SECTIONS 1064.1-1064.13 - California Statutes

INSURANCE CODE

SECTION 1064.1-1064.13

1064.1. For the purposes of this act:
(a) "Insurer" means any person subject to the insurance
supervisory authority of, or to liquidation, rehabilitation,
reorganization, or conservation by the commissioner or the equivalent
insurance supervisory official of another state.
(b) "Delinquency proceeding" means any proceeding commenced
against an insurer for the purpose of liquidating, rehabilitating,
reorganizing, or conserving that insurer.
(c) "Foreign country" means territory not in any state.
(d) "Domiciliary state" means the state in which an insurer is
incorporated or organized, or, in the case of an insurer incorporated
or organized in a foreign country, the state in which the insurer,
having become authorized to do business in the state, has, at the
commencement of delinquency proceedings, the largest amount of its
assets held in trust and assets held on deposit for the benefit of
its policyholders or policyholders and creditors in the United
States; and any such insurer is deemed to be domiciled in such state.
(e) "Ancillary state" means any state other than a domiciliary
state.
(f) "Reciprocal state" means any state other than this state in
which in substance and effect the provisions of this act are in
force, including the provisions requiring that the commissioner or
equivalent insurance supervisory official be the receiver of a
delinquent insurer. A "reciprocal state" includes any state also
which has, through its commissioner or equivalent supervisory
official, entered into a binding and enforceable written agreement
with the commissioner of this state which provides that (1) a
commissioner or equivalent supervisory official is required to be the
receiver of a delinquent insurer; (2) title to assets of the
delinquent insurer shall vest in the domiciliary receiver, as of the
date of any court order appointing him or her as receiver, and he or
she shall have the same rights to recover those assets as provided
under subdivision (b) of Section 1064.3; (3) nondomiciliary creditors
may file and prove their claims before ancillary receivers; (4) the
laws of the domiciliary state of the delinquent insurer shall be
applied uniformly to residents and nonresidents in the allowance of
preference of claims, except for claims to special deposits created
under the laws of the domiciliary state; (5) preferences (including
attachments, garnishments, and liens) for creditors with advance
information shall be prevented; and (6) the domiciliary receiver may
sue in the reciprocal state to recover any assets of a delinquent
insurer to which he or she may be entitled under the law.
(g) "General assets" means all property, real, personal, or
otherwise, not specifically mortgaged, pledged, deposited, or
otherwise encumbered for the security or benefit of specified persons
or limited class or classes of persons, and as to such specifically
encumbered property the term includes all such property or its
proceeds in excess of the amount necessary to discharge the sum or
sums secured thereby. Assets held in trust and assets held on deposit
for the security or benefit of all policyholders or all
policyholders and creditors in the United States, shall be deemed
general assets.
(h) "Preferred claim" means any claim with respect to which the
law of a state accords priority of payment from the general assets of
the insurer.
(i) "Special deposit claim" means any claim secured by a deposit
made for the security or benefit of a limited class or classes of
persons, but not including any general assets.
(j) "Secured claim" means any claim secured by mortgage, trust,
deed, pledge, deposit as security, escrow, or otherwise, but not
including special deposit claims or claims against general assets.
The term also includes claims, which more than four months prior to
the commencement of delinquency proceedings in the state of the
insurer's domicile, have become liens upon specific assets by reason
of judicial process.
(k) "Receiver" means receiver, liquidator, rehabilitator, or
conservator as the context may require.

1064.2. (a) Whenever under the laws of this state a receiver is to
be appointed in delinquency proceedings for an insurer domiciled in
this state, the court shall appoint the commissioner as receiver.
Upon the appointment, the court shall direct the receiver forthwith
to take possession of the assets of the insurer and to administer
them under the orders of the court.
(b) The domiciliary receiver and his or her successors in office
shall be vested by operation of law with the title to all of the
property, contracts, and rights of action, and all of the books and
records of the insurer wherever located, as of the date of the order
of his or her appointment, and he or she shall have the right to
recover the same and reduce them to possession; except that ancillary
receivers in reciprocal states shall have, as to assets located in
their respective states, the rights and powers which are prescribed
in this article for ancillary receivers appointed in this state as to
assets located in this state. The filing or recording of the order
appointing the receiver or certified copy thereof, in the office
where instruments affecting title to property are required to be
filed or recorded shall impart the same notice as would be imparted
by a deed, bill of sale, or other evidence of title duly filed or
recorded. The domiciliary receiver shall be responsible on his or her
official bond for the proper administration of all assets coming
into his or her possession or control.
(c) Upon taking possession of the assets of a delinquent insurer
the domiciliary receiver shall, subject to the direction of the
court, and in accordance with those procedures that the receiver may
petition the court to establish, immediately proceed to conduct the
business of the insurer or to take the steps authorized by the laws
of this state for the purpose of liquidating, rehabilitating,
reorganizing, or conserving the affairs of the insurer. In connection
with delinquency proceedings, he or she may appoint one or more
special deputy commissioners to act for him or her, and may employ
clerks and assistants as he or she deems necessary. The compensation
of the special deputies, clerks, or assistants and all expenses of
taking possession of the delinquent insurer and of conducting the
delinquency proceedings shall be fixed by the receiver, subject to
the approval of the court, and shall be paid out of the funds or
assets of the insurer. Within the limits of the duties imposed upon
them, special deputies shall possess all the powers given to them,
and, in the exercise of those powers, shall be subject to all of the
duties imposed upon the receiver with respect to delinquency
proceedings.

1064.3. (a) Whenever under the laws of this state an ancillary
receiver is to be appointed in delinquency proceedings for an insurer
not domiciled in this state, the court shall appoint the
commissioner as ancillary receiver. The commissioner shall file an
application requesting the appointment (1) if he or she finds that
there are sufficient assets of that insurer located in this state, or
that there are sufficient persons residing in this state having
claims against that insurer, to justify the appointment of an
ancillary receiver, or (2) if 10 or more persons resident in this
state having claims against that insurer file an application with the
commissioner requesting the appointment of an ancillary receiver.
(b) The domiciliary receiver of an insurer domiciled in a
reciprocal state, shall be vested by operation of law with the title
to all of the property, contracts, and rights of action, and all of
the books and records of the insurer located in this state, and he or
she shall have the immediate right to recover balances due from
local agents and to obtain possession of any books and records of the
insurer found in this state. He or she shall also be entitled to
recover the other assets of the insurer located in this state except
that upon the appointment of an ancillary receiver in this state, the
ancillary receiver shall, during the ancillary receivership
proceedings, have the sole right to recover such other assets. The
ancillary receiver shall, as soon as practicable, liquidate from
their respective securities those special deposit claims and secured
claims which are proved and allowed in the ancillary proceedings in
this state, and shall pay the necessary expenses of the proceedings.
All remaining assets shall be promptly transferred to the domiciliary
receiver. Subject to the foregoing provisions, the ancillary
receiver and his or her deputies shall have the same powers and be
subject to the same duties with respect to the administration of such
assets, as a receiver of an insurer domiciled in this state.
(c) Notwithstanding any other provision of this article, in any
ancillary receivership proceeding in this state against an insurer
domiciled in a reciprocal state, assets located in this state which
comprise all or part of any deposit by that insurer under the laws of
that reciprocal state for the benefit and security of beneficiaries
of awards of workers' compensation against insurers shall be returned
promptly to the domiciliary receiver, if he or she so requests,
without deduction of any amounts to satisfy claims of policyholders
and creditors.

1064.4. (a) In a delinquency proceeding begun in this state against
an insurer domiciled in this state, claimants residing in reciprocal
states may file claims either with the ancillary receivers, if any
in their respective states, or with the domiciliary receiver. All
claims shall be filed on or before the last date fixed for the filing
of claims in the domiciliary delinquency proceedings.
(b) Controverted claims belonging to claimants residing in
reciprocal states may either (1) be proved in this state as provided
by law, or (2), if ancillary proceedings have been commenced in those
reciprocal states, be proved in those proceedings. In the event a
claimant elects to prove his or her claim in ancillary proceedings,
if notice of the claim and opportunity to appear and be heard is
afforded the domiciliary receiver of this state as provided in
Section 1064.5 with respect to ancillary proceedings in this state,
the final allowance of such claim by the courts in the ancillary
state shall be accepted in this state as conclusive as to its amount,
and shall also be accepted as conclusive as to its priority, if any,
against special deposits or other security located within the
ancillary state.

1064.5. (a) In a delinquency proceeding in a reciprocal state
against an insurer domiciled in that state, claimants against such
insurer who reside within this state may file claims either with the
ancillary receiver, if any, appointed in this state, or with the
domiciliary receiver. All such claims shall be filed on or before the
last date fixed for the filing of claims in the domiciliary
delinquency proceeding.
(b) Controverted claims belonging to claimants residing in this
state may either (1) be proved in the domiciliary state as provided
by the laws of that state, or (2), if ancillary proceedings have been
commenced in this state, be proved in those proceedings. In the
event that any such claimant elects to prove his or her claim in this
state, he or she shall file his or her claim with the ancillary
receiver in the manner provided by the law of this state for the
proving of claims against insurers domiciled in this state, and he or
she shall give notice in writing to the receiver in the domiciliary
state, either by registered mail or by personal service at least 40
days prior to the date set for hearing. The notice shall contain a
concise statement of the amount of the claim, the facts on which the
claim is based, and the priorities asserted, if any. If the
domiciliary receiver, within 30 days after the giving of notice,
shall give notice in writing to the ancillary receiver and to the
claimant, either by registered mail or by personal service, of his or
her intention to contest that claim, he or she shall be entitled to
appear or to be represented in any proceeding in this state involving
the adjudication of the claim. The final allowance of the claim by
the courts of this state shall be accepted as conclusive as to its
amount, and shall also be accepted as conclusive as to its priority,
if any, against special deposits or other security located within
this state.

1064.6. (a) In a delinquency proceeding against an insurer
domiciled in this state, claims owing to residents of ancillary
states shall be preferred claims if like claims are preferred under
the laws of this state. All such claims, whether owing to residents
or nonresidents, shall be given equal priority of payment from
general assets regardless of where such assets are located.
(b) In a delinquency proceeding against an insurer domiciled in a
reciprocal state, claims owing to residents of this state shall be
preferred if like claims are preferred by the laws of that state.

1064.7. The owners of special deposit claims against an insurer for
which a receiver is appointed in this or any other state shall be
given priority against their several special deposits in accordance
with the provisions governing the creation and maintenance of such
deposits. If there is a deficiency in any such deposit so that the
claims secured thereby are not fully discharged therefrom, the
claimants may share in the general assets, but, unless applicable law
provides otherwise, the sharing shall be deferred until general
creditors, and also claimants against other special deposits who have
received smaller percentages from their respective special deposits,
have been paid percentages of their claims equal to the percentage
paid from the special deposit.

1064.8. The owner of a secured claim against an insurer for which a
receiver has been appointed in this or any other state may surrender
his or her security and file his or her claim as a general creditor,
or the claim may be discharged by resort to the security, in which
case the deficiency, if any, shall be treated as a claim against the
general assets of the insurer on the same basis as claims of
unsecured creditors. If the amount of the deficiency has been
adjudicated in ancillary proceedings as provided in this article, or
if it has been adjudicated by a court of competent jurisdiction in
proceedings in which the domiciliary receiver has had notice and
opportunity to be heard, that amount shall be conclusive; otherwise
the amount shall be determined in the delinquency proceeding in the
domiciliary state.

1064.9. During the pendency of delinquency proceedings in this or
any reciprocal state, no action or proceeding in the nature of an
attachment, garnishment, or execution shall be commenced or
maintained in the courts of this state against the delinquent insurer
or its assets. Any lien obtained by any such action or proceeding
within four months prior to the commencement of any such delinquency
proceeding or at any time thereafter shall be void as against any
rights arising in such delinquency proceeding.

1064.10. The domiciliary receiver of an insurer domiciled in a
reciprocal state may sue in this state to recover any assets of that
insurer to which he or she may be entitled under the laws of this
state.

1064.11. If any provision of this article or the application
thereof to any person or circumstances is held invalid, that
invalidity shall not affect other provisions or applications of the
article which can be given effect without the invalid provision or
application, and to this end the provisions of this article are
declared to be severable.

1064.12. (a) This article may be referred to as the "Uniform
Insurers Rehabilitation Act."
(b) The Uniform Insurers Rehabilitation Act shall be so
interpreted and construed as to effectuate its general purpose to
make uniform the law of those states that enact it. To the extent
that its provisions, when applicable, conflict with Article 14
(commencing with Section 1010), the provisions of this article shall
control. The provisions of Article 14 (commencing with Section 1010)
not in conflict with this article shall be unaffected by it.
(c) This article does not apply in regard to insurers domiciled in
any state that is not a reciprocal state, and to any insurer
domiciled in a reciprocal state before that state appoints a
domiciliary receiver for the insurer. All those insurers shall be
governed by Article 14 (commencing with Section 1010). If a
domiciliary receiver is appointed in a reciprocal state while a
receivership is proceeding under Article 14 (commencing with Section
1010), the receiver under that article shall thereafter act as
ancillary receiver under Section 1064.3.
(d) This article shall not apply to the State Compensation
Insurance Fund.

1064.13. (a) Upon receipt of a notice of liquidation the
commissioner shall cease imposing, billing or collecting fees and
assessments against the subject company pursuant to this code.
(b) Upon receipt of a notice of conservation or administrative
supervision the commissioner may cease to impose, bill, or collect
fees against the subject company pursuant to this code. Following the
date the order has been lifted the commissioner may once again
impose, bill, or collect fees against the subject company.
(c) Upon receipt of a notice of liquidation all outstanding
invoices, billings or assessments pursuant to this code prior to the
date of the notice shall be cancelled.
(d) Upon issuance of a notice of conservation or administrative
supervision, outstanding amounts due from the subject company imposed
prior to the date of the conservation or administrative supervision,
may be held in abeyance and remain unpaid until the conservation or
administrative supervision is terminated. Late filing fees accrued
pursuant to Section 12995 of this code shall not be imposed.
(e) If it is determined that an insurer is in any of the
conditions enumerated in Section 1011, and it is determined that all
available funds are needed to pay policyholders, the commissioner may
suspend the imposition of fees or assessments until the condition of
the insurer has improved to the extent where payment of fees or
assessments will not harm policyholders.