Bail: Security given for the release of a criminal defendant or witness from legal custody (usually in the form of money) to secure his/her appearance on the day and time appointed.
Contract: A legal written agreement that becomes binding when signed.
creditor: means a person having a claim against an insurer whether the claim is:
Director: means a member of the board of directors of a corporation. See Utah Code 31A-1-301
Employee: means :
(a)
an individual employed by an employer; or
(b)
an individual who meets the requirements of Subsection (53)(b). See Utah Code 31A-1-301
Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
Filed: means that a filing is:
(i)
submitted to the department as required by and in accordance with applicable statute, rule, or filing order;
(ii)
received by the department within the time period provided in applicable statute, rule, or filing order; and
(iii)
accompanied by the appropriate fee in accordance with:
a similar mechanism in another state that is created for the payment of claims or continuation of policy obligations of a financially impaired or insolvent insurer. See Utah Code 31A-27a-102
Impaired: means that an insurer:
(a)
does not have admitted assets at least equal to the sum of:
(i)
all its liabilities; and
(ii)
the minimum surplus required to be maintained by Section 31A-5-211 or 31A-8-209; or
(b)
has a total adjusted capital that is less than its authorized control level RBC, as defined in Section 31A-17-601. See Utah Code 31A-27a-102
Indemnity: means the payment of an amount to offset all or part of an insured loss. See Utah Code 31A-1-301
insolvent: means that an insurer:
(a)
is unable to pay its obligations when they are due;
(b)
does not have admitted assets at least equal to all of its liabilities; or
(c)
has a total adjusted capital that is less than its mandatory control level RBC, as defined in Section 31A-17-601. See Utah Code 31A-27a-102
Insurance: includes :
(i)
a risk distributing arrangement providing for compensation or replacement for damages or loss through the provision of a service or a benefit in kind;
(ii)
a contract of guaranty or suretyship entered into by the guarantor or surety as a business and not as merely incidental to a business transaction; and
(iii)
a plan in which the risk does not rest upon the person who makes an arrangement, but with a class of persons who have agreed to share the risk. See Utah Code 31A-1-301
Insured: means a person to whom or for whose benefit an insurer makes a promise in an insurance policy and includes:
is doing, has done, purports to do, or is licensed to do the business of insurance;
(b)
is or has been subject to the authority of, or to rehabilitation, liquidation, reorganization, supervision, or conservation by an insurance commissioner; or
Litigation: A case, controversy, or lawsuit. Participants (plaintiffs and defendants) in lawsuits are called litigants.
Member: means a person having membership rights in an insurance corporation. See Utah Code 31A-1-301
Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
receiver: means the commissioner or the commissioner's designee, including a rehabilitator, liquidator, or ancillary receiver. See Utah Code 31A-27a-102
receivership: means a rehabilitation, liquidation, or ancillary receivership. See Utah Code 31A-27a-102
receivership court: refers to the court in which a delinquency proceeding is pending. See Utah Code 31A-27a-102
Reinsurance: means a transaction or contract under which an assuming insurer agrees to indemnify a ceding insurer against all, or a part, of a loss that the ceding insurer may sustain under the one or more policies that the ceding insurer issues or will issue. See Utah Code 31A-27a-102
Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
State: means a state, district, or territory of the United States. See Utah Code 31A-27a-102
Statute: A law passed by a legislature.
Surplus: means the excess of assets over the sum of paid-in capital and liabilities. See Utah Code 31A-1-301
Tort: A civil wrong or breach of a duty to another person, as outlined by law. A very common tort is negligent operation of a motor vehicle that results in property damage and personal injury in an automobile accident.
(a)
The priority of payment of distributions on unsecured claims shall be in accordance with the order in which each class of claim is set forth in this section except as provided in Section 31A-27a-702.
(b)
All claims in each class shall be paid in full or adequate funds retained for the claim’s payment before a member of the next class receives payment.
(c)
All claims within a class shall be paid substantially the same percentage.
(d)
Except as provided in Subsections (2)(a)(i)(E), (2)(k), and (2)(m), subclasses may not be established within a class.
(e)
A claim by a shareholder, policyholder, or other creditor may not be permitted to circumvent the priority classes through the use of equitable remedies.
(2)
The order of distribution of claims shall be as follows:
(a)
a Class 1 claim, which:
(i)
is a cost or expense of administration expressly approved or ratified by the liquidator, including the following:
(A)
the actual and necessary costs of preserving or recovering the property of the insurer;
(B)
reasonable compensation for all services rendered on behalf of the administrative supervisor or receiver;
(C)
a necessary filing fee;
(D)
the fees and mileage payable to a witness;
(E)
an unsecured loan obtained by the receiver, which:
(I)
unless its terms otherwise provide, has priority over all other costs of administration; and
(II)
absent agreement to the contrary, shares pro rata with all other claims described in this Subsection (2)(a)(i)(E); and
(F)
an expense approved by the rehabilitator of the insurer, if any, incurred in the course of the rehabilitation that is unpaid at the time of the entry of the order of liquidation; and
(ii)
except as expressly approved by the receiver, excludes any expense arising from a duty to indemnify a director, officer, or employee of the insurer which expense, if allowed, is a Class 7 claim;
(b)
a Class 2 claim, which:
(i)
is a reasonable expense of a guaranty association, including overhead, salaries, or other general administrative expenses allocable to the receivership such as:
(A)
an administrative or claims handling expense;
(B)
an expense in connection with arrangements for ongoing coverage; and
(C)
in the case of a property and casualty guaranty association, a loss adjustment expense, including:
(I)
an adjusting or other expense; and
(II)
a defense or cost containment expense; and
(ii)
excludes an expense incurred in the performance of duties under Section 31A-28-112 or similar duties under the statute governing a similar organization in another state;
(c)
a Class 3 claim, which:
(i)
is:
(A)
a claim under a policy of insurance including a third party claim;
(B)
a claim under an annuitycontract or funding agreement;
(C)
a claim under a nonassessable policy for unearned premium;
(D)
a claim of an obligee and, subject to the discretion of the receiver, a completion contractor under a surety bond or surety undertaking, except for:
(I)
a bail bond;
(II)
a mortgage guaranty;
(III)
a financial guaranty; or
(IV)
other form of insurance offering protection against investment risk or warranties;
(E)
a claim by a principal under a surety bond or surety undertaking for wrongful dissipation of collateral by the insurer or its agents;
(F)
an indemnity payment on:
(I)
a covered claim; or
(II)
for a delinquency proceeding under this chapter that is initiated before May 8, 2018, a payment for the continuation of coverage made by an entity responsible for the payment of a claim or continuation of coverage of an insolvent health maintenance organization;
(G)
a claim for unearned premium;
(H)
a claim incurred during the extension of coverage provided for in Sections 31A-27a-402 and 31A-27a-403; or
(I)
all other claims incurred in fulfilling the statutory obligations of a guaranty association not included in Class 2, including:
(I)
an indemnity payment on covered claims; and
(II)
in the case of a life and health guaranty association, a claim:
(Aa)
as a creditor of the impaired or insolvent insurer for a payment of and liabilities incurred on behalf of a covered claim or covered obligation of the insurer; and
(Bb)
for the funds needed to reinsure the obligations described under this Subsection (2)(c)(i)(I)(II) with a solvent insurer; and
(ii)
notwithstanding any other provision of this chapter, excludes the following which shall be paid under Class 7, except as provided in this section:
(A)
an obligation of the insolvent insurer arising out of a reinsurance contract;
(B)
an obligation that is incurred pursuant to an occurrence policy or reported pursuant to a claims made policy after:
(I)
the expiration date of the policy;
(II)
the policy is replaced by the insured;
(III)
the policy is canceled at the insured’s request; or
(IV)
the policy is canceled as provided in this chapter;
(C)
an obligation to an insurer, insurance pool, or underwriting association and the insurer’s, insurance pool’s, or underwriting association’s claim for contribution, indemnity, or subrogation, equitable or otherwise, except for direct claims under a policy where the insurer is the named insured;
(D)
an amount accrued as punitive or exemplary damages unless expressly covered under the terms of the policy, which shall be paid as a claim in Class 9;
(E)
a tort claim of any kind against the insurer;
(F)
a claim against the insurer for bad faith or wrongful settlement practices; and
(G)
a claim of a guaranty association for assessments not paid by the insurer, which claims shall be paid as claims in Class 7; and
(iii)
notwithstanding Subsection (2)(c)(ii)(B), does not exclude an unearned premium claim on a policy, other than a reinsurance agreement;
(d)
a Class 4 claim, which is a claim under a policy for mortgage guaranty, financial guaranty, or other forms of insurance offering protection against investment risk or warranties;
(e)
a Class 5 claim, which is a claim of the federal government not included in Class 3 or 4;
(f)
a Class 6 claim, which is a debt due an employee for services or benefits:
(i)
to the extent that the expense:
(A)
does not exceed the lesser of:
(I)
$5,000; or
(II)
two months’ salary; and
(B)
represents payment for services performed within one year before the day on which the initial order of receivership is issued; and
(ii)
which priority is in lieu of any other similar priority that may be authorized by law as to wages or compensation of employees;
(g)
a Class 7 claim, which is a claim of an unsecured creditor not included in Classes 1 through 6, including:
(i)
a claim under a reinsurance contract;
(ii)
a claim of a guaranty association for an assessment not paid by the insurer; and
(iii)
other claims excluded from Class 3 or 4, unless otherwise assigned to Classes 8 through 13;
(h)
subject to Subsection (3), a Class 8 claim, which is:
(i)
a claim of a state or local government, except a claim specifically classified elsewhere in this section; or
(ii)
a claim for services rendered and expenses incurred in opposing a formal delinquency proceeding;
(i)
a Class 9 claim, which is a claim for penalties, punitive damages, or forfeitures, unless expressly covered under the terms of a policy of insurance;
(j)
a Class 10 claim, which is, except as provided in Subsections 31A-27a-601(2) and 31A-27a-601(3), a late filed claim that would otherwise be classified in Classes 3 through 9;
(k)
subject to Subsection (4), a Class 11 claim, which is:
(i)
a surplus note;
(ii)
a capital note;
(iii)
a contribution note;
(iv)
a similar obligation;
(v)
a premium refund on an assessable policy; or
(vi)
any other claim specifically assigned to this class;
(l)
a Class 12 claim, which is a claim for interest on an allowed claim of Classes 1 through 11, according to the terms of a plan to pay interest on allowed claims proposed by the liquidator and approved by the receivership court; and
(m)
subject to Subsection (4), a Class 13 claim, which is a claim of a shareholder or other owner arising out of:
(i)
the shareholder’s or owner’s capacity as shareholder or owner or any other capacity; and
(ii)
except as the claim may be qualified in Class 3, 4, 7, or 12.
(3)
To prove a claim described in Class 8, the claimant shall show that:
(a)
the insurer that is the subject of the delinquency proceeding incurred the fee or expense on the basis of the insurer’s best knowledge, information, and belief:
(i)
formed after reasonable inquiry indicating opposition is in the best interests of the insurer;
(ii)
that is well grounded in fact; and
(iii)
is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law; and
(b)
opposition is not pursued for any improper purpose, such as to harass, to cause unnecessary delay, or to cause needless increase in the cost of the litigation.
(4)
(a)
A claim in Class 11 is subject to a subordination agreement related to other claims in Class 11 that exist before the entry of a liquidation order.
(b)
A claim in Class 13 is subject to a subordination agreement, related to other claims in Class 13 that exist before the entry of a liquidation order.
