The priority of distribution of claims from the insurer‘s estate shall be in accordance with the order in which each class of claims is set forth. Claims 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. Subclasses shall not be established within a class. As used in this section, “insurer’s estate” means the general assets of the insurer. The order of distribution of claims is:
 1.

 Class 1.

 The costs and expenses of administration, including but not limited to the following:

 a. The actual and necessary costs of preserving or recovering the assets of the insurer.
 b. Compensation for all authorized services rendered in the liquidation.
 c. Necessary filing fees.
 d. The fees and mileage payable to witnesses.
 e. Authorized reasonable attorney’s fees and other professional services rendered in the liquidation.
 f. The reasonable expenses of a guaranty association or foreign guaranty association in handling claims.

Terms Used In Iowa Code 507C.42

  • Account: means the same as defined in section 554. See Iowa Code 554E.1
  • Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
  • Foreign guaranty association: means a similar entity presently existing in or to be created in the future by the legislature of any other state. See Iowa Code 507C.2
  • Guaranty association: means the Iowa insurance guaranty association created in chapter 515B, the Iowa life and health insurance guaranty association created in chapter 508C, and any other similar entity either presently existing or to be created by the general assembly for the payment of claims of insolvent insurers. See Iowa Code 507C.2
  • Indemnification: In general, a collateral contract or assurance under which one person agrees to secure another person against either anticipated financial losses or potential adverse legal consequences. Source: FDIC
  • Insurer: means a person who has done, purports to do, is doing or is licensed to do insurance business, and is or has been subject to the authority of, or to liquidation, rehabilitation, reorganization, supervision, or conservation by an insurance commissioner. See Iowa Code 507C.2
  • property: includes personal and real property. See Iowa Code 4.1
  • Remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant.
  • State: means a state, district, or territory of the United States and the Panama Canal Zone. See Iowa Code 507C.2
  • Transaction: means a sale, trade, exchange, transfer, payment, or conversion of a digital asset or any other property or any other action or set of actions occurring between two or more persons relating to the conduct of business, commercial, or governmental affairs. See Iowa Code 554E.1
  • year: means twelve consecutive months. See Iowa Code 4.1
 2.

 Class 2.

 Claims under policies, including claims of the federal or any state or local government, for losses incurred, including third-party claims, claims against the insurer for liability for bodily injury or for injury to or destruction of tangible property which are not under policies, claims of a guaranty association or foreign guaranty association, claims under funding agreements as provided in section 508.31A, subsection 3, claims for an insufficiency in the assets allocated to and accumulated in a separate account as provided in section 508A.1, subsection 8, and claims for unearned premium. 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 a 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. A payment by an employer to an employee is not a gratuity.

 3.

 Class 3.

 Claims of the federal government except those under class 2.

 4.

 Class 4.

 Reasonable compensation to employees for services performed to the extent that they do not exceed two months of monetary compensation and represent payment for services performed within one year before the filing of the petition for liquidation or, if the rehabilitation preceded liquidation, within one year before the filing of the petition for rehabilitation. Officers and directors are not entitled to the benefit of this priority. The priority is in lieu of other similar priority which may be authorized by law as to wages or compensation of employees.

 5.

 Class 5.

 Claims of general creditors, including claims of ceding and assuming reinsurers in their capacity as such, and subrogation claims.

 6.

 Class 6.

 Claims of any state or local government except those under class 2. Claims, including those of a governmental body for a penalty or forfeiture, are 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 incurred. The remainder of such claims shall be postponed to the class of claims under subsection 9.

 7.

 Class 7.

 Claims filed late or any other claims other than claims under subsections 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 are limited in accordance with law.

 9.

 Class 9.

 The claims of shareholders or other owners.

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