Indiana Code 27-1-17-9. Hazardous financial condition
(1) It cannot meet the current applicable requirements for the conduct of the business of insurance in this state.
Terms Used In Indiana Code 27-1-17-9
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Commissioner: means the "insurance commissioner" of this state. See Indiana Code 27-1-2-3
- Contract: A legal written agreement that becomes binding when signed.
- Embezzlement: In most states, embezzlement is defined as theft/larceny of assets (money or property) by a person in a position of trust or responsibility over those assets. Embezzlement typically occurs in the employment and corporate settings. Source: OCC
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Insurance: means a contract of insurance or an agreement by which one (1) party, for a consideration, promises to pay money or its equivalent or to do an act valuable to the insured upon the destruction, loss or injury of something in which the other party has a pecuniary interest, or in consideration of a price paid, adequate to the risk, becomes security to the other against loss by certain specified risks; to grant indemnity or security against loss for a consideration. See Indiana Code 27-1-2-3
- insurer: means a company, firm, partnership, association, order, society or system making any kind or kinds of insurance and shall include associations operating as Lloyds, reciprocal or inter-insurers, or individual underwriters. See Indiana Code 27-1-2-3
- Reinsurer: means an insurer that:
Indiana Code 27-1-2-3
(3) It is the subject of liquidation or dissolution proceedings undertaken by another state, or any other proceeding undertaken by another state to procure the appointment of a receiver, liquidator, rehabilitator, sequestrator, conservator, or similar officer.
(4) Its further transaction of business would be hazardous to its policyholders, contract holders, or the public as shown by the following conduct or other conduct:
(A) Investment practices not providing availability within a reasonable time of sufficient moneys to promptly meet any demand which might in the ordinary course of business be properly made against it.
(B) Embezzlement, sequestration, or wrongful diversion of any of its assets by any of its officers or directors.
(C) Willful violation of its charter or any law of this state.
(b) Upon finding that a company is in a hazardous financial condition as described in subsection (a), the commissioner shall order the company to take such action as reasonably may be required to correct the situation, such as the following:
(1) Requiring the company to reduce the volume of new business being accepted to an amount and period of time specified by the commissioner in the manner prescribed by his order.
(2) Requiring the submission of such reinsurance contracts for approval and make such requirements relative to the company’s reinsurance program as the commissioner deems necessary to protect the interests of Indiana policyholders.
(3) Requiring the company to reinsure all or any part of its Indiana business with a company duly authorized to transact such business in this state.
(4) Requiring a contribution to surplus which will increase the company’s surplus for such a period of time, and by such an amount, and in such a manner, as the commissioner may deem necessary and essential.
(5) Requiring the company to maintain a special deposit with the commissioner of insurance of this state in cash or securities of the kinds in which a domestic insurer is permitted to invest its funds, in an amount not less than the lesser of:
(A) the amounts required to be maintained as reserves, for losses and loss adjustment expenses on Indiana business and reserves for unearned premiums on Indiana business. (In determining the amount of deposit required by this subdivision, the reserves for losses, loss adjustment expenses, and unearned premiums shall be reduced only for reinsurance cessions to approved reinsurers which maintain with an independent custodian cash or marketable securities in an amount not less than the sum of the reinsurer‘s reserves for losses, loss adjustment expenses, and unearned premiums in regard to reinsurance assumed); and
(B) six hundred thousand dollars ($600,000).
Any deposit required by this subsection shall be for the protection and benefit of Indiana policyholders or claimants only and shall not be withdrawn without the consent of the commissioner. The commissioner shall require such reports as may be necessary to implement supervision of any order issued under this subsection.
(c) If the company fails to comply with the commissioner’s order under subsection (b) within sixty (60) days or if the commissioner finds that the company’s financial condition is so serious as to make any efforts under subsection (b) meaningless to the company’s policyholders, claimants, or the public, the commissioner shall suspend the authority granted to such company to do business in this state. If no demand for a hearing is made by the suspended company within thirty (30) days after suspension, such suspension shall become a revocation of the authority to transact the business of insurance in this state. Any such hearing shall be held in compliance with IC 4-21.5-3. If during such a hearing satisfactory evidence is forced to indicate that the company is in a hazardous financial condition as described in subsection (a), the commissioner shall revoke the authority of the company to transact the business of insurance in this state.
As added by Acts 1977, P.L.281, SEC.4. Amended by P.L.7-1987, SEC.138.