AI-assisted research summary: This section covers financial rules for impaired or insolvent insurers, including recordkeeping, court discretion, recovery actions, liability for certain distributions, and being bound by certain settlements.
20-690 - Financial provisions 20-690 . Financial provisions A. Nothing in this article shall be construed to reduce the liability for unpaid assessments of the insureds of an impaired insurer or insolvent insurer operating under a plan with assessment liability. B. Records shall be kept of all negotiations and meetings in which the fund or its representatives are involved to discuss the activities of the fund in carrying out its powers and duties. Records of such negotiations or meetings shall be made public only on the termination of a liquidation, rehabilitation or conservation proceeding involving the impaired insurer or insolvent insurer, on the termination of the impairment or insolvency of the insurer or on the order of a court of competent jurisdiction. C. For the purpose of carrying out its obligations pursuant to this article, the board shall be deemed to be a creditor of the impaired insurer or insolvent insurer to the extent of assets attributable to policies reduced by any amounts to which the board is entitled as subrogee. All assets of the impaired insurer or insolvent insurer attributable to policies shall be used to continue all policies and pay all contractual obligations of the impaired insurer or insolvent insurer. As used in this subsection, "assets attributable to policies" means that proportion of the assets which the reserves that should have been established for such policies or contracts bear to the reserve that should have been established for all policies of insurance or health benefit plans written by the impaired insurer or insolvent insurer. D. Before the termination of any liquidation, rehabilitation or conservation proceeding, the court may take into consideration the contributions of the respective parties including the board, the shareholders, contract owners, certificate holders, enrollees and policyowners of the impaired insurer or insolvent insurer and any other party with a bona fide interest in making an equitable distribution of the ownership rights of such impaired insurer or insolvent insurer. In such a determination, consideration shall be given to the welfare of the policyholders, contract owners, certificate holders and enrollees of the continuing or successor member insurer. No distribution to stockholders of the assets of an impaired insurer or insolvent insurer may be made until and unless the total amount of valid claims of the fund with interest thereon for monies expended in carrying out its powers and duties under section 20-685 with respect to such insurer is fully recovered by the fund. E. If an order for liquidation or rehabilitation of a member insurer domiciled in this state has been entered, the receiver appointed under such order may recover on behalf of the member insurer, from any affiliate that controlled it, the amount of distributions, other than stock dividends paid by the member insurer on its capital stock, made at any time during the five years preceding the petition for liquidation or rehabilitation subject to the following limitations: 1. No such dividend shall be recoverable if the member insurer shows that when paid the distribution was lawful and reasonable and that the member insurer did not know and could not reasonably have known that the distribution might adversely affect the ability of the member insurer to fulfill its contractual obligations. 2. Any person who as an affiliate that controlled the member insurer at the time the distributions were paid shall be liable up to the amount of distributions the person received. Any person who was an affiliate that controlled the member insurer at the time the distributions were declared shall be liable up to the amount of distributions the person would have received if they had been paid immediately. If two persons are liable with respect to the same distributions, they are jointly and severally liable. 3. The maximum amount recoverable pursuant to this subsection shall be the amount needed in excess of all other available assets of the impaired insurer or insolvent insurer to pay the contractual obligations of the impaired insurer or insolvent insurer. 4. If any person liable pursuant to paragraph 2 is insolvent, all its affiliates that controlled it at the time the dividend was paid are jointly and severally liable for any resulting deficiency in the amount recovered from the insolvent affiliate. F. The receiver, conservator, liquidator or statutory successor of an impaired insurer or insolvent insurer is bound by a settlement of covered claims by the fund or a similar organization in another state.