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HOUSE BILL 1634
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Passed Legislature ‑
2001 Regular Session
State of Washington 57th
Legislature 2001 Regular Session
By
Read
first time 01/31/2001. Referred to Committee on Financial Institutions &
Insurance. Prioritizing and ordering the
distribution of claims of an insurer's estate.
_1 AN
ACT Relating to prioritizing and ordering the distribution
_2 of claims
of an insurer's estate; amending RCW 48.31.280 and
_3 48.31.260;
and creating a new section.
_4 BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
_5 Sec. 1. RCW 48.31.280
and 1993 c 462 s 83 are each amended to read
_6 as
follows:
_7 The
priority of distribution of claims from the insurer's
_8 estate
is as follows: Every claim in a class must be paid in full
_9 or
adequate funds retained for payment before the members of the
10 next
class receive any payment; no subclasses may be established
11 within
a class; and no claim by a shareholder, policyholder, or
12 other
creditor may circumvent the priority classes through the use
13 of
equitable remedies. The order of distribution of claims is:
14 (1)
Class 1. The costs and expenses of administration during
15 rehabilitation
and liquidation, including but not limited to the
16 following:
17 (a)
The actual and necessary costs of preserving or recovering
18 the
assets of the insurer;
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1 HB 1634.PL
_1 (b)
Compensation for all authorized services rendered in the
_2 rehabilitation
and liquidation;
_3 (c)
Necessary filing fees;
_4 (d)
The fees and mileage payable to witnesses;
_5 (e)
Authorized reasonable attorneys' fees and other
_6 professional
services rendered in the rehabilitation and
_7 liquidation;
_8 (f)
The reasonable expenses of a guaranty association or
_9 foreign
guaranty association for unallocated loss adjustment
10 expenses.
11 (2)
Class 2. ((Reasonable compensation to employees for services
12 performed
to the extent that they do not exceed two months of
13 monetary
compensation and represent payment for services performed
14 within
one year before the filing of the petition for liquidation
15 or,
if rehabilitation preceded liquidation, within one year before
16 the
filing of the petition for rehabilitation. Principal officers
17 and
directors are not entitled to the benefit of this priority
18 except
as otherwise approved by the liquidator and the court. The
19 priority
is in lieu of any other similar priority that may be
20 authorized
by law as to wages or compensation of employees.
21 (3)
Class 3. Loss claims. For purposes of this section, "loss
22 claims"
are all claims under policies, including claims of the
23 federal
or a state or local government, for losses incurred,
24 including
third-party claims and all claims of a guaranty
25 association
or foreign guaranty association. All claims under life
26 insurance
and annuity policies, whether for death proceeds,
27 annuity
proceeds, or investment values, are loss claims. That
28 portion
of any loss indemnification that is provided for by other
29 benefits
or advantages recovered by the claimant, is not included
30 in
this class, other than benefits or advantages recovered or
31 recoverable
in discharge of familial obligation of support or by
32 way
of succession at death or a proceeds of life insurance, or as
33 gratuities.
No payment by an employer to his or her employee may be
34 treated
as a gratuity.
35 (4)
Class 4. Claims under nonassessable policies for unearned
36 premium
or other premium refunds and claims of general creditors
37 including
claims of ceding and assuming companies in their
38 capacity
as such.
HB 1634.PL p.
2
_1 (5)
Class 5. Claims of the federal or any state or local
_2 government
except those under subsection (3) of this section.
_3 Claims,
including those of any governmental body for a penalty or
_4 forfeiture,
are allowed in this class only to the extent of the
_5 pecuniary
loss sustained from the act, transaction, or proceeding
_6 out
of which the penalty or forfeiture arose, with reasonable and
_7 actual
costs occasioned thereby. The remainder of such claims are
_8 postponed
to the class of claims under subsection (8) of this
_9 section.
10 (6)
Class 6. Claims filed late or any other claims other than
11 claims
under subsections (7) and (8) of this section.
12 (7)
Class 7. Surplus or contribution notes, or similar
13 obligations,
and premium refunds on assessable policies. Payments
14 to
members of domestic mutual insurance companies are limited in
15 accordance
with law.
16 (8)
Class 8. The claims of shareholders or other owners in their
17 capacity
as shareholders.)) Loss claims. For purposes of this
18 section,
loss claims are all claims under policies, including
19 claims
of the federal or a state or local government, for losses
20 incurred,
including third-party claims, and all claims of a
21 guaranty
association or foreign guaranty association. All claims
22 under
life insurance and annuity policies, whether for death
23 proceeds,
annuity proceeds, or investment values, are loss
24 claims.
That portion of any loss indemnification that is provided
25 for
by other benefits or advantages recovered by the claimant, is
26 not
included in this class, other than benefits or advantages
27 recovered
or recoverable in discharge of familial obligations of
28 support
or by way of succession at death or as proceeds of life
29 insurance,
or as gratuities. No payment by an employer to an
30 employee
may be treated as a gratuity. Loss claims also include
31 claims
under nonassessable policies for unearned premium or other
32 premium
refunds.
33 (3)
Class 3. Claims of the federal government, other than claims
34 which
are included as loss claims under subsection (2) of this
35 section.
36 (4)
Class 4. Reasonable compensation to employees for services
37 performed
to the extent that they do not exceed two months of
38 monetary
compensation and represent payment for services performed
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3 HB 1634.PL
_1 within
one year before the filing of the petition for liquidation
_2 or,
if rehabilitation preceded liquidation, within one year before
_3 the
filing of the petition for rehabilitation; except, where there
_4 are
no claims and no potential claims of the federal government in
_5 the
estate, in which case claims in this class shall have priority
_6 over
claims in class 2 and below. Principal officers and directors
_7 are
not entitled to the benefit of this priority except as
_8 otherwise
approved by the liquidator and the court. This priority
_9 is
in lieu of any other similar priority that may be authorized by
10 law
as to wages or compensation of employees.
11 (5)
Class 5. Claims of general creditors including claims of
12 ceding
and assuming companies in their capacity as such.
13 (6)
Class 6. Claims of any state or local government, except
14 those
under subsection (2) of this section. Claims, including those
15 of
any governmental body for a penalty or forfeiture, are allowed
16 in
this class only to the extent of the pecuniary loss sustained
17 from
the act, transaction, or proceeding out of which the penalty
18 or
forfeiture arose, with reasonable and actual costs occasioned
19 thereby.
The remainder of such claims are postponed to the class of
20 claims
under subsection (9) of this section.
21 (7)
Class 7. Claims filed late or any other claims other than
22 claims
under subsections (8) and (9) of this section.
23 (8)
Class 8. Surplus or contribution notes, or similar
24 obligations,
and premium refunds on assessable policies. Payments
25 to
members of domestic mutual insurance companies are limited in
26 accordance
with law.
27 (9)
Class 9. The claims of shareholders or other owners in their
28 capacity
as shareholders.
29 Sec. 2. RCW 48.31.260
and 1947 c 79 s .31.26 are each amended to
30 read as
follows:
31 The
rights and liabilities of the insurer and of its creditors,
32 policyholders,
stockholders, members, subscribers, and all other
33 persons
interested in its estate shall, unless otherwise directed
34 by the
court, be fixed as of the date on which the order directing
35 the
liquidation of the insurer is filed in the office of the clerk
36 of the
court which made the order, subject to the provisions of
HB 1634.PL p.
4
_1 RCW
48.31.300 with respect to the rights of claimants holding
_2 contingent
claims and RCW 48.31.280 with respect to the priority
_3 and
order of distributions of claims.
_4 NEW
SECTION. Sec. 3. This act applies to
and governs all claims
_5 filed
in any proceeding to liquidate an insurer that is initiated
_6 on or
after January 1, 2001.
_7 NEW
SECTION. Sec. 4. If any provision of
this act or its
_8 application
to any person or circumstance is held invalid, the
_9 remainder
of the act or the application of the provision to other
10 persons
or circumstances is not affected.
‑‑‑ END ‑‑‑
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