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Iowa Code (Last Updated: December 05, 2016) |
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Title XIII. COMMERCE |
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Chapter 507C. INSURERS SUPERVISION, REHABILITATION, AND LIQUIDATION |
Section 507C.42. Priority of distribution.
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The priority of distribution of claims from the insurer’s estate shall be in accordance with the order in which each class of claims is set forth. Claims in each class shall be paid in full or adequate funds retained for the payment before the members of the next class receive any payment. Subclasses shall not be established within a class. As used in this section, “insurer’s estate” means the general assets of the insurer. The order of distribution of claims is:
1. Class 1. The costs and expenses of administration, including but not limited to the following:
a. The actual and necessary costs of preserving or recovering the assets of the insurer.
b. Compensation for all authorized services rendered in the liquidation.
c. Necessary filing fees.
d. The fees and mileage payable to witnesses.
e. Authorized reasonable attorney’s fees and other professional services rendered in the liquidation.
f. The reasonable expenses of a guaranty association or foreign guaranty association in handling claims.
2. Class 2. Claims under policies, including claims of the federal or any state or local government, for losses incurred, including third-party claims, claims against the insurer for liability for bodily injury or for injury to or destruction of tangible property which are not under policies, claims of a guaranty association or foreign guaranty association, claims under funding agreements as provided in section 508.31A, subsection 3, claims for an insufficiency in the assets allocated to and accumulated in a separate account as provided in section 508A.1, subsection 8, and claims for unearned premium. Claims under life insurance and annuity policies, whether for death proceeds, annuity proceeds, or investment values, shall be treated as loss claims. That portion of a loss, indemnification for which is provided by other benefits or advantages recovered by the claimant, shall not be included in this class, other than benefits or advantages recovered or recoverable in discharge of familial obligations of support or by way of succession at death or as proceeds of life insurance, or as gratuities. A payment by an employer to an employee is not a gratuity.
3. Class 3. Claims of the federal government except those under class 2.
4. Class 4. Reasonable compensation to employees for services performed to the extent that they do not exceed two months of monetary compensation and represent payment for services performed within one year before the filing of the petition for liquidation or, if the rehabilitation preceded liquidation, within one year before the filing of the petition for rehabilitation. Officers and directors are not entitled to the benefit of this priority. The priority is in lieu of other similar priority which may be authorized by law as to wages or compensation of employees.
5. Class 5. Claims of general creditors, including claims of ceding and assuming reinsurers in their capacity as such, and subrogation claims.
6. Class 6. Claims of any state or local government except those under class 2. Claims, including those of a governmental body for a penalty or forfeiture, are allowed in this class 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 incurred. The remainder of such claims shall be postponed to the class of claims under subsection 9.
7. Class 7. Claims filed late or any other claims other than claims under subsections 8 and 9.
8. Class 8. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies are limited in accordance with law.
9. Class 9. The claims of shareholders or other owners.
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