214
sive with respect to all claimants, whether or not they re-
ceived notice.
SEC. 730. DUTIES OF AGENTS.
Every person who receives notice that an insurer
which the person represents as an agent is the subject of
a liquidation order shall, within 30 days of such notice,
provide to the receiver the information in the agent’s
records related to any policy or reinsurance agreement is-
sued by the insurer or reinsurer through the agent. The
provision of information pursuant to this section shall not
infringe in any way on any preexisting property rights that
an agent has in such information, such as the ownership
of insurance expiration lists. The information provided
pursuant to this section may not be used by any person
other than the agent to solicit renewal of any policy issued
by the insurer (or its successor), other insurance or any
other products, or a change in the agent of record.
SEC. 731. SETOFFS.
(a) IN GENERAL.—Mutual debts or mutual credits,
whether arising out of one or more reinsurance or other
contracts between the insurer or reinsurer in receivership
and another person shall be set off and the balance only
shall be allowed or paid.
(b) LIMITATIONS ON SETOFF.—No setoff shall be al-
lowed in favor of a person if—
215
(1) the circumstances creating the obligation of
the insurer or reinsurer in receivership occurred
after the effective date of the cancellation or termi-
nation of policies in effect at the time of the entry
of the receivership order;
(2) the obligation of the insurer or reinsurer to
the person was purchased by or transferred to the
person with the intent of its being used as a setoff;
(3) the obligation of the insurer or reinsurer is
owed to an affiliate of the person or to any other en-
tity or association other than the person;
(4) the obligation of the person is owed to an
affiliate of the insurer or reinsurer, or to any other
person;
(5) the obligation of the person is to pay an as-
sessment levied against the members or subscribers
of the insurer or reinsurer, or is to pay a balance
upon a subscription to the capital stock of the in-
surer or reinsurer, or is in any other way in the na-
ture of a capital contribution; or
(6) the obligations between the person and the
insurer or reinsurer arise out of transactions where
either the person or the insurer or reinsurer has as-
sumed risks and obligations from the other party
216
and then has ceded back to that party substantially
the same risks and obligations.
(c) DEBTS DUE AND PAYABLE.—The receiver shall
provide persons claiming a setoff with accounting state-
ments identifying debts which are due and payable. Where
a person owes amounts which are due and payable, against
which the person asserts setoff of mutual credits which
may become due and payable from the insurer or reinsurer
in receivership in the future, the person shall promptly pay
to the receiver the amounts due and payable. Notwith-
standing section 745, the receiver shall promptly and fully
refund, to the extent of the person’s prior payments, any
mutual credits that become due and payable to the person
by the insurer or reinsurer in receivership.
SEC. 732. OBLIGATION OF A REINSURER.
In the event of a receivership, the reinsurance
recoverables due under any reinsurance contract shall be
payable by the assuming reinsurer directly to the receiver.
Subject to the right of setoff and verification of coverage
under the relevant contract, the assuming reinsurer shall
pay its share of the loss at the time that the amount of
the claim is ultimately determined in the liquidation pro-
ceeding. The receiver shall, within a reasonable time after
the initiation of the receivership, provide the assuming re-
insurer with claim information in accordance with the re-
217
insurance contracts. During the pendency of any such
claim, the assuming reinsurer may investigate the claim
and, at its own expense, interpose in the proceeding where
the claim is to be adjudicated any defenses which it may
deem available to the ceding insurer or reinsurer, or its
receiver. Expenses of investigation and defense incurred
by the assuming reinsurer shall be chargeable against the
ceding insurer or reinsurer as part of the administrative
expense of liquidation, in proportion to the benefit accru-
ing to the ceding insurer or reinsurer solely as a result
of the defense undertaken by the assuming reinsurer. The
reinsurance proceeds shall be payable as provided in the
agreement, except when such assuming reinsurer has a
valid contractual obligation to pay reinsurance proceeds
to a party other than the ceding insurer or reinsurer.
SEC. 733. REINSURER’S LIABILITY.
The amount recoverable by the receiver from a rein-
surer shall not be reduced as a result of delinquency pro-
ceedings regardless of any provision in the reinsurance
contract or other agreement. Payment made directly to an
insured or other creditor shall not diminish the reinsurer’s
obligation to such ceding insurer’s or reinsurer’s estate ex-
cept when such reinsurer has a valid contractual obligation
to pay reinsurance proceeds to a party other than the in-
surer or reinsurer.
218
SEC. 734. RECOVERY OF PREMIUMS OWED.
(a) RESPONSIBILITIES AND RIGHTS OF AGENTS AND
SIMILAR PERSONS.—An agent, broker, premium finance
company, or any other person, other than the insured, re-
sponsible for the collection or payment of a premium shall
be obligated to pay any collected, earned premium held
by such person at any time of the order of liquidation and
shall fulfill contractual obligations, as they have been cus-
tomarily required to be performed during the course of
the relationship with the insurer, to collect and pay earned
premiums to the insurer. Such person shall not be obli-
gated to—
(1) collect or pay unearned premiums, or
(2) pay to the receiver commissions due the in-
surer on earned premiums.
(b) RESPONSIBILITIES AND RIGHTS OF INSURED.—
(1) An insured shall be obligated to pay any
earned premium due, but shall not be obligated to
pay any unearned premium. An insured shall be en-
titled to any collected, unearned premium that an
agent, broker, premium finance company, or any
other person has collected from that insured and
that at the time of the order of liquidation has not
been paid to the insurer. The insured may direct
such person to return the unearned premium or to
219
use such unearned premium to secure replacement
coverage.
(2) An insured shall be obligated to continue
paying premiums or annuity considerations due on
life or health insurance policies or annuities that are
continued under section 726(c).
(c) DEFINITIONS.—For purposes of this section, the
following definitions apply:
(1) The term ‘‘earned premium’’ means that
portion of an insurance premium covering the
unexpired term of the policy prior to the cancellation
or renewal of coverage.
(2) The term ‘‘unearned premium’’ means that
portion of an insurance premium covering the term
of the policy subsequent to the cancellation or
nonrenewal of coverage.
(3) The term ‘‘uncollected premium’’ means
that portion of an insurance premium for an insur-
ance policy that an agent, broker, premium finance
company, or similar person has a legal obligation to
collect from an insured but has not yet received.
SEC. 735. RECEIVER’S PROPOSAL TO DISTRIBUTE ASSETS.
(a) APPLICATION.—Within 120 days of a final deter-
mination of insolvency and the issuance by a district court
of a liquidation order, the receiver shall make application
220
to the court for approval of a proposal to disburse funds
as appropriate out of marshalled assets of an insurer in
liquidation from time to time as such assets become avail-
able to NIPC and to guaranty associations having obliga-
tions because of such liquidation. If the receiver deter-
mines that there are insufficient assets to disburse, the
application required by this subsection shall be considered
satisfied by a filing by the receiver stating the reason for
this determination.
(b) CONTENT OF PROPOSAL.—A proposal under sub-
section (a) shall at least include provisions for—
(1) reserving amounts for the payment of ex-
penses of administration and the payment of claims
of secured creditors to the extent of the value of the
security held, and claims falling within the priorities
established by section 743 for Classes 1 and 2;
(2) disbursement of the funds marshalled to
date and subsequent disbursement of funds as they
become available; and
(3) equitable allocation of disbursements to the
guaranty associations for reimbursement of costs ad-
vanced or guarantee obligations paid.
(c) DISBURSEMENTS.—The receiver’s proposal under
subsection (a) may provide for disbursements to NIPC
and to the guaranty associations for amounts estimated
221
to be the amounts of covered claim payments to be made
in the future by NIPC and by the guaranty associations
for which claims could be asserted against the insurer. The
receiver shall account to the court from time to time as
to the application of such advances, the claims’ obligations
paid, and the investment yield on the advances, which
shall be applied as if part of the advances.
(d) NOTICE.—Notice of an application under sub-
section (a) shall be given to the State insurance regulator
of each of the States in which the insurer in liquidation
is domiciled, licensed, or doing business, and to NIPC and
to any appropriate guaranty associations. Any such notice
shall be deemed to have been given when deposited in the
United States mails, first class postage prepaid, at least
30 days before submission of an application under sub-
section (a) to the court. Action on the application may
be taken by the court if the notice has been given and
if the receiver’s proposal complies with paragraphs (1) and
(2) of subsection (b).
SEC. 736. FILING OF CLAIMS.
(a) FORM FOR FILING.—Proof of all claims shall be
filed with the receiver in the form required by section 737
on or before the last day for filing specified in the notice
required under section 729.
222
(b) EXCUSED LATE FILED CLAIMS.—The receiver
may permit a claimant making a late filing to share in
distributions, whether past or future, as if it were not late
to the extent that any such payment will not prejudice
the orderly administration of the receivership, under any
of the following circumstances:
(1) A transfer to a creditor was avoided under
sections 714, 715, and 716, or was voluntarily sur-
rendered under section 717, and the filing satisfies
the conditions of such section.
(2) The valuation under section 742 of security
held by a secured creditor shows a deficiency, which
is filed within 30 days after the valuation.
(3) The receiver shall permit late filed claims to
share in distributions, whether past or future, as if
they were not late, if such claims are claims of
NIPC or a guaranty association for reimbursement
of claims paid or expenses incurred, or both, subse-
quent to the last day for filing where such payments
were made and expenses incurred as provided by
law.
(c) OTHER LATE FILED CLAIMS.—The receiver may
consider any claim filed which is not covered by subsection
(b), and permit the claimant to receive distributions which
are subsequently declared on any claims of the same or
223
lower priority if the payment does not prejudice the or-
derly administration of the receivership. The late-filing
claimant shall receive, at each such distribution, the same
percentage of the amount allowed on its claim as is then
being paid to claimants of any lower priority. Such claim-
ant shall not share in any distributions made or declared
prior to the filing of said claim.
SEC. 737. PROOF OF CLAIM.
(a) IN GENERAL.—Proof of claim shall consist of a
statement signed by the claimant that includes all of the
following that are applicable:
(1) The basis of the claim including the consid-
eration given for it.
(2) The identity and amount of the security on
the claim.
(3) The payments made on the debt, if any.
(4) The sum claimed is justly owing and there
is no setoff, counterclaim, or defense to the claim.
(5) Any right of priority of payment or other
specific right asserted by the claimants.
(6) A copy of the written instrument which is
the foundation of the claim. If such instrument has
been lost or destroyed, a statement of such fact and
of the circumstances of such loss or destruction shall
be filed under oath with the claim.
224
(7) The name and address of the claimant and
the attorney who represents the claimant, if any.
The proof of claim requirement of this subsection shall
be satisfied if a policyholder who does not know or have
reason to know of the existence of actual or potential
claims by the policyholder states the intention to reserve
the right to assert all future claims that are covered by
the policy.
(b) CONSIDERATION.—Except as provided in the last
sentence of subsection (a), no claim need be considered
if it does not contain all the information required by sub-
section (a) which may be applicable. The receiver may re-
quire that a prescribed form be used and may require that
other information and documents be included.
(c) ADDITIONAL INFORMATION.—At any time the re-
ceiver may request the claimant to present information or
evidence supplementary to the information required under
subsection (a) and may take statements under oath, re-
quire production of affidavits or depositions, or otherwise
obtain additional information or evidence.
(d) EFFECT OF JUDGMENT.—A judgment entered
against an insured of an insurer or reinsurer after the
date of the entry of a receivership shall not be considered
by the receiver as conclusive evidence of liability or of the
value of any claim against the insurer or reinsurer. If any
225
such judgment exceeds the receiver’s valuation of the
claim, the amount of excess shall be classified as a Class
5 priority in accordance with section 743.
(e) EFFECT
OF DEFAULT
OR COLLUSIVE JUDG-
MENT.—A judgment entered against an insured of an in-
surer or reinsurer or against the insurer or reinsurer itself
that is taken by default or collusion prior to or subsequent
to the date of the entry of the receivership order shall not
be considered by the receiver as evidence of liability or of
the value of the claim.
(f) CLAIMS.—All claims of NIPC and a guaranty as-
sociation shall be in such form and contain such substan-
tiation as determined by the receiver.
SEC. 738. CONTINGENT AND IMMATURE CLAIMS.
(a) CONTINGENT CLAIMS.—A claim may be allowed
even if contingent if it is filed in accordance with section
736. It may be allowed and may participate in all distribu-
tions declared after it is filed to the extent that it does
not prejudice the orderly administration of the receiver-
ship.
(b) CONTINGENT THIRD PARTY CLAIMS.—The claim
of a third party which is contingent only on its first ob-
taining a judgment against the insured shall be considered
as if there were no such contingency. A contingent claim
may be allowed—
226
(1) if it may be reasonably inferred from the
proof presented upon such claim that the person
would be able to obtain a judgment upon such cause
of action against such insured;
(2) if such person shall furnish suitable proof,
unless the court for good cause shown shall other-
wise direct, that no further valid claims against the
insurer or reinsurer arising out of this cause of ac-
tion other than those already presented can be
made; and
(3) if the total liability of the insurer or rein-
surer to all claimants arising out of the same act of
its insured shall be no greater than its total liability
would be were it not in receivership.
(c) IMMATURE CLAIMS.—Claims that are due except
for the passage of time shall be treated as other claims
are treated, except that such claims may be discounted
at the legal rate of interest.
SEC. 739. VALUATION OF CLAIMS.
(a) THIRD PARTY CLAIMS.—Whenever any third
party asserts a cause of action against an insured of an
insurer or reinsurer in receivership, the third party may
file a claim with the receiver.
(b) INSURED’S CONTINGENT CLAIMS.—Any insured
under a liability insurance policy shall have the right to
227
file a contingent claim pursuant to the following proce-
dures:
(1) The court, at the time of the entry of the
order of receivership, shall fix the final date for the
filing of information or evidence by which an
insured’s contingent claim may be fixed in an
amount certain, but in no event shall such date be
more than 3 years after the last day fixed for the
filing of proofs of claim. Such date may be extended
by the court upon the petition of the receiver should
it be determined that such extension will not delay
the distribution of the insurer’s or reinsurer’s assets.
(2) No contingent claim of an insured shall be
allowed unless such claim is fixed in an amount cer-
tain and the insured claimant presents evidence of
payment of such claim to the receiver on or before
the last day fixed by the court.
(3) An insured may include as part of his con-
tingent claim reasonable attorney’s fees for services
rendered subsequent to the date that the insurer’s or
reinsurer’s obligation, if any, to defend or continue
the defense of the claim terminated if such attor-
ney’s fees have actually be paid to the insured and
evidence of payment has been presented to the re-
ceiver.
228
(c) SEVERAL CLAIMS.—If several claims founded
upon one policy are filed, whether by third parties or as
claims by the insured under this section, and the aggre-
gate allowed amount of the claims to which the same limit
of liability in the policy is applicable exceeds that limit,
each claim as allowed shall be reduced in the same propor-
tion so that the total equals the policy limit.
(d) PRESENTMENT OF CLAIM.—No claim may be
presented under this section if it has been paid or is obli-
gated to be paid by NIPC and any guaranty association.
SEC. 740. DISPUTED CLAIMS.
(a) DENIAL OF CLAIM.—When a claim is denied in
whole or in part by the receiver, written notice of the de-
termination shall be given to the claimant or its attorney
by first class mail at the address shown in the proof of
claim. Within 60 days from the mailing of the notice, the
claimant may file its objections with the receiver. If no
such filing is made, the claimant may not further object
to the determination.
(b) ACTION
ON CLAIM.—Whenever objections are
filed with the receiver and the receiver does not alter its
denial of the claim as a result of the objections, the re-
ceiver shall ask the court for a hearing as soon as prac-
ticable and give notice of the hearing by first class mail
to the claimant or its attorney and to any other person
229
directly affected, not less than 10 days before the date
of the hearing. The matter may be heard by the court or
by a court-appointed master who shall submit findings of
fact and a recommended decision.
SEC. 741. CLAIMS OF SURETY.
Whenever a creditor whose claim against an insurer
or reinsurer in receivership is secured, in whole or in part,
by the undertaking of another person and the creditor fails
to file and prove that claim, the other person may do so
in the creditor’s name and shall be subrogated to the
rights of the creditor, whether the claim has been filed
by the creditor or by the other person in the creditor’s
name, to the extent that it discharges the undertaking.
In the absence of an agreement with the creditor to the
contrary, the other person shall not be entitled to any dis-
tribution until the amount paid to the creditor on the un-
dertaking plus the distributions paid on the claim from
the insurer’s or reinsurer’s estate to the creditor equals
the amount of the entire claim of the creditor. Any excess
received by the creditor shall be held by it in trust for
such other person. The term ‘‘other person’’ as used in
this section is not intended to apply to the receiver, NIPC,
or to a guaranty association.
230
SEC. 742. SECURED CREDITORS’ CLAIMS.
(a) IN GENERAL.—A creditor with a secured claim
may collect its debt—
(1) by converting the security into money ac-
cording to the terms of the agreement pursuant to
which the security was delivered to the creditors; or
(2) by agreement, arbitration, or compromise
between the creditor and the receiver.
(b) INSUFFICIENT SECURITY.—If the security held
by a creditor is valued pursuant to subsection (a) and such
value is insufficient to extinguish the debt to the creditor,
then such insufficiency shall be classified and paid as an
unsecured claim. If the claimant surrenders its security
to the receiver, the entire claim shall be classified as an
unsecured claim.
SEC. 743. PRIORITY OF DISTRIBUTION.
The priority of distribution of claims from the estate
of an insurer or reinsurer in receivership shall be in ac-
cordance with the order in which each class of claims is
herein set forth. Every claim in each class shall be paid
in full or adequate funds shall be retained for such pay-
ment before the members of the next class receive any pay-
ment. No subclasses shall be established within any class.
The order of distribution of claims shall be as follows:
(1) Class 1—The costs and expenses of admin-
istration during receivership, including—
231
(A) the actual and necessary costs of pre-
serving or recovering the assets of the insurer
or reinsurer;
(B) compensation for all authorized serv-
ices rendered in the receivership, including rea-
sonable compensation to the receiver as ap-
proved by the court to cover the portion of the
total expenses of the receiver which are reason-
ably related to the conduct of the receivership
of the insurer or reinsurer without provision for
any profit to the receiver;
(C) any necessary filing fees;
(D) the fees and mileage payable to wit-
nesses;
(E) reasonable attorney’s fees and other
professional services rendered in the receiver-
ship; and
(F) the reasonable expenses of the Na-
tional Insurance Protection Corporation or a
guaranty association in handling claims on be-
half of the insurer or reinsurer.
(2) Class 2—Reasonable compensation to em-
ployees for services performed to the extent that
they do not exceed 2 months of monetary compensa-
tion and represent payment for services performed
232
within one year before the filing of the petition for
receivership. Principal officers and directors shall
not be entitled to the benefit of this priority except
as otherwise approved by the receiver and the court.
(3) Class 3—All claims under insurance policies
and insurance contracts issued by the insurer, in-
cluding claims of NIPC and any guaranty associa-
tion for claims paid on behalf of the insurer and un-
earned premiums and other premium refunds.
Claims under this category include all claims under
life insurance and annuity policies, whether for
death proceeds, annuity proceeds, or investment
values.
(4) Class 4—Claims for any amount due an as-
suming reinsurer or ceding insurer for sums due
under reinsurance contracts entered into with the in-
surer or reinsurer in receivership.
(5) Class 5—Claims for punitive or exemplary
damages and any claim for any amount due an in-
surer, insurance pool, or underwriting association as
subrogated recoveries, contribution, indemnification,
or otherwise. All other claims of general creditors
not falling within any other priority under this sec-
tion, including claims for taxes and debts due the
233
Federal Government or any State or local govern-
ment.
(6) Class 6—Claims filed late and all other
claims other than claims under Classes 7 and 8.
(7) Class 7—Surplus or contribution notes, or
similar obligations.
(8) Class 8—Proprietary claims of sharehold-
ers, members, or other owners in their capacity as
such.
SEC. 744. RECEIVER’S RECOMMENDATIONS TO THE COURT.
(a) IN GENERAL.—The receiver shall review all
claims duly filed in receivership and shall make such fur-
ther investigation as it shall deem necessary. If the insurer
has issued annuities or life insurance policies, the receiver
shall report the persons to whom, according to the records
of the insurer, amounts are owed as cash value or other
investment value. The receiver may compound, com-
promise, or in any other manner negotiate the amount for
which claims will be recommended to the court. Unre-
solved disputes shall be determined under section 740. As
soon as practicable, it shall periodically present to the
court a report of the claims against the insurer or rein-
surer with its recommendations. The report shall include
the name and address of each claimant and the amount
of the claim finally recommended, if any.
234
(b) ALLOWANCE OF CLAIM.—The court may approve,
disapprove, or modify the claims as recommended by the
receiver. No claim under a policy of insurance shall be al-
lowed for an amount in excess of the applicable policy lim-
its.
SEC. 745. DISTRIBUTION OF ASSETS.
Under the direction of the court, the receiver shall
pay distributions in a manner that will assure the proper
recognition of priorities and a reasonable balance between
the expeditious completion of the receivership and the pro-
tection of unliquidated and undetermined claims, including
third party claims. Distribution of assets in kind may be
made at valuations set by agreement between the receiver
and the creditor and approved by the court.
SEC. 746. UNCLAIMED AND WITHHELD FUNDS.
All unclaimed funds subject to distribution remaining
in the receiver’s possession at the time it applies to the
court for discharge, including the amount distributable to
any creditor, shareholder, member, or other person who
is unknown or cannot be found, shall be paid into the
court and disposed of as under chapter 129 of title 28,
United States Code.
SEC. 747. TERMINATION OF PROCEEDINGS.
(a) IN GENERAL.—When all assets justifying the ex-
pense of collection and distribution have been collected and
235
distributed, the receiver shall apply to the court for dis-
charge. The court may grant the discharge and make any
other order, including an order to dispose of any remain-
ing funds that are uneconomic to distribute, by paying
said funds into the court and disposing of same pursuant
to chapter 129 of title 28, United States Code.
(b) REOPENING.—After a receivership proceeding has
been terminated and the receiver discharged, the receiver
or other interested party may at any time petition the dis-
trict court to reopen the proceedings for good cause, in-
cluding the discovery of additional assets. If the court is
satisfied that there is justification for reopening, it shall
so order.
SEC. 748. DISPOSITION OF RECORDS DURING AND AFTER
TERMINATION OF RECEIVERSHIP.
Whenever it shall appear to the receiver that the
records of any insurer or reinsurer subject to receivership
are no longer useful, it may recommend to the court and
the court shall direct which records should be retained for
future reference and which should be destroyed. The re-
ceiver shall provide for those records which the court or-
ders to be retained. The court shall order that sufficient
funds for this and other administrative purposes be re-
served by the receiver. Any funds remaining after payment
of all such administrative expenses shall be paid into the
236
court and disposed of pursuant to chapter 129 of title 28,
United States Code.
SEC. 749. TRANSITION PERIOD.
(a) IN GENERAL.—This title shall take effect on the
date of enactment of this Act.
(b) COMMISSION AUTHORITY TO ACT AS RECEIVER
FOR STATE-REGULATED INSURERS AND REINSURERS.—
The Commission shall have the authority to contract with
any State insurance regulator to assume the responsibility
of administering receiverships in existence prior to the ef-
fective date in subsection (a). In such case, the applicable
State law shall apply to the receivership.
TITLE VIII-DEFINITIONS
SEC. 801. DEFINITIONS.
For purposes of this Act:
(1) The term ‘‘accident and health insurance’’
means insurance against death or personal injury by
accident and insurance against sickness, ailment or
bodily injury, but does not include insurance provid-
ing benefits pursuant to any workers’ compensation
law.
(2) The term ‘‘admitted insurer’’ means an in-
surer licensed to do an insurance business pursuant
to a certificate of authority issued by any State, ex-
cept that with respect to certificates of authority is-
237
sued by one or more States, an insurer shall be ad-
mitted insurer only with respect to risks located in
a State which has issued a certificate of authority to
the insurer.
(3) The term ‘‘affiliate’’ means an entity which
controls, is under the control of, or under common
control with, another entity.
(4) The term ‘‘authorized’’ means that the en-
tity has received the approval of the relevant govern-
mental authority to engage in the activity described.
(5) The term ‘‘aviation insurance’’ means insur-
ance on aircraft owned or operated by manufactur-
ers of aircraft, or on aircraft operated in commercial
flight, or cargo of that aircraft, or against liability,
other than workers compensation and employers li-
ability, arising out of the ownership, maintenance or
use of that aircraft.
(6) The term ‘‘captive insurer’’ means any pure
captive insurer or group captive insurer. For pur-
poses of this paragraph, the term ‘‘pure captive in-
surer’’ means any company that insures risks of its
parent or affiliates. The term ‘‘group captive in-
surer’’ means any company that insures risks of its
owners or affiliates.
238
(7) The term ‘‘ceding insurer’’ means an in-
surer which agrees to reinsure all or part of a risk
it has contractually undertaken.
(8) The term ‘‘certificate of authority’’ means
evidence issued by any State that an insurer is li-
censed to transact an insurance business within that
State.
(9) The term ‘‘certified reinsurer’’ means a re-
insurer certified pursuant to section 302 or 303.
(10) The term ‘‘claimant’’ means any insured,
or their successor in interest, making a claim on an
insurance policy or any person instituting a claim
covered by such policy.
(11) The term ‘‘commercial insurance’’ means
any line of property and casualty insurance except
private passenger automobile and homeowner’s in-
surance.
(12) The term ‘‘Commission’’ means the Fed-
eral Insurance Solvency Commission.
(13) The term ‘‘contractual obligation’’ means
any obligation under a policy or contract or certifi-
cate under a group policy or contract, or portion
thereof for which coverage is provided.
(14) The term ‘‘control’’ means the possession,
direct or indirect, of the power to direct or cause the
239
direction of the management and policies of a per-
son, whether through the ownership of voting securi-
ties, by contract other than a commercial contract
for goods or nonmanagement services, or otherwise,
unless the power is the result of an official position
with or corporate office held by the person. Control
shall be presumed to exist if any person, directly or
indirectly, owns, controls, holds with the power to
vote, or holds proxies representing, 10 percent or
more of the voting securities of any person. This
presumption may be rebutted by a showing that con-
trol does not exist in fact. The Commission may,
after furnishing all persons in interest notice and op-
portunity to comment, determine that control exists
in fact, notwithstanding the absence of a presump-
tion to that effect.
(15) The term ‘‘creditor’’ means a person hav-
ing any claim, whether matured or unmatured, liq-
uidated or unliquidated, secured or unsecured, abso-
lute, fixed, or contingent.
(16) The term ‘‘declaration of insolvency’’
means an order entered by a United States District
Court pursuant to section 725(d).
(17) The term ‘‘direct placement’’ means a
placement in which an insured procures insurance