§ 10-3-529 — Setoffs - effective date - applicability

(1) Notwithstanding any
other provision of this title, mutual debts or mutual credits, whether arising out of
one or more contracts between the insurer and another person in connection with
any action or proceeding under this part 5, shall be set off, and the balance only
shall be allowed or paid, except as provided in subsections (2) and (4) of this section
and section 10-3-532.

(2) No setoff shall be allowed in favor of any person where:

(a) The obligation of the insurer to the person would not at the date of the
filing of a petition for receivership entitle the person to share as a claimant in the
assets of the insurer; or

(b) The obligation of the insurer to the person was purchased by or
transferred to the person with a view to its being used as a setoff; or

(c) The obligation of the insurer is owed to an affiliate of such person, or any
other entity or association other than the person; or

(d) The obligation of the person is owed to an affiliate of the insurer or to any
other entity or association other than the insurer; or

(e) The obligation of the person is to pay an assessment levied against the
members or subscribers of the insurer, or is to pay a balance upon a subscription to
the capital stock of the insurer, or is in any other way in the nature of a capital
contribution; or

(f) The obligations between the person and the insurer arise from business in
which either the person or the insurer has assumed risks and obligations from the
other party and then has ceded back to that party substantially the same risks and
obligations; except that, with regard to such business, the commissioner has
discretion to allow certain setoffs if the commissioner deems them appropriate.

(3) (Deleted by amendment, L. 2001, p. 229, � 1, effective July 1, 2001.)

(4) The commissioner may promulgate rules and regulations to implement
this section including the establishment of reasonable accounting requirements.

(5) Notwithstanding any other provision of this section to the contrary, a
setoff of sums due on obligations in the nature of those set forth in paragraph (f) of
subsection (2) of this section shall be allowed for those sums accruing from
business written where the contracts were entered into, renewed, or extended with
the express written approval of the insurance department of the state of domicile
of the now insolvent insurer and, in the judgment of such insurance department, it
was necessary to provide reinsurance in order to prevent or mitigate a threatened
impairment or insolvency of a domiciliary insurer in connection with the exercise of
the said insurance department's regulatory responsibilities.

(6) This section shall be effective January 1, 1993, and shall apply to all
contracts entered into, renewed, extended, or amended on or after said date and to
debts or credits arising from any business written or transactions occurring after
January 1, 1993, pursuant to any contract including those in existence prior to
January 1, 1993, and shall supersede any agreements or contractual provisions
which might be construed to enlarge the setoff rights of any person under any
contract with the insurer. For purposes of this section, any change in the terms of,
or consideration for, any such contract shall be deemed an amendment.

Legislative History

Source: L. 92: Entire part R&RE, p. 1463, � 14, effective July 1. L. 2001: (1), (2)(a), (2)(f), and (3) amended, p. 229, � 1, effective July 1.