§ 27-1-23-10.5 — Receiver's right to recover upon liquidation or rehabilitation

Indiana § 27-1-23-10.5

• Jurisdiction: Indiana
• Title 27: INSURANCE
• Art. 1: DEPARTMENT OF INSURANCE
• Ch. 23: Regulation of Insurance Holding Company Systems

Text

5. (a) If an order for liquidation or
rehabilitation of a domestic insurer has been entered, the receiver
appointed under the order has a right to recover on behalf of the
insurer:
(1) from any parent corporation or holding company or person or
affiliate that otherwise controlled the insurer, the amount of
distributions other than distributions of shares of the same class
of stock paid by the insurer on the insurer's capital stock; or
(2) any payment in the form of a bonus, a termination settlement,
or an extraordinary lump sum salary adjustment made by the
insurer or the insurer's subsidiaries to a director, an officer, or an
employee;
if the distribution or payment described in subdivision (1) or (2) is
made at any time during the one (1) year preceding the petition for
liquidation, conservation, or rehabilitation, as the case may be, subject
to the limitations of subsections (b), (c), and (d).
(b) A distribution is not recoverable if the parent or affiliate shows
that, when paid, the distribution was lawful and reasonable and that the
insurer did not know and could not reasonably have known that the
distribution might adversely affect the ability of the insurer to fulfill the
insurer's contractual obligations.
(c) Any person that was a parent corporation or holding company or
a person that otherwise controlled the insurer or affiliate at the time
distributions described in subsection (a) were paid shall be liable up to
the amount of distributions or payments under subsection (a) that the
person received. Any person that otherwise controlled the insurer at the
time the distributions were declared shall be liable up to the amount of
distributions the person would have received if the distributions had
been paid immediately. If at least two (2) persons are liable with
respect to the same distributions, they are jointly and severally liable.
(d) The maximum amount recoverable under this section shall be
the amount needed in excess of all other available assets of the
impaired or insolvent insurer to pay the contractual obligations of the
impaired or insolvent insurer and to reimburse any guaranty funds.
(e) To the extent that any person liable under subsection (c) is
insolvent or otherwise fails to pay claims due from the person, the
person's parent corporation or holding company or the person that
otherwise controlled the person at the time the distribution was paid is
jointly and severally liable for any resulting deficiency in the amount
recovered from the parent corporation or holding company or person
that otherwise controlled the person.

Legislative History

As added by P.L.130-1994, SEC.32 and P.L.116-1994, SEC.42.