Minnesota Session Laws - 1985, Regular Session

  

                         Laws of Minnesota 1985 

                        CHAPTER 255-H.F.No. 857 
           An act relating to insurance; authorizing the receiver 
          of an insolvent insurer to accelerate the distribution 
          of available assets in payment of claims against the 
          insurer; establishing priority of certain claims; 
          amending Minnesota Statutes 1984, sections 60B.44, 
          subdivision 1; 60B.46, by adding subdivisions; and 
          60C.05, subdivision 1. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1984, section 60B.44, 
subdivision 1, is amended to read: 
    Subdivision 1.  [DEDUCTIBLE PROVISION.] The order of 
distribution of claims from the insurer's estate shall be as in 
the order stated in this section with a descending degree of 
preference for each subdivision.  The first $50 of the amount 
allowed on each claim in the classes under subdivisions 3 to 7 
shall be deducted from the claim and included in the class under 
subdivision 9.  Claims may not be cumulated by assignment to 
avoid application of the $50 deductible provision.  Subject to 
the $50 deductible provision, every claim in each class shall be 
paid in full or adequate funds retained for the payment before 
the members of the next class receive any payment.  No 
subclasses shall be established within any class. 
    Sec. 2.  Minnesota Statutes 1984, section 60B.46, is 
amended by adding a subdivision to read:  
    Subd. 3.  [PAYMENTS TO GUARANTY ASSOCIATIONS.] Within 120 
days of a final determination of insolvency of a company by a 
court of competent jurisdiction of this state or as soon 
thereafter as is practical, the liquidator shall make 
application to the court for approval of a proposal to disburse 
assets out of the company's marshalled assets, from time to time 
as the assets become available, to the Minnesota Insurance 
Guaranty Association, to the Minnesota Life and Health Insurance 
Guaranty Association, and to any entity or person performing a 
similar function in another state.  
    Sec. 3.  Minnesota Statutes 1984, section 60B.46, is 
amended by adding a subdivision to read:  
    Subd. 4.  [CONTENTS OF PROPOSAL.] The proposal shall at 
least include provisions for:  
    (1) reserving amounts for the payment of expenses of 
administration, the payment of claims of secured creditors to 
the extent of the value of their security, and the payment of 
claims having a higher priority than those of the guaranty 
associations;  
    (2) disbursements of the assets marshalled to date and 
subsequent disbursements of assets as they become available;  
    (3) equitable allocation of disbursements to each of the 
guaranty associations entitled thereto;  
    (4) the securing by the liquidator from each of the 
guaranty associations entitled to disbursements pursuant to this 
section of an agreement to return to the liquidator the assets 
previously disbursed to them as may be required to pay claims of 
secured creditors and those claims having a higher priority than 
those of the guaranty association.  No bond shall be required of 
a guaranty association; and 
    (5) a full report to be made by the guaranty association to 
the liquidator accounting for all assets so disbursed to the 
association, all disbursements made therefrom, any interest 
earned by the guaranty association on the assets, and any other 
matter as the court may direct.  
    Sec. 4.  Minnesota Statutes 1984, section 60B.46, is 
amended by adding a subdivision to read:  
    Subd. 5.  [DISBURSEMENTS.] (a) The proposal shall provide 
for disbursements to the guaranty associations in amounts 
estimated to be at least equal to the claim payments made or to 
be made thereby for which the guaranty association could assess 
a claim against the liquidator.  The proposal shall further 
provide that if the assets available for distribution from time 
to time do not equal or exceed the amount of such claim payments 
made or to be made by the guaranty association, then 
disbursements shall be in the amount of the available assets.  
    (b) The liquidator's proposal shall, with respect to an 
insolvent insurer writing life or health insurance or annuities, 
provide for disbursements of assets to any guaranty association 
or any foreign guaranty association covering life or health 
insurance or annuities or to any other entity or organization 
reinsuring, assuming, or guaranteeing policies or contracts of 
insurance under the acts creating these associations.  
    Sec. 5.  Minnesota Statutes 1984, section 60B.46, is 
amended by adding a subdivision to read: 
    Subd. 6.  [NOTICE OF APPLICATION.] Notice of the 
application shall be given to the guaranty associations in, and 
to the commissioners of insurance of, each of the states.  The 
notice shall be deemed to have been given when deposited in the 
United States mail, certified first class postage prepaid, at 
least 30 days prior to submission of the application to the 
court.  Action on the application may be taken by the court 
provided the above required notice has been given and provided 
further that the liquidator's proposal complies with subdivision 
4, clauses (1) and (2).  
    Sec. 6.  Minnesota Statutes 1984, section 60C.05, 
subdivision 1, is amended to read: 
    Subdivision 1.  The association shall: 
    (a) Be deemed the insurer to the extent of its obligation 
on the covered claims.  The claims found by the board of 
directors to be covered shall be paid out of available funds 
after they have been approved or settled under sections 60B.45, 
subdivision 2, and 60B.58, subdivision 2, or the corresponding 
laws of another jurisdiction, subject to the board's power to 
reduce the amount of or reject the award under section 60C.10. 
    (b) Allocate claims paid and expenses incurred among the 
four accounts and assess member insurers separately for each 
account the amounts necessary to pay the obligations of the 
association under clause (a), the expenses of handling covered 
claims, the cost of examinations under section 60C.15 and other 
expenses authorized by Laws 1971, Chapter 145. 
    (c) Notify the persons as the commissioner directs under 
Laws 1971, Chapter 145. 
    (d) Handle claims through its employees or through one or 
more insurers or other persons designated as servicing 
facilities. Designation of a servicing facility is subject to 
the approval of the commissioner, but the designation may be 
declined. 
    (e) Reimburse each servicing facility for obligations of 
the association paid by the facility and for expenses incurred 
by the facility while handling claims on behalf of the 
association and shall pay the other expenses of the association 
authorized by Laws 1971, Chapter 145.  
    (f) Notify each member insurer of its assessment not later 
than 30 days before it is due.  
    (g) Issue to each insurer paying an assessment under this 
chapter a certificate of contribution, in a form prescribed by 
the commissioner, for the amount so paid.  All outstanding 
certificates shall be of equal dignity and priority without 
reference to amounts or dates of issue.  A certificate of 
contribution may be shown by the insurer in its financial 
statement as an asset in the form and for the amount, if any, 
and period of time the commissioner approves. 
    Approved May 29, 1985