CHAPTER 395
FORMERLY
HOUSE BILL NO. 443
AN ACT TO AMEND CHAPTER 42, TITLE 18, DELAWARE CODE RELATING TO THE SCOPE OF THE DELAWARE INSURANCE GUARANTEE ASSOCIATION ACT.
BE IT ENACTED BY THE GENERAL ASSEMBLY OP THE STATE OF DELAWARE:
Section 1. Amend §4203, Chapter 42, Title 18, Delaware Code by striking the period at the end of the last sentence of such section, substituting a comma in lieu thereof, and adding the following:
"and insurance obtained pursuant to Chapter 19, Surplus Lines, of this title."
Section 2. Amend §4208, Chapter 42, Title 18, Delaware Code by adding after subsection 7 of section (a) the following new subsection:
"(8) Issue to each insurer paying an assessment under this Act a certificate of contribution, in a form prescribed by the Commissioner, for the amount so paid. All outstanding certificates shall be of equal dignity and priority without reference to amounts or dates of Issue. A certificate of contribution may be shown by the insurer in its financial statement as an asset in such form and for such amount, if any, and period of time as the Commissioner may approve."
Section 3. Amend Chapter 42, Title 18, Delaware Code by adding thereto a new section to read as follows:
"§4219. Member Insurer's Rights
(a) Unless a longer period has been allowed by the commissioner, a member insurer shall at its option have the right to show a certificate of contribution as an asset in the form approved by the commissioner at percentages of the original face amount approved by the commissioner, for calendar years as follows:
(1) One hundred percent (200%) for the calendar year of issuance;
(2) Eighty percent (80%) for the first calendar year after the year of issuance;
(3) Sixty percent (60%) for the second calendar year after the year of issuance;
(4) Forty percent (40%) for the third calendar year after the year of issuance;
(5) Twenty percent (20%) for the fourth calendar year after the year of issuance;
(b) The insurer may offset the amount written off by it in a calendar year under subsection (a) above, against its premium tax liability to this state accrued with respect to business transacted in such year.
(c) Any sums acquired by refund from the Association which have theretofore been written off by contributing insurers and offset against premium taxes as provided above, end is not then needed for purposes of this Act, shall be paid by the Association to the commissioner and by him deposited with the state treasury for credit to the general fund of this state.
(d) To the extent amounts have been written off under subsection (c) above, the provisions of §4216 of this title shall not apply."
Section 4. Amend Chapter 42, Title 18, Delaware Code by adding thereto a new section to read as follows:
"§4220. Preferred Creditor Status
Upon the issuance of a proper court order placing a domestic insurer in receivership for rehabilitation or liquidation, all policyholders, beneficiaries and insureds of such insolvent insurer, with respect to claims arising from and within the coverages of and not in excess of the applicable limits of insurance policies and contracts issued by the insolvent insurer, and liability claims against insureds which claims are within the coverage of and not in excess of the applicable limits of insurance policies and insurance contracts issued by the insolvent insurer, and the Delaware Insurance Guaranty Association and any similar organization in another state shall be preferred creditors of said Insolvent insurer."
Section 5. Amend Chapter 42, Title 18, Delaware Code by adding thereto a new section to read as follows:
"§4221. Access to Assets of Insolvent Insurer; Application for Court Approval of Plan to Disburse Assets; Notice of Application
(a) Within 120 days of a final determination of insolvency by an insurance company by a court of competent Jurisdiction the receiver shall make application to the said court for approval of a proposal to disburse assets out of such company's marshalled assets, from time to time as such assets become available, to the Delaware Insurance Guaranty Association and to any entity or person performing a similar function in another state. (The Delaware Insurance Guaranty Association and any entity or person performing a similar function in other states shall hereinafter be referred to collectively as the associations.)
(b) Such proposal shall at a minimum include provision for:
(1) Reserving amounts for the payment of expenses of administration and claims falling within the priorities established in the Delaware Uniform Insurers Liquidation Act but only with respect to such priorities higher than that of the associations;
(2) Disbursement of the assets marshalled to date and subsequent disbursement of assets as they become available;
(3) Equitable allocation of disbursements to each of the associations entitled thereto;
(4) The securing by the receiver from each of the associations entitled to disbursements pursuant to this section of an agreement to return to the receiver such assets previously disbursed as may be required to pay claims of secured creditors and claims with a higher priority than those of the associations. No bond shall be required of any such associations.
(c) The receiver's proposal shall provide for disbursements to the associations in amounts at least equal to the payments made or to be made thereby for which such associations could assert claims against the receiver, and shall further provide that if the assets available for disbursement from time to time do not equal or exceed the amount of such payments made or to be made by the associations then disbursements shall be in the amount of available assets.
(d) Notice of such application shall be given to the associations in and to the commissioners of insurance of each of the states. Any such notice shall be deemed to have been given when deposited in the United States certified mails, first-class postage prepaid, at least 30 days prior to submission of such application to the said court. Action on the application may be taken by the said court provided the above required notice has been given and provided further that the receiver's proposal compiles with subdivisions (1) and (4) of subsection (b) of this section."
Section 6. Amend Chapter 42, Title 18, Delaware Code by adding thereto a new section to read as follows:
"§4222. If any provision or item of this Act or the application thereof is held invalid, such invalidity shall not affect other provisions, items or application of this Act which can be given effect without the invalid provisions, items or applications, and to this end the provistons of this Act are hereby declared severable."
Approved July 21, 1982.