375.1218. Classes of claims--priority of distribution.
Classes of claims--priority of distribution.
375.1218. The priority of distribution of claims from the insurer'sestate shall be in accordance with the order in which each class of claimsis herein set forth. Every claim in each class shall be paid in full oradequate funds retained for such payment before the members of the nextclass receive any payment. No subclasses shall be established within anyclass. No claim by a shareholder, policyholder or other creditor shall bepermitted to circumvent the priority class through the use of equitableremedies. The order of distribution of claims shall be:
1. Class 1. The costs and expenses of administration duringrehabilitation and liquidation, including but not limited to the following:
(1) The actual and necessary costs of preserving or recovering theassets of the insurer, and costs necessary to store records required to bepreserved pursuant to section 375.1228;
(2) Compensation for all authorized services rendered in therehabilitation and liquidation;
(3) Any necessary filing fees;
(4) The fees and mileage payable to witnesses;
(5) Authorized reasonable attorney's fees and other professionalservices rendered in the rehabilitation and liquidation.
2. Class 2. All claims under policies including such claims of thefederal or any state or local government for losses incurred ("lossclaims") including third party claims and all claims of a guarantyassociation or foreign guaranty association including reasonable allocatedloss adjustment expenses and all claims of a life and health insuranceguaranty association or foreign guaranty association which covers claims oflife and health insurance policies, relating to the handling of suchclaims. All claims under life insurance and annuity policies and fundingagreements, whether for death proceeds, annuity proceeds or investmentvalues shall be treated as loss claims. That portion of any loss,indemnification for which is provided by other benefits or advantagesrecovered by the claimant, shall not be included in this class, other thanbenefits or advantages recovered or recoverable in discharge of familialobligation of support or by way of succession at death or as proceeds oflife insurance, or as gratuities. No payment by an employer to hisemployee shall be treated as a gratuity. Early distributions to guarantyassociations and foreign guaranty associations may be made in the mannerprovided in section 375.1205, provided that such guaranty associations andforeign guaranty associations agree to indemnify the liquidator if ashortage occurs in the insurer's estate of property necessary to settleclaims as provided by this section. Any early distributions shall notincrease the proportionate share of such guaranty associations and foreignguaranty associations, of distributions of the insurer's estate. Theliquidator shall have authority to inquire into the reasonableness of anyallocated loss adjustment expenses claimed by a guaranty association orforeign guaranty association and such claim shall not be allowed if it isfound to be unreasonable.
3. Class 3. Claims of the United States government other than thoseclaims included in class 2.
4. Class 4. Reasonable compensation to employees for servicesperformed to the extent that they do not exceed two months of monetarycompensation and represent payment for services performed within one yearbefore the filing of the petition for liquidation or, if rehabilitationpreceded liquidation, within one year before the filing of the petition forrehabilitation. Principal officers and directors shall not be entitled tothe benefit of this priority except as otherwise approved by the liquidatorand the court. Such priority shall be in lieu of any other similarpriority which may be authorized by law as to wages or compensation ofemployees.
5. Class 5. Claims under nonassessable policies for unearnedpremiums or other premium refunds and claims of general creditors includingclaims of ceding and assuming companies in their capacity as such.
6. Class 6. Claims of any state or local government except thoseunder class 2 of this section*. Claims, including those of anygovernmental body for a penalty or forfeiture, shall be allowed in thisclass only to the extent of the pecuniary loss sustained from the act,transaction, or proceeding out of which the penalty or forfeiture arose,with reasonable and actual costs occasioned thereby. The remainder of suchclaims shall be postponed as class 9** claims.
7. Class 7. Claims filed late or any other claims other than class 8or 9*** claims.
8. Class 8. Surplus or contribution notes, or similar obligations,and premium refunds on assessable policies. Payments to members ofdomestic mutual insurance companies shall be limited in accordance withlaw.
9. Class 9. The claims of shareholders or other owners in theircapacity as shareholders.
(L. 1991 H.B. 385, et al. § 91, A.L. 1992 H.B. 1574, A.L. 1993 H.B. 709, A.L. 1996 S.B. 896)*Word "above" appears in original rolls.
**"Class 8" appears in original rolls.
***"Class 7 or 8" appears in original rolls.