Session Laws

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 1 of chapter 175 of the General Laws, as appearing in the 1986 Official Edition, is hereby amended by inserting after the definition of "Profits" the following definition:-

"Receiver", receiver, liquidator, or conservator as the context requires.

SECTION 2. The first paragraph of section 6 of said chapter 175, as so appearing, is hereby amended by striking out the third sentence and inserting in place thereof the following sentence:- The court may issue a temporary injunction and appoint the commissioner temporary receiver forthwith and it may after a full hearing make the injunction permanent and appoint the commissioner permanent receiver to take possession of all the property and effects of the company, to settle its affairs, and to distribute its assets, subject to such rules and orders as the court may prescribe.

SECTION 3. The second paragraph of said section 6 of said chapter 175, as so appearing, is hereby amended by striking out the first sentence and inserting in place thereof the following sentence:- At any time during pendency of a proceeding under this section against a domestic company transacting business in any other reciprocal state, as defined in section one hundred and eighty A for any cause other than that the company has exceeded its powers or has violated any provision of law, the commissioner may make application to the court for the termination of said proceeding and for his appointment as receiver to rehabilitate or liquidate the company as provided in and subject to section one hundred and eighty B or section one hundred and eighty C.

SECTION 4. Section 180A of said chapter 175, as so appearing, is hereby amended by inserting before the definition of "State" the following two definitions:-

"Ancillary state", any state other than a domiciliary state.

"Delinquency proceeding", any proceeding commenced against an insurer for the purpose of liquidating, rehabilitating, reorganizing, or conserving such insurer.

SECTION 5. Said section 180A of said chapter 175, as so appearing, is hereby further amended by inserting after the word "proceedings", in line 11, the following words:- or the largest amount of its assets held in trust and assets held on deposit for the benefit of its policyholders and creditors in the United States;.

SECTION 6. Said section 180A of said chapter 175, as so appearing, is hereby further amended by inserting after the definition of "General assets" the following three definitions:-

"Insurer", 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.

"Preferred claim", any claim with respect to which the law of a state accords priority of payment from the general assets of the insurer.

"Receiver", receiver, liquidator, rehabilitator or conservator as the context requires.

SECTION 7. Said section 180A of said chapter 175, as so appearing, is hereby further amended by inserting after the word "force", in line 25, the following:- , including the provisions requiring that the commissioner or equivalent insurance supervisory official be the receiver of a delinquent insurer. The term "reciprocal state" shall also include any state also which has, through its commissioner or equivalent supervisory official, entered into a binding and enforceable written agreement with the commissioner of the commonwealth which provides that (1) a commissioner or equivalent supervisory official is required to be the receiver of a delinquent insurer; (2) title assets of the delinquent insurer shall vest in the domiciliary receiver, as of the date of any court order appointing him as receiver, and he shall have the same rights to recover such assets as provided under section one hundred and eighty E; (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.

SECTION 8. Section 180B of said chapter 175, as so appearing, is hereby amended by striking out the second sentence and inserting in place thereof the following sentence:- The court may on such application issue a temporary injunction restraining the company in whole or in part from further proceeding with its business by appointing the commissioner as temporary receiver forthwith and after due notice and opportunity to be heard, appointing the commissioner as permanent receiver and authorize him to take possession of all property and effects of the company and to conduct its business for the purpose of rehabilitating it by taking such measures as may be proper to eliminate the causes and conditions which caused the institution of such proceeding, subject to the order of the court, or may dismiss the petition.

SECTION 9. Section 180C of said chapter 175, as so appearing, is hereby amended by striking out, in line 5, the word "may" and inserting in place thereof the following word:- shall.

SECTION 10. The first paragraph of section 180E of said chapter 175, as so appearing, is hereby amended by striking out the first sentence and inserting in place thereof the following sentence:- Whenever under the laws of the commonwealth, an ancillary receiver is to be appointed in delinquency proceedings for an insurer not domiciled in the commonwealth, the court shall appoint the commissioner as ancillary receiver and authorize him in addition to other powers, to conserve its assets within the commonwealth upon the grounds that such foreign insurer has been placed in the hands of a receiver or that possession of such insurer has been taken by the person having supervision of such insurer in its domiciliary state, or that such insurer has had its property sequestrated in its domiciliary state or any other state.

SECTION 11. Section 180F of said chapter 175, as so appearing, is hereby amended by inserting after the second paragraph the following two paragraphs:-

In the event a claimant elects to prove his claim in ancillary proceedings, if notice of the claim and opportunity to appear and to be heard is afforded the domiciliary receiver of the commonwealth as provided in section one hundred and eighty I with respect to ancillary proceedings in the commonwealth, the final allowance of such claim by the courts of the ancillary state shall be accepted in the commonwealth as conclusive as to its amount and priority, if any, against special deposits or other security located within the ancillary state. In a delinquency proceeding against an insurer domiciled in the commonwealth, claims owing to residents of ancillary states shall be preferred claims if like claims are preferred under the laws of the commonwealth. 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.

In a delinquency proceeding against an insurer domiciled in a reciprocal state, claims owing to residents of the commonwealth shall be preferred if like claims are preferred by the laws of the state.

SECTION 12. The third paragraph of said section 180F of said chapter 175, as so appearing, is hereby amended by striking out clause (4) and inserting in place thereof the following clause:-

(4) Claims by policyholders, beneficiaries, and insureds arising from and within the coverage of and not in excess of the applicable limits of insurance policies and insurance contracts issued by the company, and claims presented by the Massachusetts Insurers Insolvency Fund, the Massachusetts Life and Health Insurance Guaranty Association, or any similar organization in another state; provided, however, that the workers' compensation claims afforded a preference in section forty-six A shall be treated as preferred only as respects all other claims in this clause; and.

SECTION 13. Said section 180F of said chapter 175, as so appearing, is hereby further amended by adding the following paragraph:-

During the pendency of delinquency proceedings in the commonwealth or any other state, no action or proceeding in the nature of an attachment, garnishment, or levy on execution shall be commenced or maintained in the courts of the commonwealth 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 any time thereafter shall be void as against any rights arising in such delinquency proceeding.

SECTION 14. The second paragraph of section 180I of said chapter 175, as so appearing, is hereby amended by adding the following sentence:- The final allowance of a claim by a court of the commonwealth shall be accepted as conclusive as to its amount and priority, if any, against special deposits or other security located within the commonwealth.

SECTION 15. Section 180K of said chapter 175, as so appearing, is hereby amended by adding the following sentence:- If the amount of the deficiency has been adjudicated in ancillary proceedings as provided in this chapter 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 proceedings in the domiciliary state.