§ 27-9-3-40 — Priority of distribution of claims

(a) The priority of distribution of claims from
the insurer's estate must be in accordance with the order in which each
class of claims is set forth in this section. Every claim in each class
must be paid in full (or adequate funds retained for payment) before the
members of the next class receive any payment. Subclasses may not be
established within any class. The order of distribution of claims shall
be:
(1) Class 1. The costs and expenses of administration, including:
(A) The actual and necessary costs of preserving or recovering
the assets of the insurer.
(B) Compensation for all services rendered in the liquidation.
(C) Any necessary filing fees.
(D) The fees and mileage payable to witnesses.
(E) Reasonable attorney's fees.
(F) The reasonable expenses of a guaranty association or
foreign guaranty association in handling claims.
(2) Class 2. All claims under policies for losses incurred,
including third party claims, all claims against the insurer for
liability for bodily injury or for injury to or destruction of tangible
property which are not under policies, and all claims of a guaranty
association or foreign guaranty association. All claims under life
insurance and annuity policies, whether for death proceeds,
annuity proceeds, or investment values shall be treated as loss
claims. That portion of any loss, indemnification for which is
provided by other benefits or advantages recovered by the
claimant, shall not be included in this class, other than benefits or
advantages recovered or recoverable in discharge of familial
obligations of support or by way of succession at death or as
proceeds of life insurance, or as gratuities. Payment by an
employer to his employee may not be treated as gratuity.
(3) Class 3. Claims of the federal government.
(4) Class 4. Debts owed to employees for services performed, to
the extent that they do not exceed one thousand dollars ($1,000)
and represent payment for services performed within one (1) year
before the filing of the petition for liquidation. Officers and
directors are not entitled to the benefit of this priority. This
priority is in place of any other similar priority that may be
authorized by law as to wages or compensation of employees.
(5) Class 5. Claims under nonassessable policies for unearned
premium or other premium refunds and claims of general
creditors.
(6) Class 6. Claims of any state or local government. Claims,
including those of any governmental body for a penalty or
forfeiture, shall be allowed in 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 these claims
shall be postponed to the class of claims under subdivision (9).
(7) Class 7. Claims filed late or any other claims other than claims
under subdivisions (8) and (9).
(8) Class 8. Surplus or contribution notes, or similar obligations,
and premium refunds on assessable policies. Payments to
members of domestic mutual insurance companies shall be
limited in accordance with law.
(9) Class 9. The claims of shareholders or other owners.
(b) This section is severable in the manner provided in IC 1-1-1-8(b). If:
(1) any provision of this section; or
(2) the application of any provision of this section to any person
or circumstance;
is held invalid, the invalidity does not affect the other provisions or
applications of this section.
As added by Acts 1979, P.L.255, SEC.1. Amended by
P.L.185-1996, SEC.15.