under oath, concerning its affairs.
(h) If organized under article five-a, six, seven, eight, ten or ten-b of the former insurance law constituting chapter twenty-eight of the consolidated laws of nineteen hundred nine, or if organized as a mutual or non-stock insurer under article nine-a, nine-c, ten, eleven-a, eleven-b, twelve or fourteen of the former insurance law constituting chapter twenty-eight of the consolidated laws in effect immediately before the effective date of this chapter or article forty-one, forty-two, forty-four, forty-five, sixty-one or sixty-six of this chapter, including amendments thereto in force at the time of such organization, is found to be in such condition, after examination, that it could not meet the requirements for incorporation and authorization specified in such articles except with respect to having any required initial surplus.
(i) Has ceased to do the business of insurance for a period of one year as provided in subsection (b) of section one thousand two hundred three of this chapter.
(j) Has commenced voluntary liquidation or dissolution, or attempts to commence or prosecute any action or proceeding to liquidate its business or affairs, or to dissolve its corporate charter, or to procure the appointment of a receiver, trustee, custodian, or sequestrator under any law except this article.
(k) Has been the subject of an application for the appointment of a receiver, trustee, custodian or sequestrator of the insurer or its property, or if a receiver, trustee, custodian, or sequestrator is appointed by a federal court or if such appointment is imminent.
(l) Has consented to such an order through a majority of its directors, shareholders, or members.
(m) Has not organized or completed its organization and obtained a license or certificate authorizing it to commence the doing of an insurance business within one year from the date of its incorporation, as provided in subsection (a) of section one thousand two hundred three of this chapter.
(n) Has failed or refused to take such steps as may be necessary to remove from office any officer or director whom the superintendent has found, after notice to and hearing of such insurer and of such officer or director, to be a dishonest or untrustworthy person.
(o) Has an occurrence of an authorized control level event or a mandatory control level event pursuant to subsection (f) or (g) of section one thousand three hundred twenty-two of this chapter.
§ 7403. Order of rehabilitation; advances from property/casualty insurance security fund; termination.(a) An order to rehabilitate a domestic insurer shall direct the superintendent and his successors in office, as rehabilitator, forthwith to take possession of the property of such insurer and to conduct the business thereof, and to take such steps toward the removal of the causes and conditions which have made such proceeding necessary as the court shall direct.
(i) provision is made therefor in an order to rehabilitate a domestic insurer,
(ii) more than fifty percent of the insurer's net direct premiums in the preceding three calendar years were derived from business in this state which is protected by the property/casualty insurance security fund, and
(iii) such insurer has consented to rehabilitation, the commissioner of taxation and finance shall advance monies of such fund, in such amounts as specified in the court's order, to the rehabilitator to enable the insurer to comply with any surplus requirement or other requirement of this chapter.
(2) Before issuing such order, the court shall determine that the insurer has the potential and capability, pursuant to a plan submitted by the rehabilitator, of complying with all surplus and other requirements of this chapter and repaying such advance to the fund within two years after termination of the rehabilitation proceeding, at a rate of interest approved by the superintendent to be determined annually which shall not be less than the average rate of return of the fund as determined by the superintendent for the preceding calendar year.
(3) The plan shall include:
(i) an explanation of the factors leading to the insurer's condition requiring rehabilitation and the procedures proposed to improve its condition, and
(ii) a provision for posting collateral with the rehabilitator as security for the advance, to the extent that the insurer's assets permit.
(4) The court shall not order any advance to the rehabilitator without his specific request or if the insurer's required capital or surplus is impaired in an amount exceeding the greater of thirty million dollars or fifteen percent of the insurer's net direct premium writings in the previous calendar year. Total advances to an insurer shall not exceed the greater of forty million dollars or twenty percent of such net direct premium writings. No advance shall be made on or after July first, two thousand which would lower the amount of assets in the fund below one hundred ninety-five million dollars.
(5) Advances shall, in all respects except as to rate of interest, be subject to the provisions of section one thousand three hundred seven of this chapter, provided that in the event that an insurer which has received an advance pursuant to this subsection is subsequently the subject of an order of liquidation, the claim of the fund for the advance and any accrued interest shall be paid to the fund in accordance with the provisions of section seven thousand four hundred thirty-four of this article.
(6) This subsection shall expire July first, two thousand, provided that the insurer's obligation to repay to the fund moneys advanced to it under this subsection, and the fund's claim for the advance, and any accrued interest, as a priority over all non-secured creditors, shall survive such expiration date.
* NB Expired July 1, 2000
(c) If at any time the superintendent deems further efforts to rehabilitate such insurer would be futile, he may apply to the court under this article for an order of liquidation.
(d) The rehabilitator or any interested person upon due notice to the superintendent, at any time, may apply for an order terminating any rehabilitation proceeding and permitting such insurer to resume possession of its property and the conduct of its business, but no such order shall be granted except when, after a full hearing, the court shall determine that the purposes of the proceeding have been fully accomplished.
§ 7404. Grounds for liquidation.The superintendent may apply under this article for an order directing the superintendent to liquidate the business of a domestic insurer, or of the United States branch of an alien insurer having trusteed assets in this state, upon any of the grounds specified in subsections (a) through (o) of section seven thousand four hundred two of this article, whether or not there has been a prior order directing the superintendent to rehabilitate such insurer.
§ 7405. Order of liquidation; rights and liabilities.(a) An order to liquidate the business of a domestic insurer shall direct the superintendent and his successors in office, as liquidator, forthwith to take possession of the property of such insurer and to liquidate the business of the same and deal with such property and business of such insurer in their own names as superintendents or in the insurer's name as the court may direct, and to give notice to all creditors to present their claims.
(b) The superintendent and his successors shall be vested by operation of law with the title to all property, contracts and rights of action of such insurer as of the date of the entry of the order so directing them to liquidate. The filing or recording of such order in any record office of the state shall impart the same notice that a deed, bill of sale or other evidence of title duly filed or recorded by such insurer would have imparted. The rights and liabilities of any such insurer and of its creditors, policyholders, shareholders, members and all other persons interested in its estate shall, unless otherwise directed by the court, be fixed as of the date the order is entered in the office of the clerk of the county where such insurer had its principal office on the date the proceeding commenced, subject, however, to the provisions of section seven thousand four hundred thirty-three of this article to the rights of claimants holding contingent claims.
(c) The liquidator of any domestic insurance corporation shall reinsure all its policy obligations in any solvent corporation authorized to do business in this state if the unearned premium reserve of the insurer is sufficient to effect such reinsurance. If such reserve is insufficient for that purpose, the liquidator shall reinsure a percentage of each policy obligation of the insurer outstanding to the extent that the reserve may be sufficient for that purpose. No contract of reinsurance shall be entered into by the liquidator except pursuant to an order of the court in which the liquidator was appointed directing the reinsurance and establishing the general form of the reinsurance contract.
(d) An order to liquidate the business of the United States branch of an alien insurer having trusteed assets in this state shall be in the same terms as those hereinbefore prescribed, except that only the assets of the business of such United States branch shall be included therein.
(e) Where the trustee of a mortgage series consisting in whole or in part of certificated mortgage investments guaranteed by a domestic insurer has distributed all of the trust estate collateral, or has been permitted by court order to abandon all or part of such collateral not distributed, the court, by order, may, upon the consent of the liquidator of the insurer, direct the superintendent, upon being furnished with a list of certificate holders certified to by the trustee, to record subsequent transfers of certificates and charge and collect a reasonable fee therefor, and distribute dividends applicable thereto upon liquidation of company assets in his hands, to the record owners of such certificates, and make and deduct from such dividend payments a reasonable charge for such services. The duty of the superintendent under such order shall terminate upon the termination of the liquidation proceedings.
(1) No later than one hundred eighty days after a final order of liquidation with an adjudication of insolvency of an insurer by a court of competent jurisdiction of this state, the liquidator may in his sole discretion make application to the court for approval of a proposal to disburse assets out of marshalled assets, from time to time as such assets become available, to any fund established by article seventy-six of this chapter, article six-A of the workers' compensation law and any foreign entity performing a similar function, having obligations because of such insolvency. If the liquidator determines that there are insufficient assets to disburse, the application authorized by this subsection shall be considered satisfied by a filing by the liquidator stating the reasons for this determination.
(2) Such proposal shall at least include provisions for:
(A) reserving amounts for the payment of expenses of administration, claims of secured creditors to the extent of the value of the security held, and claims falling within the priorities established in section seven thousand four hundred twenty-six of this article;
(B) disbursement of the assets marshalled to date and subsequent disbursement of assets as they become available;
(C) disbursements to the funds and entities entitled thereto under this subsection in amounts estimated to be at least equal to all claim payments for which such funds or entities could assert claims against the liquidator, and if the assets available for disbursement from time to time do not at least equal such claim payments, then disbursements in the amount of available assets;
(D) equitable allocation of disbursements to each of such funds or entities;
(E) the securing by the liquidator from each of such funds or entities of an agreement to return to the liquidator such assets, together with income earned on assets previously disbursed, as may be required to pay claims of secured creditors and claims falling within the priorities established in section seven thousand four hundred twenty-six of this article in accordance with such priorities. No bond shall be required of any such fund or entity; and
(F) a full report to be made by each such fund or entity to the liquidator accounting for all assets so disbursed to the fund or entity, all disbursements made therefrom, any income earned by the fund or entity on such assets and any other matters as the court may direct.
(3) Notice of such application shall be given to such funds and entities and to the commissioners of insurance of each of the states. Any such notice shall be deemed to have been given when deposited in the United States certified mails, first class postage prepaid, at least thirty days prior to submission of such application to the court. Action on the application may be taken by the court if the required notice has been given and the liquidator's proposal complies with subparagraphs (A), (B) and (D) of paragraph two of this subsection.
(g) No later than one hundred twenty days after the end of the calendar or fiscal year of a domestic insurance corporation subject to rehabilitation or liquidation, upon whichever standard the corporation conducts its financial affairs, the rehabilitator or liquidator shall submit to the department an annual report of the preceding calendar or fiscal year's activity of such corporation. Such report, which shall pertain only to such corporation's activities and those of the rehabilitator or liquidator as they relate to such corporation, shall include a financial review of the assets and liabilities of the corporation, the claims accrued or paid in that period, and a summary of all other corporate activity and a narrative of the actions of the rehabilitator or liquidator respecting such corporation. This report shall be separate and apart from other reports issued by the liquidation bureau of the department in the normal course of its business.
§ 7406. Grounds for conservation of assets of foreign or alien insurer.(a) The superintendent may apply under this article for an order directing the superintendent to conserve the assets within the state of a foreign insurer upon:
(1) any of the grounds specified in subsection (a) through (g), (j), (k) or (o) of section seven thousand four hundred two of this article, or
(2) upon the ground that such insurer has consented to such an order through a majority of its directors, shareholders or members, or has had its property sequestrated in its domiciliary country or state or in any other country or state.
(b) The superintendent may apply under this article for an order directing him to conserve the assets within this state of an alien insurer, except one which has its trusteed assets in this state, on any of the grounds specified in subsection (a), (b), (d) through (g), (j) or (k) of section seven thousand four hundred two of this article, or upon the ground that it has failed or refused to comply, within the time designated by the superintendent, with an order of the superintendent, pursuant to law, to rectify an impairment of its trusteed surplus, or that it has consented to such an order through a majority of its directors, shareholders or members, or has had its property sequestrated in its domiciliary country or elsewhere.
§ 7407. Order of conservation or ancillary liquidation of a foreign or alien insurer.(a) An order to conserve the assets of a foreign or alien insurer shall direct the superintendent and his successors in office, as conservator, forthwith to take possession of, and conserve, the insurer's property within this state, subject to the court's further direction.
(b) Where the superintendent has been appointed pursuant to the provisions of section seven thousand four hundred six of this article as conservator of the assets within the state of a foreign or alien insurer, for which a domiciliary receiver is subsequently appointed for such insurer in its domiciliary state which is also a reciprocal state, as defined in section seven thousand four hundred eight of this article, the superintendent, upon request of the domiciliary receiver, shall, notwithstanding subsection (a) of section seven thousand four hundred ten of this article, apply to the court in which such conservation proceeding was commenced for an order appointing the superintendent as ancillary receiver for such foreign or alien insurer.
(c) Whenever a domiciliary receiver is appointed for any insurer in its domiciliary state which is also a reciprocal state, as defined in section seven thousand four hundred eight of this article, the superintendent, upon request of the domiciliary receiver, shall, notwithstanding subsection (a) of section seven thousand four hundred ten of this article, apply to a court of competent jurisdiction for an order appointing the superintendent as ancillary receiver of such insurer.
(d) Notwithstanding subsection (a) of section seven thousand four hundred ten of this article, the court may on the application of the superintendent pursuant to subsection (b) or (c) of this section appoint the superintendent as the ancillary receiver in this state, subject to the provisions of sections seven thousand four hundred eight through seven thousand four hundred fifteen of this article. Subject to the provisions of such sections, the rights and duties of the superintendent with reference to such insurer and such assets shall include those heretofore exercised by and imposed upon ancillary receivers of foreign corporations in this state.
§ 7408. Uniform insurers liquidation act; title; definitions.(a) This section and sections seven thousand four hundred nine through seven thousand four hundred fifteen of this article may be cited as the uniform insurers liquidation act.
(b) In this act:
(1) "Insurer" means any person, firm, corporation, association, or aggregation of persons doing an insurance business and subject to the insurance supervisory authority of, or to liquidation, rehabilitation, reorganization, or conservation by, the superintendent of insurance of this state, or the equivalent insurance supervisory official of another state.
(2) "Delinquency proceeding" means any proceeding commenced against an insurer for the purpose of liquidating, rehabilitating, reorganizing, or conserving such insurer.
(3) "Foreign country" means territory not in any state.
(4) "Domiciliary state" means the state in which an insurer is incorporated or organized, or, as to an insurer incorporated or organized in a foreign country, the state in which such insurer, having become authorized to do business in such state, has, at the commencement of delinquency proceedings, the largest amount of its assets held in trust and assets held on deposit for the benefit of its policyholders or policyholders and creditors in the United States; and any such insurer is deemed to be domiciled in such state.
(5) "Ancillary state" means any state except a domiciliary state.
(6) "Reciprocal state" means any state other than this state in which in substance and effect the provisions of this act are in force, including the provisions requiring that the insurance commissioner or equivalent insurance supervisory official be the receiver of a delinquent insurer.
(7) "General assets" means all property, real, personal, or otherwise, not specifically mortgaged, pledged, deposited, or otherwise encumbered for the security or benefit of specified persons or a limited class of persons, and as to such specifically encumbered property the term includes all such property or its proceeds in excess of the amount necessary to discharge all sums secured thereby. Assets held in trust and assets held on deposit for the security or benefit of all policyholders, or all policyholders and creditors in the United States, are general assets.
(8) "Preferred claim" means any claim with respect to which the law of a state or of the United States accords priority of payment from the general assets of the insurer.
(9) "Special deposit claim" means any claim secured by a deposit made pursuant to statute for the security or benefit of a limited class of persons, but not including any general assets.
(10) "Secured claim" means any claim secured by mortgage, trust, deed, pledge, deposit as security, escrow, other security interest, or otherwise, but not including special deposit claims or claims against general assets. The term also includes claims which more than four months prior to the commencement of delinquency proceedings in the state of the insurer's domicile have become liens upon specific assets by reason of judicial process.
(11) "Receiver" means receiver, liquidator, rehabilitator, or conservator as the context may require.
§ 7409. Conduct of delinquency proceedings against insurers domiciled in this state.(a) Whenever under the laws of this state a receiver is to be appointed in delinquency proceedings for an insurer domiciled in this state, the court shall appoint the superintendent as such receiver and direct the superintendent forthwith to take possession of the assets of the insurer and to administer the same under the orders of the court.
(b) As domiciliary receiver the superintendent and his successors in office shall be vested by operation of law with the title to all property, contracts, and rights of action, and all books and records of the insurer wherever located, as of the date of entry of the order directing him to liquidate a domestic insurer or the United States branch of an alien insurer domiciled in this state, and he shall have the right to recover the same and reduce the same to possession; except that ancillary receivers in reciprocal states shall have, as to assets located in their respective states, the rights and powers hereinafter prescribed for ancillary receivers appointed in this state as to assets located in this state. The filing or recording of the order directing possession to be taken, or a certified copy thereof, in the office where instruments affecting title to property are required to be filed or recorded shall impart the same notice as would be imparted by a deed, bill of sal e, or other evidence of title duly filed or recorded. The superintendent as domiciliary receiver shall be responsible for the proper administration of all assets coming into his possession or control. The court may at any time require bond from him or his deputies if deemed desirable for the protection of the assets.
(c) Upon taking possession of the assets of a delinquent insurer the domiciliary receiver shall, subject to the direction of the court, immediately proceed to conduct the business of the insurer or to take such steps as are authorized by the laws of this state for the purpose of liquidating, rehabilitating, reorganizing, or conserving the affairs of the insurer. In connection with delinquency proceedings he may appoint special deputy superintendents, and employ such counsel, clerks, and assistants as he deems necessary. Their compensation and all expenses of taking possession of the insurer and of conducting the delinquency proceedings shall be fixed by the receiver, subject to the approval of the court, and shall be paid out of the funds or assets of the insurer. Within the limits of the duties imposed upon them special deputies shall possess all the powers given to, and, in the exercise of those powers, shall be subject to all duties imposed upon, the receiver with respe ct to delinquency proceedings.
§ 7410. Conduct of delinquency proceedings against insurers not domiciled in this state.(a) Whenever under the laws of this state an ancillary receiver is to be appointed in delinquency proceedings for an insurer not domiciled in this state, the court shall appoint the superintendent as ancillary receiver. The superintendent shall file a petition requesting the appointment if he finds that there are sufficient assets of such insurer located in this state to justify the appointment of an ancillary receiver, or if ten or more persons resident in this state having claims against such insurer file a petition with the superintendent requesting the appointment of such ancillary receiver.
(b) The domiciliary receiver for the purpose of liquidating an insurer domiciled in a reciprocal state, shall be vested by operation of law with the title to all of the property, contracts, and rights of action, and all books and records of the insurer located in this state, and shall have the immediate right to recover balances due from local agents and obtain possession of any books and records of the insurer found in this state. He shall also be entitled to recover the other assets of the insurer located in this state except that upon the appointment of an ancillary receiver in this state, the ancillary receiver shall during the ancillary receivership proceedings have the sole right to recover such other assets. The ancillary receiver shall, as soon as practicable, liquidate from their respective securities those special deposit claims and secured claims which are proved and allowed in the ancillary proceedings in this state, and shall pay the necessary expenses of the proceedings. All remaining assets he shall promptly transfer to the domiciliary receiver. Subject to the foregoing provisions the ancillary receiver and his deputies shall have the same powers and be subject to the same duties with respect to the administration of such assets, as a receiver of an insurer domiciled in this state.
(c) The domiciliary receiver of an insurer domiciled in a reciprocal state may sue in this state to recover any assets of such insurer to which he may be entitled under the laws of this state.
§ 7411. Filing and proving of claims of non-residents against delinquent insurers domiciled in this state.(a) In a delinquency proceeding begun in this state against an insurer domiciled in this state, claimants residing in reciprocal states may file claims either with the ancillary receivers, if any, in their respective states, or with the domiciliary receiver. All such claims must be filed on or before the last date fixed for the filing of claims in the domiciliary delinquency proceedings.
(1) Controverted claims of claimants residing in reciprocal states may either be proved in this state as provided by law, or, if ancillary proceedings have been commenced in such reciprocal states, may be proved in those proceedings.
(2) If a claimant elects to prove his claim in ancillary proceedings and if notice of the claim and opportunity to appear and be heard is afforded the domiciliary receiver of this state as provided in section seven thousand four hundred twelve of this article with respect to ancillary proceedings in this state, the final allowance of such claim by the courts in the ancillary state shall be accepted in this state as conclusive as to its amount, and as to its priority, if any, against special deposits or other security located within the ancillary state.
§ 7412. Filing and proving of claims of residents against delinquent insurers domiciled in reciprocal states.(a) In a delinquency proceeding in a reciprocal state against an insurer domiciled in that state, claimants residing in this state may file claims either with the ancillary receiver, if any, appointed in this state, or with the domiciliary receiver. All such claims must be filed on or before the last date fixed for the filing of claims in the domiciliary proceeding.
(1) Controverted claims belonging to claimants residing in this state may be proved either in the domiciliary state as provided by the law of that state, or in ancillary proceedings, if any, in this state.
(2) If the claimant elects to prove his claim in this state, he shall file it with the ancillary receiver in the manner provided by the law of this state for the proving of claims against insurers domiciled in this state, and he shall give notice in writing to the receiver in the domiciliary state either by registered mail or by personal service at least forty days prior to the date set for hearing. The notice shall contain a concise statement of the amount of the claim, the facts on which it is based, and the priorities asserted, if any. If the domiciliary receiver, within thirty days after the giving of such notice, shall give notice in writing to the ancillary receiver and to the claimant, either by registered mail or personal service, of his intention to contest such claim, he shall be entitled to appear or to be represented in any proceeding in this state involving the adjudication of the claim.
(3) The final allowance of the claim by the courts of this state shall be accepted as conclusive as to its amount, and shall also be accepted as conclusive as to its priority, if any, against special deposits or other security located within this state.
§ 7413. Priority of preferred claims, special deposit claims and secured claims.(a) In a delinquency proceeding against an insurer domiciled in this state, claims owing to residents of ancillary states shall be preferred claims if like claims are preferred under the laws of this state. All such claims whether owing to residents or non-residents shall be given equal priority of payment from general assets regardless of where such assets are located.
(b) In a delinquency proceeding against an insurer domiciled in a reciprocal state, claims owing to residents of this state shall be preferred if like claims are preferred by the laws of that state.
(c) The owners of special deposit claims against an insurer for which a receiver is appointed in this or any other state shall be given priority against their several special deposits in accordance with the provisions of the statutes governing the creation and maintenance of such deposits. If there is a deficiency in any such deposit so that the claims secured thereby are not fully discharged therefrom, the claimants may share in the general assets, but such sharing shall be deferred until general creditors, and also claimants against other special deposits who have received smaller percentages from their respective special deposits, have been paid percentages of their claims equal to the percentage paid from the special deposit.
(d) The owner of a secured claim against an insurer for which a receiver has been appointed in this or any other state may surrender his security and file his claim as a general creditor, or the claim may be discharged by resort to the security, in which case the deficiency, if any, shall be treated as a claim against the general assets of the insurer on the same basis as claims of unsecured creditors. If the amount of the deficiency has been adjudicated in ancillary proceedings as provided in this act, or if it has been adjudicated by a court of competent jurisdiction in proceedings in which the domiciliary receiver has had notice and opportunity to be heard, such amount shall be conclusive; otherwise the amount shall be determined in the delinquency proceeding in the domiciliary state.
§ 7414. Attachment and garnishment of assets.During the pendency of delinquency proceedings in this or any reciprocal state no action or proceeding in the nature of an attachment, garnishment, or execution shall be commenced or maintained in the courts of this state against the delinquent insurer or its assets. Any lien obtained by any such action or proceeding within four months prior to the commencement of any such delinquency proceeding or at any time thereafter shall be void as against any rights arising in such delinquency proceeding.
§ 7415. Uniformity of interpretation.The uniform insurers liquidation act shall be interpreted and construed to effectuate its general purpose to make uniform the law of those states that enact it. To the extent that its provisions, when applicable, conflict with other provisions of this chapter, the provisions of this act shall control.
§ 7416. Grounds for dissolution of domestic insurer.The superintendent may apply under this article for an order dissolving the corporate existence of a domestic insurer: (i) upon his application for an order of liquidation of its business, or at any time after such order has been granted; or (ii) upon the grounds specified in subsection (m) of section seven thousand four hundred two of this article, regardless of whether an order of liquidation is sought or has been obtained.
§ 7417. Commencement of a proceeding.The superintendent represented by the attorney general shall commence any proceeding under this article by an application to the supreme court, in the judicial district in which the principal office of the insurer is located, for an order directing such insurer to show cause why the superintendent should not have the requested relief. On the return of such order, and after a full hearing, which shall be held without delay, such court shall either deny the application or grant it together with such other relief as the nature of the case and the interests of policyholders, creditors, shareholders, members, or the public may require.
§ 7418. Service of order to show cause.(a) The order to show cause and the papers upon which it is granted shall be served upon the insurer named therein by delivering true copies to, and leaving them with:
(1) If a domestic corporation: its president or other head, the secretary or clerk to the corporation, the cashier, the treasurer or any director or managing agent.
(2) If a foreign or alien corporation: its president, vice-president, treasurer or assistant treasurer, secretary or assistant secretary, or any director or managing agent or, if the corporation has no such officers within this state, to the officer performing corresponding functions.
(3) If a voluntary, unincorporated or a joint stock association, order or society: the president, vice-president, treasurer, director, trustee or other officer or a member with managerial powers.
(4) If a reciprocal insurer or Lloyds underwriters: the duly designated attorney-in-fact.
(b) When it is satisfactorily proved by the verified report of an examiner to the superintendent or by affidavit of any other person familiar with the facts that the persons upon whom service is required to be made have departed from the state or keep themselves concealed therein or have resigned from their offices within forty days prior to the application for an order to show cause under the provision of this section, or that service cannot be made immediately by the exercise of reasonable diligence, such order may provide for service in such manner as the court directs.
§ 7419. Injunctions.(a) Upon application by the superintendent for an order to show cause under this article or at any time thereafter, the court in which such order is made, or any justice thereof may without notice issue an injunction restraining the insurer, its officers, directors, shareholders, members, trustees, agents, servants, employees, policyholders, attorneys, managers, and all other persons from the transaction of its business or the waste or disposition of its property until further order of the court.
(b) Such court or justice may at any time during a proceeding under this article issue such other injunctions or orders as it deems necessary to prevent interference with the superintendent or the proceeding, or waste of the assets of the insurer, or the commencement or prosecution of any actions, the obtaining of preferences, judgments, attachments or other liens, or the making of any levy against the insurer, its assets or any part thereof.
§ 7420. Annual report.The superintendent shall transmit to the legislature in his annual report the names of all insurers proceeded against under this article together with such facts as shall acquaint the policyholders, creditors, shareholders, and the public with all proceedings. To that end the special deputy superintendent in charge of any such insurer shall file annually with the superintendent a report of the affairs of such insurer.
§ 7421. Removal of proceedings.Any time after commencement of a proceeding under this article, the superintendent may apply ex parte to the court or any justice thereof for an order changing the venue of and removing the proceeding to Albany county, or, in the discretion of the superintendent, to any other county of this state in which he deems that such proceeding may be most economically and efficiently conducted. Upon the filing of any such application, the court or any justice thereof shall direct the clerk of the county wherein such proceeding is pending to transmit all papers filed therein with such clerk to the clerk of the county to which such proceeding is removed. The proceeding shall thereafter be conducted in such other county as though it had been commenced in such county.
§ 7422. Appointment of deputies; employment of assistants.(a) For the purposes of this article the superintendent shall have power to appoint special deputy, and assistant special deputy, superintendents as his agents, and to employ such counsel, clerks and assistants as may by him be deemed necessary and to give them such powers to assist him as he considers wise.
(b) The compensation of such special and assistant special deputy superintendents, counsel, clerks and assistants, and all expenses of conducting any proceeding under this article shall be fixed by the superintendent, subject to the approval of the court, and shall be paid out of the funds or assets of such insurer.
§ 7423. Exemption from filing fees.The superintendent shall not be required to pay any fee to any county clerk, register or other public officer in this state for filing, recording, issuing a transcript or certificate, or authenticating any paper or instrument pertaining to the exercise by the superintendent of any of the powers or duties conferred upon him by any of the provisions of this article, whether or not such paper or instrument be executed by the superintendent or his deputies or attorneys of record and whether or not it is connected with the commencement of an action or judicial proceeding by or against the superintendent, or with the subsequent conduct of such an action or proceeding.
§ 7424. Deposit of monies collected; preference.Monies collected by the superintendent in a proceeding under this article shall be deposited in one or more state or national banks, savings banks, or trust companies. In the case of insolvency or voluntary or involuntary liquidation of any such depositary organized and supervised under the laws of this state, such deposits shall be entitled to priority of payment on an equality with any other priority given by the banking law of this state. The superintendent may in his discretion deposit such monies or any part thereof in a national bank or trust company as a trust fund.
§ 7425. Voidable transfers.(a) Any transfer of, or lien created upon, the property of an insurer within twelve months prior to the granting of an order to show cause under this article with the intent of giving to any creditor or enabling him to obtain a greater percentage of his debt than any other creditor of the same class and which is accepted by such creditor having reasonable cause to believe that such a preference will occur, shall be voidable.
(b) Every director, officer, employee, shareholder, member or other person acting on behalf of such insurer who shall be concerned in any such prohibited act and every person receiving thereby any property of such insurer or the benefit thereof shall be personally liable therefor and shall be bound to account to the superintendent.
(c) The superintendent, as liquidator, rehabilitator or conservator in any proceeding under this article, may avoid any transfer of, or lien upon, the property of an insurer which any creditor, shareholder or member of such insurer might have avoided and may recover the property transferred or its value from the transferee unless he was a bona fide holder for value prior to the date of the granting of an order to show cause under this article. Such property or its value may be recovered from anyone who has received it except a bona fide holder for value.
(d) Notwithstanding the provisions of subsection (a) of this section, a commutation of a reinsurance agreement, approved by the superintendent pursuant to section one thousand three hundred twenty-one of this chapter, shall not be voidable as a preference.
§ 7427. Offsets.(a) In all cases of mutual debts or mutual credits between the insurer and another person in connection with any action or proceeding under this article, such credits and debts shall be set off and the balance only shall be allowed or paid, except as provided in subsection (b) hereof.
(b) No offset shall be allowed in favor of any such person, however, where:
(1) the obligation of the insurer to such person would not at the date of the entry of any liquidation order, or otherwise, as provided in section seven thousand four hundred five of this article, entitle him to share as a claimant in the assets of such insurer, or
(2) the obligation of the insurer to such person was purchased by or transferred to such person with a view of its being used as an offset, or
(3) the obligation of such person is to pay an assessment levied against the members of a mutual insurer or to pay a balance upon a subscription to the shares of a stock insurance corporation.
§ 7428. Disposition of assets and compromise of claims.(a) The superintendent may, subject to the approval of the court:
(1) sell or otherwise dispose of all or any part of the real and personal property of an insurer against whom a proceeding has been brought under this article, and
(2) sell or compound all doubtful or uncollectible debts or claims owed by or to such insurer including claims based upon an assessment levied against a member of a mutual insurer.
(b) If the amount of any such debt or claim owed by or to such insurer does not exceed twenty-five hundred dollars, the superintendent may compromise or compound the same upon such terms as he may deem for the best interests of such insurer without obtaining the approval of the court.
(c) The superintendent may, subject to the approval of the court, sell, or agree to sell, or offer to sell, any assets of such an insurer to such of its creditors who may desire to participate in the purchase, to be paid for in whole or in part out of dividends payable to such creditors.
(d) Upon application of the superintendent, the court may designate representatives to act for such creditors in the purchase, holding and/or management of such assets, and the superintendent may, subject to the approval of the court, advance the expenses of such representatives against the security of the claims of such creditors.
§ 7429. Borrowing on the pledge of assets.To facilitate the rehabilitation, liquidation, conservation or dissolution of an insurer pursuant to this article the superintendent may, subject to the approval of the court, borrow money and issue evidences of indebtedness therefor and secure repayment by a security interest in any or all property, real, personal or mixed of such insurer. Subject to court approval, the superintendent may take all other action necessary and proper to consummate such loans and provide for their repayment. The superintendent shall be under no obligation personally or in his capacity as superintendent to repay any loan made pursuant to this section.
§ 7430. Levy of assessments; determination of liability of members.(a) Within three years from the date of an order of rehabilitation or liquidation of a domestic mutual insurer filed in the office of the clerk of the county in which the insurer had its principal office, the superintendent may make a report to the court setting forth:
(1) the reasonable value of the insurer's assets;
(2) its probable liabilities; and
(3) the probable necessary assessment, if any, to pay all possible claims and expenses in full, including expenses of administration.
(1) Upon the basis of such report, including any amendments, the court, ex parte, may levy one or more assessments against all members of such insurer who, as shown by the records of the company, were members at any time within one year prior to the date of the issuance of the order to show cause under section seven thousand four hundred seventeen of this article.
(2) The assessments shall cover the excess of the insurer's probable liabilities over the reasonable value of its assets and the estimated cost of collection and percentage of uncollectibility thereof.
(3) The total assessments against any member with respect to any policy, whether levied by the board of directors of such insurer, the superintendent in liquidation or rehabilitation of such insurer, or otherwise, and whether levied to make good an impairment of required minimum surplus or for any other purpose under this chapter, shall be for no greater amount than that specified in the by-laws and policies of that member and may be limited as prescribed in subsection (a) of section four thousand one hundred eleven of this chapter. However, if the court finds that such policy was issued at a rate of premium below the minimum rate lawfully permitted for the risk insured, the court may determine the upper limit of such assessment upon the basis of an adequate rate for such insurance.
(4) No such assessment shall be levied against any member with respect to any non-assessable policy issued in accordance with the laws of this state.
(c) Thereafter, upon the filing of a further detailed report by the superintendent, the court shall issue an order directing each member of such insurer if he shall not pay the amount assessed against him to the superintendent on or before a day to be specified in said order, to show cause why he should not be held liable to pay such assessment together with costs as set forth in subsection (e) hereof and why the superintendent should not have judgment therefor.
(d) The superintendent shall at least twenty days before the return day of the order cause a notice of such order setting forth a brief summary of the contents of such order to be published in such manner as shall be directed by the court and mailed to each member at his last known address appearing on the records of the insurer, or at his last known address, if no address so appears.
(e) On the return day of such order to show cause, if such member shall not appear and serve verified objections upon the superintendent, the court shall make an order adjudging that such member is liable for the amount of such assessment together with ten dollars costs and directing that the superintendent may have judgment therefor. If the member shall appear and serve verified objections upon the superintendent there shall be a full hearing before the court or a referee to hear and determine, who, after such hearing, shall make an order either negativing the liability of such member to pay the assessment or directing that the superintendent may have judgment for the whole or some part of the assessment and twenty-five dollars costs and necessary disbursements incurred at such hearing.
(f) A judgment upon any such order, whether granted by a court or referee, shall have the same force and effect, and may be entered and docketed, and may be appealed from as if it were a judgment in an original action brought in the court in which the proceeding is pending.
§ 7431. Determination of liability of members for other indebtedness.(a) If it shall appear that a member of a domestic mutual insurer is indebted to such insurer, apart from his liability to assessment, the court may, upon the application of the superintendent, in any order under section seven thousand four hundred thirty of this article directing such member to show cause why he should not be held liable to pay an assessment, likewise direct him to show cause why he should not be held liable to pay such indebtedness.
(b) The liability of such member for such indebtedness shall be determined in the same manner, and at the same time, as his liability for such assessment is determined, and the superintendent may have judgment therefor, without any additional costs.
§ 7432. Adjudication of insolvency of insurer; time to file claims.(a) If upon the granting of an order of liquidation pursuant to section seven thousand four hundred four of this article or at any time thereafter during such liquidation proceeding, such insurer shall not be clearly solvent, the court shall, after such notice and hearing as it deems proper, make an order declaring such insurer to be insolvent.
(b) Where a liquidation, rehabilitation or conservation order has been entered in a proceeding against an insurer under this article, all persons who may have claims against such insurer shall present the same to the liquidator, rehabilitator or conservator at a place specified by him within four months from the date of the entry of such order, or, if the superintendent shall certify that it is necessary, within such longer time as the court shall prescribe. The superintendent shall notify all persons who may have claims against such insurer as disclosed by its books and records, to present the same to him within the time as fixed. The last day for the filing of proofs of claim shall be specified in the notice. Such notice shall be given in a manner determined by the court.
(c) Proofs of claim may be filed subsequent to the date specified, but, no such claim shall share in the distribution of the assets until all allowed claims, proofs of which were filed before such specified date, have been paid in full with interest.
§ 7433. Proof and allowance of claims.(a)
(1) A proof of claim shall consist of a written statement subscribed and affirmed by the claimant as true under the penalties of perjury, setting forth the claim, the consideration therefor, any securities held therefor, any payments made thereon, and that the sum claimed is justly owing from the insurer to the claimant.
(2) If a claim is founded upon an instrument in writing, such instrument, unless lost or destroyed, shall be filed with the proof of claim. After the filing of such instrument the superintendent may in his discretion permit the claimant to retain such instrument until final disposition of the claim. If such instrument is lost or destroyed, a statement of such fact and of the circumstances of such loss or destruction shall be filed under oath with the claim.
(1) Upon the liquidation of any domestic insurer or United States branch which has issued policies insuring the lives of persons, the superintendent shall, within thirty days after the last day set for filing claims, make a list of the persons who have not filed proofs of claim with him, to whom it appears to his entire satisfaction, from the records of the company, that there are owing amounts on such policies and he shall set opposite the name of each person such amount so owing to such person. Each person whose name shall appear upon such list shall be deemed to have duly filed, prior to the last day set for the filing of claims, a proof of claim for the amount set opposite his name.
(2) Upon the liquidation of any domestic insurer or United States branch which has issued property/casualty policies, the superintendent shall, within thirty days after the last day set for filing claims, make a list of all persons whose name appears on the books and records of the company as policyholders or claimants. Each person whose name appears upon such list shall be deemed to have duly filed a proof of claim prior to the last day set for the filing of claims.
(c) No contingent claim shall share in a distribution of assets of an insurer adjudicated to be insolvent by an order made pursuant to section seven thousand four hundred thirty-two of this article except that any such claim shall be considered if properly presented and may be allowed to share if:
(1) it becomes absolute against the insurer on or before the last day fixed for filing of proofs of claim, or
(2) there is a surplus and the liquidation is thereafter conducted upon the basis that such insurer is solvent.
(1) Where a liquidation, rehabilitation or conservation order has been entered in a proceeding against an insurer under this article, any person who has a cause of action against an insured of such insurer under a liability insurance policy issued by such insurer, shall have the right to file a claim in the proceeding, even though the claim is contingent.
(2) The claim may be allowed:
(A) if it may be reasonably inferred from the proof presented that such person would be able to obtain a judgment upon such cause of action against such insured;
(B) if such person shall furnish suitable proof, unless the court for good cause shown shall otherwise direct, that no further valid claims against such insurer arising out of his cause of action other than those already presented can be made; and
(C) if the total liability of such insurer to all claimants arising out of the same act of its insured shall be no greater than its total liability would be were it not in liquidation, rehabilitation or conservation.
(3) No judgment against such an insured taken after the date of the entry of the liquidation, rehabilitation or conservation order shall be considered in the proceedings as evidence of liability or of the amount of damages. No judgment against an insured taken by default, inquest or collusion prior to the entry of a liquidation order shall be considered as conclusive evidence in the proceeding either of the liability of such insured to such person upon such cause of action or of the amount of damages to which such person is therein entitled.
(e) Debts owing to a state, county, district or municipality, or any subdivision thereof, as a penalty or forfeiture, shall not be allowed except for the amount of the pecuniary loss sustained by the act, transaction or proceeding out of which the penalty or forfeiture arose, with reasonable and actual costs occasioned thereby, and such interest as may have accrued thereon according to law.
(f) No claim of any secured claimant shall be allowed at a sum greater than the difference between the value of the claim without security and the value of the security itself as of the date of entry of the order of liquidation or such other date set by the court for fixation of rights and liabilities as provided in section seven thousand four hundred five of this article, unless the claimant shall surrender his security to the superintendent in which event the claim shall be allowed in the full amount of its value.
§ 7433-a. Loan to workers' compensation security fund.(a) Upon certification by the superintendent that further sums, not exceeding seventy million dollars in the aggregate, are required by the workers' compensation security fund to meet its obligations and accomplish the purposes of article six-A of the workers' compensation law, the superintendent is hereby authorized to make one or more loans to such fund from the assets of one or more liquidation estates in such amounts as shall be specified by the superintendent. For purposes of this section, "liquidation estate" shall mean the assets of an insurer against which an order of liquidation has been commenced pursuant to this article. Such sums, not exceeding seventy million dollars in the aggregate, shall be a liability of the workers' compensation security fund.
(b) Notwithstanding any law, rule or regulation to the contrary, in the event that a complaint is filed in a court of competent jurisdiction concerning the superintendent's authority to loan monies to the workers' compensation security fund pursuant to this section, the superintendent shall oppose such complaint, and appeal any adverse rulings of the court. In the event a court of competent jurisdiction issues an injunction that expressly prohibits the superintendent from making loans under this section, and such injunction has been unsuccessfully opposed in court by the superintendent, the superintendent may accomplish the purposes of this section through one or more loans from the assets of the property/casualty insurance security fund to the workers' compensation security fund. Such loans shall be made subject to the conditions set forth in this section, including the certification requirement set forth in subsection (c) of this section and shall not occur more frequently than once every two months, and not be greater in amount than that needed to sustain the workers' compensation security fund for the two month period.
(c) Upon written certification by the superintendent that the assets from the liquidation estates are otherwise unavailable, loans may also be made under the terms specified in this section from the assets of the property/casualty insurance security fund. Loans made pursuant to this subsection shall not exceed the sum of thirty million dollars in the aggregate. Such loans shall not occur more frequently than once every two months, and not be greater in amount than that needed to sustain the workers' compensation security fund for the two month period. Monies from such loans shall not be used to pay administrative expenses. Each loan must be accompanied by such certification, which shall set forth the specific reason or reasons why the assets of the liquidation estates are unavailable. The certification shall be provided to the temporary president of the senate, the speaker of the assembly, the chair of the senate finance committee and the chair of the assembly ways and means committee.
(d) Any loan pursuant to this section shall be a liability of the workers' compensation security fund, and shall be repaid pursuant to a plan of repayment to be prescribed by the superintendent which, notwithstanding any other law, may provide, at the discretion of the superintendent, for an increase in the level of payments into the fund provided for in subdivision two of section one hundred eight of the workers' compensation law upon written notice by the superintendent to the governor and both houses of the legislature of the necessity of any such increase, including the reasons therefor. Such plan shall among other things require:
(i) that any loan be made upon commercially reasonable terms and in accordance with the superintendent's fiduciary responsibilities, and
(ii) immediate repayment, from the assets of the liquidation estates as referred to in subsection (a) of this section, of any loans from the property/casualty insurance security fund made pursuant to subsection (b) or (c) of this section upon sufficient monies becoming available from loans from liquidation estates pursuant to subsection (a) of this section, and
(iii) that one-fourth of the payments collected pursuant to section one hundred eight of the workers' compensation law be dedicated to the repayment of any loans made pursuant to this section.
§ 7434. Distribution of assets.(a)
(1) Upon the recommendation of the superintendent, and under the direction of the court, distribution payments shall be made in a manner that will assure the proper recognition of priorities and a reasonable balance between the expeditious completion of the liquidation and the protection of unliquidated and undetermined claims. The priority of distribution of claims from an insolvent property/casualty insurer in any proceeding subject to this article shall be in accordance with the order in which each class of claims is set forth in this paragraph and as provided in this paragraph. Every claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class receive any payment. No subclasses shall be established within any class. No claim by a shareholder, policyholder or other creditor shall be permitted to circumvent the priority classes through the use of equitable remedies. The order of distribution of claims shall be:
(i) Class one. Claims with respect to the actual and necessary costs and expenses of administration, incurred by the liquidator, rehabilitator or conservator under this article.
(ii) Class two. All claims under policies including such claims of the federal or any state or local government for losses incurred, third party claims, claims for unearned premiums, and all claims of a security fund, guaranty association or the equivalent except claims arising under reinsurance contracts.
(iii) Class three. Claims of the federal government except those under class two above.
(iv) Class four. Claims for wages owing to employees of an insurer against whom a proceeding under this article is commenced for services rendered within one year before commencement of the proceeding, not exceeding one thousand two hundred dollars to each employee, and claims for unemployment insurance contributions required by article eighteen of the labor law. Such priority shall be in lieu of any other similar priority which may be authorized by law.
(v) Class five. Claims of state and local governments except those under class two above.
(vi) Class six. Claims of general creditors including, but not limited to, claims arising under reinsurance contracts.
(vii) Class seven. Claims filed late or any other claims other than claims under class eight or class nine below.
(viii) Class eight. Claims for advanced or borrowed funds made pursuant to section one thousand three hundred seven of this chapter.
(ix) Class nine. Claims of shareholders or other owners in their capacity as shareholders.
(2) Severability. If any classification or priority provided for in paragraph one of this subsection is held to be unconstitutional or otherwise invalid, the remaining classifications and priorities shall continue in effect.
(b) No creditor shall be entitled to interest on any dividend by reason of delay in payment of such dividend.
(c) Any claimant of another state or foreign country who is entitled to, or receives, a dividend upon his claim out of a statutory deposit or the proceeds of any qualifying bond or other asset located in such other state or foreign country shall not be entitled to any further dividend from the superintendent until all other claimants of the same class irrespective of residence or place of the acts or contracts upon which their claims are based shall have received an equal dividend upon their claims. After such equalization, such claimant shall be entitled to share in the distribution of further dividends by the superintendent like all other creditors of the same class wherever residing.
(d) If, after an adjudication of insolvency, a mutual insurer is found clearly solvent upon re-examination, its surplus shall be distributed among all persons, partnerships or corporations whose membership did not cease earlier than five years prior to the date on which the insurer ceased issuing policies. The distribution shall be in the proportion which the total premium contributions of each such member during his or its entire membership in the insurer bear to the total premium contributions of all such members entitled under this subsection to any distributive share of such surplus.
(e) The provisions of this section shall apply to distributions made after the effective date of this subsection in any proceeding under this article, regardless of the date such proceeding was commenced under this article, provided that the foregoing provisions of this subsection shall not apply to distributions made pursuant to a final court order of distribution entered on or before the effective date of this subsection.
§ 7435. Distribution for life insurers.(a) The priority of distribution of claims from the estate of a life insurance company in any proceeding subject to this article shall be in accordance with the order in which each class of claims is herein set forth. Every claim in each class shall, subject to such limitations as may be prescribed by law and do not directly conflict with the express provisions of this section, be paid in full or adequate funds retained for such payment before the members of the next class receive any payment. No subclasses shall be established within any class. The order of distribution of claims shall be:
(1) Class one. Claims with respect to the actual and necessary costs and expenses of administration, incurred by the liquidator, rehabilitator, conservator or ancillary rehabilitator under this article, or by The Life Insurance Guaranty Corporation or The Life Insurance Company Guaranty Corporation of New York, and claims described in subsection (d) of section seven thousand seven hundred thirteen of this chapter.
(2) Class two. Debts due to employees for services performed to the extent that they do not exceed one thousand two hundred dollars and represent payment for services performed within one year before the commencement of a proceeding under this article. Such priority shall be in lieu of any other similar priority which may be authorized by law as to wages or compensation of employees.
(3) Class three. All claims for payment for goods furnished or services rendered to the impaired or insolvent insurer in the ordinary course of business within ninety days prior to the date on which the insurer was determined to be impaired or insolvent, whichever is applicable.
(4) Class four. All claims under insurance policies, annuity contracts and funding agreements, and all claims of The Life Insurance Company Guaranty Corporation of New York or any other guaranty corporation or association of this state or another jurisdiction, other than
(i) claims provided for in paragraph one of this subsection, and
(ii) claims for interest.
(5) Class five. Claims of the federal or any state or local government. Claims, including those of any governmental body for a penalty or forfeiture, shall be allowed to this class only to the extent of the pecuniary loss sustained from the act, transaction or proceeding out of which the penalty or forfeiture arose, with reasonable and actual costs occasioned thereby. The remainder of such claims shall be postponed to the class of claims under paragraph eight of this subsection.
(6) Class six. Claims of general creditors and any other claims other than claims under paragraphs seven and eight of this subsection.
(7) Class seven. Surplus, capital or contribution notes, or similar obligations.
(8) Class eight. The claims of
(i) policyholders, other than claims under paragraph four of this subsection, and
(ii) shareholders or other owners.
(b) Every claim under a separate account agreement providing, in effect, that the assets in the separate account shall not be chargeable with liabilities arising out of any other business of the insurer shall be satisfied out of the assets in the separate account equal to the reserves maintained in such account for such agreement and, to the extent, if any, not fully discharged thereby, shall be treated as a class four claim against the estate of the life insurance company.
(c) For purposes of this section:
(1) "The estate of the life insurance company" shall mean the general assets of such company less any assets held in separate accounts that, pursuant to section four thousand two hundred forty of this chapter, are not chargeable with liabilities arising out of any other business of the insurer.
(2) "Insurance policies, annuity contracts and funding agreements" shall mean all policies and contracts of any of the kinds of insurance specified in paragraph one, two or three of subsection (a) of section one thousand one hundred thirteen of this chapter and all funding agreements described in section three thousand two hundred twenty-two of this chapter, including all separate account agreements, except that separate account agreements referred to in subsection (b) of this section shall be included only to the extent referred to therein. (3) "Separate account agreement or agreements" shall mean any agreement or agreements for separate accounts referred to in section four thousand two hundred forty of this chapter.
§ 7436. Claims-made policies; special requirements.(a) Where a policy has been issued on a claims-made basis by an insurer against which an order of liquidation, rehabilitation or conservation has been entered pursuant to this article, the superintendent shall provide, at an appropriate additional premium by the insured and consistent with the terms of such policy, for the issuance of coverage for claims based on occurences prior to the termination of the policy which are reported after the termination of the policy, in the event that the insured seeks to purchase such coverage in accordance with the terms of such policy.
(b) If the order of liquidation, rehabilitation or conservation is entered against an insurer which has issued medical malpractice policies on a claims-made basis, then notwithstanding the entry of such order, the superintendent shall comply with the requirements for claims-made policies as set forth in subsections (b), (c) and (d) of section three thousand four hundred thirty-six of this chapter and paragraphs two, three and four of subsection (f) of section five thousand five hundred four of this chapter.
(c) In the event that an insured, who has been issued a medical malpractice policy on a claim-made basis by an insurer against which an order of liquidation has been entered pursuant to this article, chooses to purchase coverage from a successor insurer, the superintendent shall expedite the transfer of coverage that has been accrued, for claims based on occurrences prior to the termination of the policy which are reported after the termination of the policy, to the successor insurer of each insured, in accordance with the requirement for claims-made policies as set forth in subsections (b), (c) and (d) of section three thousand four hundred thirty-six and paragraphs two, three and four of subsection (f) of section five thousand five hundred four of this chapter.