§ 27-1-17-9 — Hazardous financial condition

(a) If, upon satisfactory evidence, it appears to
the commissioner that any foreign or alien insurance company doing
business in this state is in a hazardous financial condition as evidenced
by the existence of any conditions indicated by, but not limited to, the
following, he shall take such action as set forth in subsection (b) or (c),
compliance herewith not precluding action under other provisions of
law:
(1) It cannot meet the current applicable requirements for the
conduct of the business of insurance in this state.
(2) It has commenced, or has attempted to commence, any
voluntary liquidation or dissolution proceeding, or any proceeding
to procure the appointment of a receiver, liquidator, rehabilitator,
sequestrator, conservator, or similar officer for itself.
(3) It is the subject of liquidation or dissolution proceedings
undertaken by another state, or any other proceeding undertaken
by another state to procure the appointment of a receiver,
liquidator, rehabilitator, sequestrator, conservator, or similar
officer.
(4) Its further transaction of business would be hazardous to its
policyholders, contract holders, or the public as shown by the
following conduct or other conduct:
(A) Investment practices not providing availability within a
reasonable time of sufficient moneys to promptly meet any
demand which might in the ordinary course of business be
properly made against it.
(B) Embezzlement, sequestration, or wrongful diversion of any
of its assets by any of its officers or directors.
(C) Willful violation of its charter or any law of this state.
(b) Upon finding that a company is in a hazardous financial
condition as described in subsection (a), the commissioner shall order
the company to take such action as reasonably may be required to
correct the situation, such as the following:
(1) Requiring the company to reduce the volume of new business
being accepted to an amount and period of time specified by the
commissioner in the manner prescribed by his order.
(2) Requiring the submission of such reinsurance contracts for
approval and make such requirements relative to the company's
reinsurance program as the commissioner deems necessary to
protect the interests of Indiana policyholders.
(3) Requiring the company to reinsure all or any part of its
Indiana business with a company duly authorized to transact such
business in this state.
(4) Requiring a contribution to surplus which will increase the
company's surplus for such a period of time, and by such an
amount, and in such a manner, as the commissioner may deem
necessary and essential.
(5) Requiring the company to maintain a special deposit with the
commissioner of insurance of this state in cash or securities of the
kinds in which a domestic insurer is permitted to invest its funds,
in an amount not less than the lesser of:
(A) the amounts required to be maintained as reserves, for
losses and loss adjustment expenses on Indiana business and
reserves for unearned premiums on Indiana business. (In
determining the amount of deposit required by this subdivision,
the reserves for losses, loss adjustment expenses, and unearned
premiums shall be reduced only for reinsurance cessions to
approved reinsurers which maintain with an independent
custodian cash or marketable securities in an amount not less
than the sum of the reinsurer's reserves for losses, loss
adjustment expenses, and unearned premiums in regard to
reinsurance assumed); and
(B) six hundred thousand dollars ($600,000).
Any deposit required by this subsection shall be for the protection and
benefit of Indiana policyholders or claimants only and shall not be
withdrawn without the consent of the commissioner. The commissioner
shall require such reports as may be necessary to implement
supervision of any order issued under this subsection.
(c) If the company fails to comply with the commissioner's order
under subsection (b) within sixty (60) days or if the commissioner finds
that the company's financial condition is so serious as to make any
efforts under subsection (b) meaningless to the company's
policyholders, claimants, or the public, the commissioner shall suspend
the authority granted to such company to do business in this state. If no
demand for a hearing is made by the suspended company within thirty
(30) days after suspension, such suspension shall become a revocation
of the authority to transact the business of insurance in this state. Any
such hearing shall be held in compliance with IC 4-21.5-3. If during
such a hearing satisfactory evidence is forced to indicate that the
company is in a hazardous financial condition as described in
subsection (a), the commissioner shall revoke the authority of the
company to transact the business of insurance in this state.
As added by Acts 1977, P.L.281, SEC.4. Amended by
P.L.7-1987, SEC.138.