Mass. Gen. Laws ch. 175D, sec. 12 — MA Code / Part I / Title XXII / Chapter 175D / Section 12
High net worth insureds; payment of claims
Status: in_force

Section 12. (a) The Fund shall not be obligated to pay any first-party claims by a high net worth insured. (b)(1) Subject to paragraph (2), the Fund shall not be obligated to pay any third-party claim relating to a policy of a high net worth insured. This exclusion shall not apply to third-party claims against the high net worth insured where: (i) the insured has applied for or consented to the appointment of a receiver, trustee or liquidator for all or a substantial part of its assets; (ii) the insured has filed a voluntary petition in bankruptcy, filed a petition or an answer seeking a reorganization or arrangement with creditors or to take advantage of any insolvency law; or (iii) an order, judgment or decree is entered by a court of competent jurisdiction, on the application of a creditor, adjudicating the insured bankrupt or insolvent or approving a petition seeking reorganization of the insured or of all or substantial part of its assets. [ Paragraph (2) of subsection (b) effective until July 1, 2025. For text effective July 1, 2025, see below.] (2) In the Fund's sole discretion and without assuming a duty to do so, the Fund may pay any cybersecurity insurance claims, workers' compensation claims, personal injury protection claims, no-fault claims and any other claims for ongoing medical payments to third-party claimants or their providers when covered by a policy of an insolvent insured on behalf of a high net worth insured. [ Paragraph (2) of subsection (b) as amended by 2025, 9, Sec. 53 effective July 1, 2025. See 2025, 9, Sec. 138. For text effective until July 1, 2025, see above.] (2) In the Fund's sole discretion and without assuming a duty to do so, the Fund may pay any cybersecurity insurance claims, workers' compensation claims, personal injury protection claims, no-fault claims and any other claims for ongoing medical payments to third-party claimants or their providers when covered by a policy of an insolvent insurer on behalf of a high net worth insured. (c) In all cases where the Fund pays any claim on behalf of a high net worth insured, the Fund shall have the right to recover from the high net worth insured all amounts paid by the Fund to or on behalf of such insured, whether for indemnity, defense or otherwise, as well as all allocated adjustment expenses related to such claims, and the Fund's reasonable legal fees and court costs in any action necessary to collect the Fund's reimbursement under this section. (d) The Fund shall not be obligated to pay any claim that would otherwise be a covered claim that is an obligation to or on behalf of a person who has a net worth greater than that allowed by the insurance guaranty association law of the state of residence of the claimant at the time specified by that state's applicable law, and which association has denied coverage to that claimant on that basis. (e) The Fund shall establish reasonable procedures subject to the approval of the commissioner for requesting financial information from insureds on a confidential basis for purposes of applying this section. The financial information may be shared with any other association similar to the Fund and the liquidator for the insolvent member insurer on the same confidential basis. Any request to an insured seeking financial information shall advise the insured of the consequences of failing to provide the financial information. If an insured refuses to provide the requested financial information where it is requested and available, the Fund may, until such time as the information is provided, provisionally deem the insured to be a high net worth insured for the purpose of denying a claim under subsections (a) and (b). (f) In any lawsuit contesting the applicability of this section where the insured has refused to provide financial information under the procedure established pursuant to subsection (e), the insured shall bear the burden of proof concerning its net worth at the relevant time. If the insured fails to prove that its net worth at the relevant time was less than the applicable amount, the court shall award the Fund its full costs, expenses and reasonable attorneys' fees in contesting the claim.

Section 12. (a) The Fund shall not be obligated to pay any first-party claims by a high net worth insured.

(b)(1) Subject to paragraph (2), the Fund shall not be obligated to pay any third-party claim relating to a policy of a high net worth insured. This exclusion shall not apply to third-party claims against the high net worth insured where: (i) the insured has applied for or consented to the appointment of a receiver, trustee or liquidator for all or a substantial part of its assets; (ii) the insured has filed a voluntary petition in bankruptcy, filed a petition or an answer seeking a reorganization or arrangement with creditors or to take advantage of any insolvency law; or (iii) an order, judgment or decree is entered by a court of competent jurisdiction, on the application of a creditor, adjudicating the insured bankrupt or insolvent or approving a petition seeking reorganization of the insured or of all or substantial part of its assets.

[ Paragraph (2) of subsection (b) effective until July 1, 2025. For text effective July 1, 2025, see below.]

(2) In the Fund's sole discretion and without assuming a duty to do so, the Fund may pay any cybersecurity insurance claims, workers' compensation claims, personal injury protection claims, no-fault claims and any other claims for ongoing medical payments to third-party claimants or their providers when covered by a policy of an insolvent insured on behalf of a high net worth insured.

[ Paragraph (2) of subsection (b) as amended by 2025, 9, Sec. 53 effective July 1, 2025. See 2025, 9, Sec. 138. For text effective until July 1, 2025, see above.]

(2) In the Fund's sole discretion and without assuming a duty to do so, the Fund may pay any cybersecurity insurance claims, workers' compensation claims, personal injury protection claims, no-fault claims and any other claims for ongoing medical payments to third-party claimants or their providers when covered by a policy of an insolvent insurer on behalf of a high net worth insured.

(c) In all cases where the Fund pays any claim on behalf of a high net worth insured, the Fund shall have the right to recover from the high net worth insured all amounts paid by the Fund to or on behalf of such insured, whether for indemnity, defense or otherwise, as well as all allocated adjustment expenses related to such claims, and the Fund's reasonable legal fees and court costs in any action necessary to collect the Fund's reimbursement under this section.

(d) The Fund shall not be obligated to pay any claim that would otherwise be a covered claim that is an obligation to or on behalf of a person who has a net worth greater than that allowed by the insurance guaranty association law of the state of residence of the claimant at the time specified by that state's applicable law, and which association has denied coverage to that claimant on that basis.

(e) The Fund shall establish reasonable procedures subject to the approval of the commissioner for requesting financial information from insureds on a confidential basis for purposes of applying this section. The financial information may be shared with any other association similar to the Fund and the liquidator for the insolvent member insurer on the same confidential basis. Any request to an insured seeking financial information shall advise the insured of the consequences of failing to provide the financial information. If an insured refuses to provide the requested financial information where it is requested and available, the Fund may, until such time as the information is provided, provisionally deem the insured to be a high net worth insured for the purpose of denying a claim under subsections (a) and (b).

(f) In any lawsuit contesting the applicability of this section where the insured has refused to provide financial information under the procedure established pursuant to subsection (e), the insured shall bear the burden of proof concerning its net worth at the relevant time. If the insured fails to prove that its net worth at the relevant time was less than the applicable amount, the court shall award the Fund its full costs, expenses and reasonable attorneys' fees in contesting the claim.