§ 27-5-22. Application of special reserve fund to protection of policyholders.
Whenever the claims upon a fire insurance company shall exceed the amount of its capital
stock and of the guaranty surplus fund provided for by this chapter, the company shall
notify the insurance commissioner of the fact, who shall then make or cause to be
made an examination of the company, and shall issue the commissioner's certificate
of the result, showing the amounts of capital, of guaranty surplus fund, of special
reserve fund, of reinsurance liability, and of other assets. Upon the issuing of that
certificate in duplicate, one copy to be given to the company and o
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§ 27-5-22. Application of special reserve fund to protection of policyholders.
Whenever the claims upon a fire insurance company shall exceed the amount of its capital
stock and of the guaranty surplus fund provided for by this chapter, the company shall
notify the insurance commissioner of the fact, who shall then make or cause to be
made an examination of the company, and shall issue the commissioner's certificate
of the result, showing the amounts of capital, of guaranty surplus fund, of special
reserve fund, of reinsurance liability, and of other assets. Upon the issuing of that
certificate in duplicate, one copy to be given to the company and one to be recorded
in the office of the insurance commissioner, the special reserve fund shall be immediately
held to protect all policyholders of the company other than those that are claimants
upon it at the date of the certificate, and the special reserve fund together with
other assets, certified by the insurance commissioner as equal in value to the amount
of the unearned premiums of the company, to be ascertained as provided in this chapter,
shall constitute the capital and assets of the company for the protection of policyholders
other than the claimants and for the further conduct of its business, and any official
certificate of the insurance commissioner shall be binding and conclusive upon all
parties interested in the company, whether as stockholders, creditors, or policyholders.
Upon the payment to the claimants, who are claimants at the date of the certificate,
of the full sum of the capital of the company and of its guaranty surplus fund and
of its assets at that date, excepting only the special reserve fund and an amount
of its assets equal to the liability of the company for unearned premiums, as certified
in this manner by the insurance commissioner, the company shall be forever discharged
from any and all further liability to the claimants and to each of them, and the insurance
commissioner shall, after issuing the commissioner's certificate, upon the demand
of the company, transfer to it all securities that have been deposited with the commissioner
by the company as the special reserve fund, and if the amount of the special reserve
fund is less than fifty percent (50%) of the full amount of the capital of the company,
a requisition shall be issued by the insurance commissioner upon the stockholders
to make up the capital to that proportion of its full amount; provided, that any capital
impaired in this manner shall be made up at least to the sum of two hundred thousand
dollars ($200,000), and in case the company, after the requisition, shall fail to
make up its capital at least to the sum of two hundred thousand dollars ($200,000),
the special reserve fund shall still be held as security and liable for any and all
losses occurring upon policies of the company.