Summary of Insurance Priority Laws and Statutes

Summary of Insurance Priority Laws and Statutes (as of July 2018)

Alabama

Upon the issuance of a proper court order placing a domestic insurer in receivership or placing a foreign insurer in ancillary receivership for rehabilitation or liquidation, pursuant to this chapter or other insurance laws of Alabama, all beneficiaries of and all persons holding or owning a contract of insurance with such insurer shall be a preferred creditor of said insurer to the extent of the equity, cash value or other benefit then accrued, arising under the terms of such contract. With the exception of costs of administration of said receiverships, recorded tax liens and judgments obtained prior to initiation of delinquency proceedings, and secured creditors’ claims, no claim of a creditor shall be preferred over that of a policyholder of the insurer in receivership. Policyholders are hereby removed from the class of general creditors and all laws and court decisions in conflict herewith shall have no further application. This section and Sections 27-32-38 through 27-32-41 shall apply to all policyholders of insurers in receivership on October 10, 1975, and to all future receiverships.

Alaska

Every claim in each class must be paid in full, or adequate money retained for payment, before the members of the next class may receive payment.

A subclass may not be established within a class.

Class 1: the costs and expenses of administration during rehabilitation and liquidation, including the reasonable expenses of a guaranty association or foreign guaranty association that is handling claims;

Class 2: reasonable compensation to employees for services performed; two months of monetary compensation; within one year; principal officers and directors of the insurer are not entitled

Class 3: all claims under policies, including claims of the federal or a state or local government, for losses incurred, including third-party claims, and all claims of a guaranty association or foreign guaranty association; all 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 for which indemnification is provided by other benefits or advantages recovered by the claimant, may not be included in this class, other than benefits or advantages recovered or recoverable in discharge of familial obligations or support, or by way of succession at death, or as proceeds of life insurance, or as gratuities; payment by an employer to an employee may not be treated as a gratuity;

Class 4: claims under nonassessable policies for unearned premium or other premium refunds and claims of general creditors, including claims of ceding and assuming companies under contracts of reinsurance;

Class 5: claims of the federal or a state or local government;

Class 6: claims filed late, or any other claims

Class 7: surplus or contribution notes, or similar obligations, and premium refunds on assessable policies; payments to members of domestic mutual insurance companies shall be limited in accordance with law;

Class 8: the claims of shareholders or other owners, in their capacity as shareholders.

Arizona

Every claim in each class shall be paid in full or adequate funds shall be reserved for the payment before the members of the next class may receive any payment.

Subclasses may not be established within any class.

Class 1. The costs and expenses of administration incurred in connection with the delinquency proceedings.

Class 2. Claims of the Arizona property and casualty insurance guaranty fund or a similar organization in another state

Class 3. Claims under insurance policies and contracts and guaranteed investment contracts except reinsurance, including claims under nonassessable policies for unearned premiums, claims under annuity contracts, third-party claims against insureds who are covered under liability insurance policies and, in a delinquency proceeding of a health care services organization that is domiciled in this state, claims of enrollees and enrollees’ beneficiaries and any claim of a provider for services that are provided pursuant to and covered by a health care plan.

Class 4. Claims of the federal government,

Class 5. Claims for compensation actually owing to employees of the insurer, other than its officers

Class 6. Claims of any state or local government

Class 7. Claims of other general creditors that do not fall within any other priority under this section.

Class 8. Claims that are filed after the date specified for filing proofs

Class 9. Claims of surplus note or certificate of contribution holders or other similar obligations and for premium refunds on assessable policies.

Class 10. Claims of shareholders, members or other owners in that capacity.

Arkansas

Every claim 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.

No subclasses shall be established within any class.

Class 1. The costs and expenses of administration including the reasonable expenses of the Arkansas Property and Casualty Insurance Guaranty Fund, or any other domestic or foreign guaranty fund or guaranty association

Class 2. (A) All claims under policies for losses incurred, including third party claims, and all claims of a domestic or foreign guaranty fund or guaranty association.

3. That portion of any loss, for which indemnification 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.

4. No payment by an employer to his employee shall be treated as a gratuity;

Class 3. Claims under nonassessable policies for unearned premium or other premium refunds;

Class 4. Claims of the federal government

Class 5. Debts due to employees for services performed to the extent that they do not exceed one thousand dollars ($1,000) and represent payment for services performed within one (1) year before the filing of the petition for liquidation. Officers and directors shall not be entitled to the benefit of this priority.

Class 6. All claims against the insurer for liability for bodily injury to or destruction of tangible property which are not under policies, and claims of general creditors;

Class 7. Claims of any state or local government. P&F

Class 8. Claims filed late, or any other claims

Class 9. Surplus notes, or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with law;

Class 10. The claims of shareholders or other owners.

California

Class (1) Expense of administration.

Class (2) All claims of the California Insurance Guarantee Association or entities performing a similar function in other states, together with claims for refund of unearned premiums and all claims under insurance and annuity policies or contracts, including funding agreements, of an insolvent insurer that are not covered [I.e. covered by guaranty fund] claims.

The following claims are excluded from this priority:

1. Any obligations of the insolvent insurer arising out of any reinsurance contracts, as well as obligations incurred after the expiration date of the policy or after the insurance policy has been replaced by the insured or canceled at the insured’s request, or after the policy has been canceled by the California Insurance Guarantee Association, the California Life and Health Insurance Guarantee Association, or another association or entity performing a similar function in another state.

2. Any obligations to insurers, insurance pools, or underwriting associations, and their claims for contribution, indemnity, or subrogation, equitable or otherwise, except as otherwise provided in this chapter.

3. Any amount awarded as punitive or exemplary damages, and any damages in excess of the liability limits of the policies or contracts that represent damages for contractual bad faith.

4. Any amount that is a surplus deposit of a subscriber as defined in Section 1374.1.

5. Any judgments against or obligations or liabilities of the insolvent insurer otherwise arising from alleged or proven torts, and any default, collusive, or stipulated judgment against either the insured or the person subject to proceedings under this article, as well as any judgment taken in violation of Section 1020. Nothing in this subparagraph shall prohibit the commissioner from considering the underlying claims as a claim entitled to priority under this section, provided that the claimant shall provide to the commissioner a written election that the judgment shall in all things be disregarded in determining the liability for and valuation of the underlying claim.

6. Any loss adjustment expenses, including adjustment fees and expenses, attorneys’ fees and expenses, court costs, interest, bond premiums, expert witness fees, and other claims of a similar nature incurred prior to the appointment of a liquidator.

7. Claims arising from any self-insured program of the insurer, including employee life, health and annuity plans, and self-funded employee benefit plans, however denominated, as well as claims arising from a multiple employer welfare arrangement as defined in Section 514 of the federal Employee Retirement Income Security Act of 1974, as amended, a minimum premium group insurance plan, a stop-loss group insurance plan, or an administrative services-only plan.

8. Any portion of a policy or contract to the extent that it provides experience rating credits or refunds, dividends, or for the payment of fees or allowances to any person, including the policyholder or contractholder, in connection with the service to or administration of the policy or contract.

9. Any annuity issued by a charitable organization for which the person subject to these proceedings did not have or utilize a certificate of authority to issue the policy or contract.

Class (3) Claims having preference by the laws of the United States.

Class (4) Unpaid charges due under the provisions of Section 736.

Class (5) Taxes due to the State of California.

Class (6) Claims having preference by the laws of this state.

Class (7) Claims of creditors not included in paragraphs (1) to (6), inclusive.

Class (8) Certificates of contribution, surplus notes, or similar obligations, and premium refunds on assessable policies.

Class (9) The interests of shareholders or other owners in any residual value in the estate.

Colorado

Every claim in each class shall be paid in full, or adequate funds shall be retained for such payment, before the members of the next class receive any payment.

No subclasses shall be established within any class.

Class 1. The costs and expenses of administration during rehabilitation and liquidation, including the administrative expenses of guaranty associations.

Class 2. All claims under policies including such claims of the federal or any state or local government including unearned premium claims, third-party claims, and all claims of a guaranty association or foreign guaranty association. That portion of any loss for which indemnification is provided by other benefits or advantages recovered by the claimant, other than benefits or advantages recovered or recoverable in discharge of familial obligation of support or by way of succession at death or as proceeds of life insurance, or as gratuities, shall not be included in this class. No payment by an employer to the employer’s employee shall be treated as a gratuity. All claims under life insurance and annuities policies and deposits, whether for death proceeds, annuity proceeds, or values, shall be treated as class 2 claims. For the purpose of this paragraph (b), policies shall include those insurance company products that are authorized under the laws of this state as such laws existed on the date of the issuance of such policies or on the date of the entry of an order of liquidation. Notwithstanding the provisions of this paragraph (b), class 2 claims shall not include:

1. Claims under annuity and deposit contracts issued on or before August 15, 2000, however labeled, including labels such as annuity, deposit, financial guarantee, funding agreement, or guaranteed investment contract, unless the contract is:

1. Issued to, or owned by, an individual or is otherwise an annuity issued in connection with and for the purpose of funding structured settlements of liability; or

2. Issued to, for the benefit of, or in connection with, a specific employee benefit plan or governmental lottery;

2. Claims where the risk is not borne by the insurer, such as the uninsured portion of:

1. A minimum premium group insurance plan;

2. A stop-loss group insurance plan; or

3. An administrative-services only contract and the related uninsured plan liabilities;

3. Claims under an unallocated annuity contract issued to an employee benefit plan protected under the federal pension benefit guaranty corporation; and

4. Claims for benefits which are exclusively payable or determined by a separate account required by the terms of such contract to be maintained by the insurer or a separate entity.

Class 3. Claims of the federal government

Class 4. Reasonable compensation to employees for services performed two months of monetary compensation; within the one-year period; Principal officers and directors shall not be entitled

Class 5. Claims of any state or local government except those under paragraph (b) of this subsection (1) with P&F

Class 6. Claims filed late and any other claims

Class 7. Surplus or contribution notes or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with law.

Class 8. Claims of shareholders or other owners in their capacity as shareholders.

Connecticut

Every claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class receive any payment.

No subclasses shall be established within any class, except as provided in subdivision (1) of subsection (a) of section 38a-923.

Class 1. The costs and expenses of administration expressly approved by the receiver, including NO GF

Class 2. The administrative expenses of guaranty associations.

Class 3. All claims under policies including such claims of the federal or any state or local government for losses incurred, including third party claims, claims for unearned premiums, and all claims of a guaranty association for payment of covered claims or covered obligations of the insurer. All claims of a guaranty association for reasonable expenses other than those included in class 2. All claims under life and health insurance policies, annuity contracts and funding agreements, whether for death proceeds, health benefits, annuity proceeds, or investment values shall be treated as loss claims. That portion of any 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. No payment by an employer to his employee shall be treated as a gratuity. Notwithstanding the provisions of this subdivision, the following claims shall be excluded from class 3 priority: (A) Obligations of the insolvent insurer arising out of reinsurance contracts; (B) obligations incurred after the expiration date of the insurance policy or after the policy has been replaced by the insured or canceled at the insured’s request or after the policy has been canceled as provided in this chapter. Notwithstanding the provisions of this subdivision, earned premium claims on policies, other than reinsurance agreements, shall not be excluded; (C) obligations to insurers, insurance pools or underwriting associations and their claims for contribution, indemnity or subrogation, equitable or otherwise; and (D) any claim which is in excess of any applicable limits provided in the insurance policy issued by the insolvent insurer.

Class 4. Claims of the federal government

Class 5. Debts due employees for services, benefits, contractual or otherwise due arising out of such reasonable compensation to employees for services performed; two months of monetary compensation; within six months; Officers and directors shall not be entitled

Class 6. Claims of general creditors, including claims of ceding and assuming companies in their capacity as such, and claims against the insurer for liability for bodily injury or for injury to or destruction of tangible property which are not under policies.

Class 7. Claims of any state or local government, P&F

Class 8. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies, interest on claims of classes 1 to 7, inclusive, and any other claims specifically subordinated to this class.

Class 9. Claims of shareholders or other owners arising out of their capacity as shareholders or owners, or arising in any other capacity or facts except as they may be qualified in class 3 or 4.

Delware

Every claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class shall receive any payment.

No subclasses shall be established within any class.

No claim by a shareholder, policyholder or other creditor shall be permitted to circumvent the priority classes through the use of equitable remedies.

Class I. The costs and expenses of administration expressly approved by the receiver, including but not limited to the following: all expenses incurred by the Department in supervising the receivership proceedings of the insurer;

Class II. The reasonable and necessary administrative expenses of the Delaware Insurance Guaranty Association

Class III. Claims by policyholders, beneficiaries and insureds, including the federal or any state or local government if such government is a named policyholder, beneficiary or insured under the policy, arising from and within the coverage of and not in excess of the applicable limits of insurance policies, insurance contracts and funding agreements issued by the company; liability claims, including liability claims of the federal or any state or local government, against insureds which claims are within the coverage of and not in excess of the applicable limits of insurance policies, insurance contracts and funding agreements issued by the company, including claims for reasonable attorneys’ fees incurred by the policyholder to defend against the liability claim if such attorneys’ fees are covered under the policy, but only to the extent covered; policyholder’s claims for refunds of unearned premium; and claims of the Delaware Insurance Guaranty Association or the Delaware Life and Health Insurance Guaranty Association, as the case may be, and any similar organization in another state for coverage of policy benefits as required by statute; provided, however, that this paragraph shall not apply to the following claims:

1. Claims arising under reinsurance contracts, including any claims for reinsurance premium due;

2. Claims of insurers, insurance pools or underwriting associations for contribution, indemnity or subrogation, equitable or otherwise.

Interest shall not be allowed or paid on Class III claims, except that the value assigned to Class III claims arising from valid preliquidation judgments, other than judgments by default or collusion, may include prejudgment and postjudgment interest up to the date of liquidation if such interest is required by law or contract.

Class IV. Taxes owed to the United States and other debts owed to the United States as allowable

Class V. Claims of employees, other than officers or directors, of the insurer for compensation actually owing; within 3 months prior; not exceeding $1,000 for each employee.

Class VI. Claims of general creditors including, but not limited to, claims of ceding and assuming insurers in their capacity as such, and claims of insurers, insurance pools or underwriting associations for contribution, indemnity or subrogation, equitable or otherwise.

Class VII. Claims filed late

Class VIII. Surplus or contribution notes, or similar obligations.

Class IX. The claims of shareholders or other owners arising out of such capacity.

District of Columbia

Every claim 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.

No subclasses shall be established within any class.

Class 1. The costs and expenses of administration during rehabilitation and liquidation, including guaranty association or foreign guaranty association for unallocated loss adjustment expenses.

Class 2. All claims under policies including the claims of the federal or any state or local government for losses incurred (“loss claims”), including third party claims and all claims of a guaranty association or foreign guaranty association. All 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 any 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 obligation of support, by way of succession at death, as proceeds of life insurance, or as gratuities. No payment by an employer to his or her employee shall be treated as a gratuity.

Class 3. Claims of the federal or any state or local government, P&F

Class 4. Reasonable compensation to employees for services performed;do not exceed 2 months; for services performed within one year; Principal officers and directors shall not be entitled

Class 5. Claims under nonassessable policies for unearned premium or other premium refunds and claims of general creditors, including claims of ceding and assuming companies in their capacity as general creditors.

Class 6. Claims filed late or any other claims

Class 7. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with law.

Class 8. The claims of shareholders or other owners in their capacity as shareholders.

Florida

Every claim in each class shall be paid in full or adequate funds shall be retained for such payment before the members of the next class may receive any payment.

No subclasses may be established within any class.

Class 1. All of the receiver’s costs and expenses of administration; All of the expenses of a guaranty association or foreign guaranty association in handling claims.

Class 2. All claims under policies for losses incurred, including third-party claims, all claims against the insurer for liability for bodily injury or for injury to or destruction of tangible property which claims are not under policies, all claims of a guaranty association or foreign guaranty association, and all claims related to a patient’s healthcare coverage by physicians, hospitals, and other providers of a health insurer or health maintenance organization. All 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 any loss, indemnification for which is provided by other benefits or advantages recovered by the claimant, may 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. No payment by an employer to her or his employee may be treated as a gratuity.

Class 3. Claims under nonassessable policies for unearned premiums or premium refunds.

Class 4. Claims of the Federal Government.

Class 5. Debts due to employees for services performed; do not exceed $2,000 for each employee; within 6 months; Officers and directors are not entitled

Class 6. Claims of general creditors.

Class 7. Claims of any state or local government with P&F

Class 8. Claims filed late

Class 9. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with law.

Class 10. Interest on allowed claims

Class 11. The claims of shareholders or other owners.

Georgia

Every claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class receive any payment.

No subclasses shall be established within any class.

Class 1. The costs and expenses of administration during rehabilitation and liquidation, including the reasonable expenses of a guaranty association or foreign guaranty association for unallocated loss adjustment expenses;

Class 2. All claims under policies, including third-party claims and all claims of a guaranty association or foreign guaranty association. All 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 any 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 obligation of support or by way of succession at death or as proceeds of life insurance or as gratuities. No payment by an employer to his employee shall be treated as a gratuity;

Class 3. Claims of the federal government

Class 4. Reasonable compensation to employees; does not exceed two months; within one year before the filing; Principal officers and directors shall not be entitled

Class 5. Claims under nonassessable policies for unearned premium or other premium refunds and claims of general creditors, including claims of ceding and assuming companies in their capacity as such;

Class 6. Claims of any state or local government P&F

Class 7. Claims filed late or any other claims

Class 8. Surplus or contribution notes or similar obligations and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with law; and

Class 9. The claims of shareholders or other owners in their capacity as shareholders.

Hawaii

Every claim 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.

No subclasses shall be established within any class.

Class 1. The costs and expenses of administration, including the reasonable expenses of a guaranty fund or association, or foreign guaranty association in handling claims.

Class 2. All claims under policies for losses incurred, including third party claims, all claims against the insurer for liability for bodily injury or for injury to or destruction of tangible property which are not under policies, claims under nonassessable policies for unearned premium or other premium refunds, and all claims of a guaranty fund or association or foreign guaranty association. All 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 any 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. No payment by an employer to its employee shall be treated as a gratuity.

Notwithstanding the foregoing, the following claims shall be excluded from class 2:

1. Obligations of the insolvent insurer arising out of reinsurance contracts;

2. Obligations incurred after the expiration date of the insurance policy or after the policy has been replaced by the insured or canceled at the insured’s request or after the policy has been canceled as provided in this section. Notwithstanding this paragraph, earned premium claims on policies, (other than reinsurance agreements) shall not be excluded;

3. Obligations to insurers, insurance pools, or underwriting associations, and their claims for contribution, indemnity, or subrogation, equitable or otherwise;

4. Any claim that is in excess of any applicable limits provided in the insurance policy issued by the insolvent insurer; and

5. Any amount accrued as punitive or exemplary damages unless expressly covered under the terms of the policy.

Class 3. Claims of the federal government.

Class 4. Debts due to employees for services performed; do not exceed $1,000; performed within one year before the filing of the petition for liquidation. Officers and directors shall not be entitled

Class 5. Claims of general creditors.

Class 6. Claims of any state or local government P&F

Class 7. Claims filed late or any other claims

Class 8. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with the law.

Class 9. The claims of shareholders or other owners.

Idaho

Every claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class receive any payment.

No subclasses shall be established within any class.

Class 1. The costs and expenses of administration, including the reasonable expenses of a guaranty association or foreign guaranty association in handling claims.

Class 2. All claims under policies for losses incurred, including third party claims, and all claims of a guaranty association or foreign guaranty association. All claims under life policies, annuity policies or disability or health insurance policies, whether for death proceeds, annuity proceeds, or investment values shall be treated as loss claims. That portion of any 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. No payment by an employer to his employee shall be treated as a gratuity.

Class 3. Claims under nonassessable policies for unearned premium or other premium refunds.

Class 4. Claims of the federal government

Class 5. Debts due to employees for services performed and benefits accrued; do not exceed one thousand dollars ($1,000); within one (1) year; Officers and directors shall not be entitled

Class 6. Claims of general creditors and all claims against the insurer for liability for bodily injury or for injury to or destruction of tangible property which are not under the policies.

Class 7. Claims of any state or local government with P&F clause

Class 8. Claims filed late or any other claims

Class 9. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with law.

Class 10. The claims of shareholders or other owners arising out of their capacity as shareholders or owners, or any other capacity except as they may be qualified in class 2 or class 6 above.

Illinois

Class a. The costs and expenses of administration, including the reasonable expenses of the Illinois Insurance Guaranty Fund .

Class b. Secured claims, including claims for taxes and debts due the federal or any state or local government, that are secured by liens perfected prior to the filing of the complaint.

Class c. Claims for wages actually owing to employees for services rendered within 3 months prior; not exceeding $1,000 to each employee

Class d. Claims by policyholders, beneficiaries, and insureds, under insurance policies, annuity contracts, and funding agreements, liability claims against insureds covered under insurance policies and insurance contracts issued by the company, claims of obligees (and, subject to the discretion of the receiver, completion contractors) under surety bonds and surety undertakings (not to include bail bonds, mortgage or financial guaranty, or other forms of insurance offering protection against investment risk), claims by principals under surety bonds and surety undertakings for wrongful dissipation of collateral by the insurer or its agents, and claims incurred during any extension of coverage provided under subsection (5) of Section 193, and claims of the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, the Illinois Health Maintenance Organization Guaranty Association and any similar organization in another state as prescribed in Section 545. For purposes of this Section, “funding agreement” means an agreement whereby an insurer authorized to write business under Class 1 of Section 4 of this Code may accept and accumulate funds and make one or more payments at future dates in amounts that are not based upon mortality or morbidity contingencies.

Class e. Claims by policyholders, beneficiaries, and insureds, the allowed values of which were determined by estimation under paragraph (b) of subsection (4) of Section 209. {Footnote 2}

Class f. Any other claims due the federal government.

Class g. All other claims of general creditors not falling within any other priority under this Section including claims for taxes and debts due any state or local government which are not secured claims and claims for attorneys’ fees incurred by the company in contesting its conservation, rehabilitation, or liquidation.

Class h. Claims of guaranty fund certificate holders, guaranty capital shareholders, capital note holders, and surplus note holders.

Class i. Proprietary claims of shareholders, members, or other owners.

Indiana

Every claim in each class must be paid in full (or adequate funds retained for payment) before the members of the next class receive any payment.

Subclasses may not be established within any class.

Class 1. The costs and expenses of administration, including the reasonable expenses of a guaranty association or foreign guaranty association in handling claims.

Class 2. All claims under policies for losses incurred, including third party claims, all claims against the insurer for liability for bodily injury or for injury to or destruction of tangible property which are not under policies, and all claims of a guaranty association or foreign guaranty association. All 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 any 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. Payment by an employer to his employee may not be treated as gratuity.

Class 3. Claims of the federal government.

Class 4. Debts owed to employees for services performed; do not exceed one thousand dollars ($1,000); performed within one (1) year; Officers and directors are not entitled

Class 5. Claims under nonassessable policies for unearned premium or other premium refunds and claims of general creditors.

Class 6. Claims of any state or local government with P&F clause

Class 7. Claims filed late or any other claims

Class 8. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with law.

Class 9. The claims of shareholders or other owners.

Iowa

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.

Class 1. The costs and expenses of administration, including the reasonable expenses of a guaranty association or foreign guaranty association in handling claims.

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.

Class 3. Claims of the federal government

Class 4. Reasonable compensation to employees for services performed; do not exceed two months of monetary compensation; performed within one year before the filing; Officers and directors are not entitled

Class 5. Claims of general creditors, including claims of ceding and assuming reinsurers in their capacity as such, and subrogation claims.

Class 6. Claims of any state or local government with P&F clause

Class 7. Claims filed late or any other claims or any other claims

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.

Class 9. The claims of shareholders or other owners.

Kansas

Every claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class receive any payment.

No subclasses shall be established within any class.

Class 1. The costs and expenses of administration during rehabilitation and liquidation including the reasonable expenses of a guaranty association or foreign guaranty association in handling claims.

Class 2. All claims under policies including claims for unearned premium or other premium refunds and such claims of the federal or any state or local government for losses incurred, (“loss claims”) including third-party claims and all claims of a guaranty association or foreign guaranty association other than those claims included in Class 1. All claims under life insurance policies, funding agreements, guaranteed investment contracts, synthetic guaranteed investment contracts and annuity policies, whether for death proceeds, annuity proceeds or investment values shall be treated as loss claims. That portion of any 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 obligation of support or by way of succession at death or as proceeds of life insurance, or as gratuities. No payment by an employer to an employee shall be treated as a gratuity.

Class 3. Claims of the federal government

Class 4. Reasonable compensation to employees for services performed; do not exceed two months of monetary compensation; within one year before the filing; Principal officers and directors shall not be entitled

Class 5. Claims of general creditors including claims of ceding and assuming companies in their capacity as such.

Class 6. Claims of any state or local government with P&F clause

Class 7. Claims filed late or any other claims

Class 8. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with law.

Class 9. The claims of shareholders or other owners in their capacity as shareholders.

Kentucky

The first fifty dollars ($50) of the amount allowed on each claim in the classes under subsections (3) to (7), inclusive, of this section, shall be deducted from the claim and included in the class under subsection (9) of this section. Claims may not be cumulated by assignment to avoid application of the fifty dollars ($50) deductible provision.

Subject to the fifty dollars ($50) deductible provision, every claim 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.

No subclasses shall be established within any class.

No claim by a shareholder, policyholder, or other creditor shall be permitted to circumvent the priority classes through the use of equitable remedies.

Class (1) The costs and expenses of administration, no GF

Class (2) Health maintenance organization and limited health service organization out-of-network claims.

Class (3) Loss and unearned premium claims. Claims by policyholders, beneficiaries, and insureds arising from and within the coverage of and not in excess of the applicable limits of insurance policies and insurance contracts issued by the company, 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 company, and claims of guaranty associations or foreign guaranty associations. Notwithstanding the foregoing, the following claims shall be excluded from Class 2 priority:

1. Obligations of the insolvent insurer arising out of reinsurance contracts;

2. Obligations incurred after the expiration date of the insurance policy or after the policy has been replaced by the insured or canceled at the insured’s request or after the policy has been canceled as provided in this chapter. Notwithstanding this subsection, earned premium claims on policies, other than reinsurance agreements, shall not be excluded;

3. Obligations to insurers, insurance pools, or underwriting associations and their claims for contribution, indemnity or subrogation, equitable or otherwise;

4. Any claim which is in excess of any applicable limits provided in the insurance policy issued by the insolvent insurer;

5. Any amount accrued as punitive or exemplary damages unless expressly covered under the terms of the policy; and

6. Tort claims of any kind against the insurer, and claims against the insurer for bad faith or wrongful settlement practices.

Class (4) Claims of the federal government other than those claims included in Class 2.

Class (5) Debts due to employees for services performed; not to exceed one thousand dollars ($1,000); earned within one (1) year before the filing; Officers shall not be entitled

Class (6) All other claims including claims of the federal or any state or local government, with P&F clause

Class (7) Claims based solely on judgments.

Class (8) Interest on claims already paid.

Class (9) Miscellaneous subordinated claims. The remaining claims or portions of claims not already paid, with interest as in subsection (8) of this section:

1. The first fifty dollars ($50) of each claim in the classes under subsections (3) to (7), inclusive, of this section, subordinated under this section;

2. Claims under subsection (2) of KRS 304.33-380;

3. Claims subordinated by KRS 304.33-600;

4. Claims filed late;

5. Portions of claims subordinated under subsection (6) of this section; and

6. Claims or portions of claims, payment of which is provided by other benefits or advantages recovered or recoverable by the claimant.

Class (10) Preferred ownership claims. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Interest at the legal rate shall be added to each claim, as in subsections (8) and (9) of this section.

Class (11) Proprietary claims. The claims of shareholders or other owners.

Louisiana

Class 1. The commissioner’s costs and expenses of administration and the claims handling expenses of the Insurance Guaranty Association, the Louisiana Life and Health Insurance Guaranty Association, and any similar organization in another state,

Class 2. Claims by policyholders, beneficiaries, and insureds arising from and within the coverage of and not in excess of the applicable limits of insurance policies and insurance contracts issued by the 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 insurer; and claims of the Insurance Guaranty Association, the Louisiana Life and Health Insurance Guaranty Association, and any similar organization in another state, as provided for in R.S. 22:2061(B), 2055(3), 2083, and 2093(D)(2).

Class 3. Claims of the federal government

Class 4. Compensation actually owing to employees other than officers of an insurer, for services rendered within three months prior; not exceeding two thousand five hundred dollars for such employee

Class 5. Claims under nonassessable policies for unearned premiums or other premium refunds and claims of general creditors, including claims of ceding and assuming companies in their capacity as such.

Class 6. All other claims.

Maine

The first $50 of the amount allowed on each claim in the classes under subsections 3, 4, 4-B, 5 and 6 must be deducted from the claim and included in the class under subsection 8. Claims may not be cumulated by assignment to avoid application on the $50 deductible provision.

Subject to the $50 deductible provision, every claim in each class must be paid in full or adequate funds retained for the payment thereof before claims of the next succeeding class receive any payment.

No subclasses may be established within any class.

Class 1. The costs and expenses of administration, no GF

Class 2(3). Loss claims. All claims under policies for losses incurred, including 3rd-party claims, and all claims against the insurer for liability for bodily injury or for injury to or destruction of tangible property that are not under policies, except the first $200 of losses otherwise payable to any claimant under this subsection. All claims under life insurance policies and annuity contracts, whether for death proceeds, annuity proceeds or investment values, must be treated as loss claims. Claims may not be cumulated by assignment to avoid application of the $200 deductible provision. That portion of any loss for which indemnification is provided by other benefits or advantages recovered or recoverable by the claimant may 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. No payment made by an employer to an employee may be treated as a gratuity. Any provider or member claims for covered services under a health maintenance organization contract, including a point-of-service contract, not paid under subsection 1 are included in this class. Obligations of an insolvent insurer arising out of reinsurance contracts are excluded from this subsection.

Class 3(4). Unearned premiums and small loss claims. Claims under nonassessable policies for unearned premiums or other premium refunds and the first $200 or loss excepted by the deductible provision in subsection 3, except that, if the receiver fails to prorate a premium due to the insurer based on a termination of coverage under this chapter, any resulting unearned premium must be paid to the insured under subsection 1 as an expense of the administration.

Class 4(4-A). Claims of the Federal Government

Class 5(4-B). Debts due to employees of the insurer, other than officers, for services performed, not to exceed $1,000 to each employee and earned within one year immediately preceding the filing of the petition for liquidation

Class 6(5). All other claims, including claims of any state or local government with P&F clause

Class 7(6). Claims based solely on judgments.

Class 8(7). Interest on claims already paid.

Class 9(8). Miscellaneous subordinated claims. The remaining claims or portions of claims not already paid, with interest as in subsection 7:

A. The first $50 of each claim in the classes under subsections 3, 4, 4-B, 5 and 6 subordinated under this section;

B. Claims subordinated by section 4380 (subordination of claims for noncooperation);

C. Claims filed late;

D. Portions of claims subordinated under subsection 5; and

E. Claims or portions of claims payment of which is provided by other benefits or advantages recovered or recoverable by the claimant.

Class 10(9). Preferred ownership claims. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Interest at the legal rate shall be added to each claim, as in subsections 7 and 8.

Class 11(10). Proprietary claims. The claims of stockholders or other owners of the insurer.

Original numbering in parenthesis

Maryland

1. The first $500 of compensation or wages owed to an officer or employee of an insurer for services rendered within 3 months before the commencement of a delinquency proceeding against the insurer shall be paid before payment of any other debt or claim.

2. Subject to paragraph (3) of this subsection, the Commissioner may pay the compensation required to be paid under this subsection as soon as practicable after commencement of the delinquency proceeding.

3. At all times, the Commissioner shall reserve funds that the Commissioner believes are sufficient for expenses of administration.

4. The priority required under this subsection is instead of any other similar priority that may be authorized by law as to wages or compensation.

3. Priority over all other claims in a liquidation proceeding, other than claims for wages specified in subsection (b) of this section, expenses of administration, and taxes, shall be given to:

1. claims by policyholders, beneficiaries, insureds, or holders of funding agreements issued under § 16-113 of this article, that arise from and within the coverage of and are not in excess of the applicable limits of policies and insurance contracts issued by the insurer;

2. liability claims against insureds that are within the coverage of and are not in excess of the applicable limits of policies and insurance contracts issued by the insurer; and

3. claims of:

1. the Property and Casualty Insurance Guaranty Corporation;

2. the Life and Health Insurance Guaranty Corporation; and

3. any similar organization in another state.

4. Notwithstanding the provisions of subsections (b) and (c) of this section, if there are known or potential claims due the federal government, the following shall be the priority of distribution:

1. expenses of administration;

2. the following claims without priority among them:

1. claims made by policyholders, beneficiaries, insureds, or holders of funding agreements issued under § 16-113 of this article, that arise from and within the coverage of and are not in excess of the applicable limits of policies and insurance contracts issued by the insurer;

2. liability claims against insureds that are within the coverage of and are not in excess of the applicable limits of policies and insurance contracts issued by the insurer; and

3. claims of:

1. the Property and Casualty Insurance Guaranty Corporation;

2. the Life and Health Insurance Guaranty Corporation; and

3. any similar organization in another state;

3. claims of the federal government not included in item (2) of this subsection;

4. the first $500 of compensation or wages owed to an officer or employee of an insurer for services rendered within 3 months before the commencement of a delinquency proceeding against the insurer, which shall be instead of any other similar priority that may be authorized by law as to wages or compensation;

5. claims for taxes and debts due any state or local government; and

6. all other claims of general creditors not falling within any other priority under this subsection.

(e)(1) The owners of special deposit claims against an insurer for which a receiver is appointed in this State or another state have priority against their special deposits as provided by the law that governs the creation and maintenance of special deposits.

2. If there is a deficiency in a special deposit so that the claims secured by the special deposit are not fully discharged, the claimants may share in the general assets after general creditors, and claimants against other special deposits who have received smaller percentages from their respective special deposits, have been paid percentages of their claims equal to the percentage paid from the special deposit.

(f)(1) The owner of a secured claim against an insurer for which a receiver has been appointed in this State or another state may:

1. surrender the security and file the claim as a general creditor; or

2. have the claim discharged by resort to the security.

2. If the owner of a secured claim has the claim discharged by resort to the security, any deficiency shall be treated as a claim against the general assets of the insurer on the same basis as the claims of unsecured creditors.

3. The amount of a deficiency is conclusive if adjudicated:

1. in an ancillary proceeding under this subtitle; or

2. by a court of competent jurisdiction in a proceeding in which the domiciliary receiver has had notice and an opportunity to be heard.

4. If the amount of a deficiency is not conclusive, the amount shall be determined in a delinquency proceeding in the domiciliary state.

(g)(1) Current financing moneys that, in accordance with regulations adopted by the Health Services Cost Review Commission, are provided by an insurer, nonprofit health service plan, or health maintenance organization to a hospital for discounted hospital rates are deemed to be security for the amount of outstanding charges owed by the insurer, nonprofit health service plan, or health maintenance organization to the hospital for bills or claims for services provided by the hospital before the delinquency proceeding.

2. A hospital that retains any current financing moneys as security under this subsection:

1. is deemed to be the owner of a secured claim against the insurer, nonprofit health service plan, or health maintenance organization for which a receiver has been appointed; and

2. may discharge its claim against the insurer, nonprofit health service plan, or health maintenance organization as provided under subsection (f) of this section.

(h)(1) In a delinquency proceeding against an insurer domiciled in the State, claims owing to residents of ancillary states are preferred claims if similar claims are preferred under the law of this State.

2. All claims owing to residents of ancillary states or nonresidents have equal priority of payment from general assets regardless of where the general assets are located.

1. In a delinquency proceeding against an insurer domiciled in a reciprocal state, claims owing to residents of this State are preferred claims if similar claims are preferred under the law of that state.

Massachusetts

When any domestic company becomes insolvent, or is unable to pay in full its liabilities as set forth in sections ten, eleven and twelve, claims for unpaid losses under its policies, other than life or endowment policies or annuity or pure endowment contracts, shall, in the distribution of its assets, whether liquidation is effected by a receiver or otherwise, be deemed and treated as preferred over claims for return premiums on cancelled or unexpired policies. Nothing in this section shall impair the obligation now or hereafter imposed by law upon the officers of a mutual company, other than a life company, to make assessments on its members to pay its incurred losses and expenses.

Preference of workers’ compensation claims

Except as otherwise provided in section 180F, when any domestic company which has insured the payment of the compensation provided for by chapter one hundred and fifty-two becomes insolvent, or is unable to pay in full its liabilities as set forth in sections ten and twelve, unpaid losses under its workers’ compensation policies shall, in the distribution of its assets, whether liquidation is effected by a receiver or otherwise, be deemed and treated as preferred over all claims except debts due the United States and debts or taxes due the commonwealth or any city or town thereof.

Michigan

Every claim in each class shall be paid in full or adequate funds retained for their payment before the members of the next class receive payment.

Subclasses shall not be established within a class.

Class 1. The costs and expenses of administration, including debts due to employees for services performed to the extent that they do not exceed $1,000.00 and represent payment for services performed within 1 year before the filing of the petition for liquidation; Officers and directors are not entitled; no GF

Class 2. Except as otherwise provided in this section, all claims under policies for losses incurred, including third party claims, and all claims of a guaranty association or foreign guaranty association. However, obligations of an insolvent insurer arising out of reinsurance contracts shall not be included in this class. All claims under life insurance and annuity policies, whether for death proceeds, annuity proceeds, or investment values, shall be treated as loss claims. For purposes of this section, life insurance and annuity policies include, but are not limited to, individual annuities, group annuities, guaranteed investment contracts, and funding agreement contracts, issued by an insurer. That portion of any 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 obligation of support or by way of succession at death or as proceeds of life insurance, or as gratuities. A payment by an employer to his or her employee shall not be treated as a gratuity.

Class 3. Claims of the federal government.

Class 4. All claims against the insurer for liability for bodily injury or for injury to or destruction of tangible property that are not under policies and, to the extent not included in class 1, debts due to employees for services performed; do not exceed $1,000; services performed within 1 year before the filing; Officers and directors are not entitled

Class 5. Claims under nonassessable policies for unearned premium or other premium refunds and claims of general creditors.

Class 6. Claims of any state or local government, with P&F clause

Class 7. Claims filed late or any other claims

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.

Class 9. The claims of shareholders or other owners. In paying claims pursuant to this class, disinterested shareholders have priority over interested shareholders who are directors or officers who fail to exercise their duties in accordance with section 5240.

Minnesota

Every claim 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.

No subclasses shall be established within any class.

Class 1(2). The costs and expenses of administration, no GF.

Class 2(4). Loss claims; including claims not covered by a guaranty association. All claims under policies or contracts of coverage for losses incurred including third party claims, and all claims against the insurer for liability for bodily injury or for injury to or destruction of tangible property which are not under policies or contracts. All claims under life insurance and annuity policies, including funding agreements issued pursuant to section 61A.276, whether for death proceeds, annuity proceeds, or investment values, shall be treated as loss claims. That portion of any loss for which indemnification is provided by other benefits or advantages recovered or recoverable 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. No payment made by an employer to an employee shall be treated as a gratuity. Claims not covered by a guaranty association are loss claims.

Class 3(4a). Unearned premiums. Claims under nonassessable policies or contracts of coverage for unearned premiums or subscription rates or other refunds.

Class 4(4b). Federal government. Claims of the federal government.

Class 5(4c). Debts due to employees for services performed, not to exceed $1,000 to each employee; earned within one year before the filing; Officers are not entitled

Class 6. All other claims including claims of any state or local government, with P&F clause

Class 7. Claims based solely on judgments.

Class 8. Interest on claims already paid.

Class 9. Miscellaneous subordinated claims.

Class 10. Preferred ownership claims. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited to the amount set forth in section 60B.46, subdivision 2, clause (b). Interest at the legal rate shall be added to each claim, as in subdivisions 8 and 9.

Class 11. Proprietary claims. The claims of shareholders or other owners.

Original numbering in parenthesis

Missippi

Every claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class receive any payment.

No subclasses shall be established within any class.

Class 1. The costs and expenses of administration during rehabilitation and liquidation, including the reasonable expenses of a guaranty association or foreign guaranty association for unallocated loss adjustment expenses.

Class 2. All claims under policies including such claims of the federal or any state or local government for losses incurred (“loss claims”) including third party claims and all claims of a guaranty association or foreign guaranty association. All 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 any 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 obligation of support or by way of succession at death or as proceeds of life insurance, or as gratuities. No payment by an employer to his employee shall be treated as a gratuity.

Class 3. Claims under nonassessable policies for unearned premium or other premium refunds.

Class 4. Claims of the federal government

Class 5. Reasonable compensation to employees for services performed; do not exceed two (2) months of monetary compensation; performed within one (1) year before the filing; Principal officers and directors shall not be entitled

Class 6. Claims of general creditors including claims of ceding and assuming companies in their capacity as such.

Class 7. Claims of any state or local government, with P&F clause

Class 8. Claims filed late or any other claims

Class 9. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with law.

Class 10. The claims of shareholders or other owners in their capacity as shareholders.

Missouri

Every claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class receive any payment.

No subclasses shall be established within any class.

No claim by a shareholder, policyholder or other creditor shall be permitted to circumvent the priority class through the use of equitable remedies.

Class 1. The costs and expenses of administration during rehabilitation and liquidation, including the reasonable expenses of the Missouri property and casualty insurance guaranty association, and any similar organization

Class 2. All claims under policies including such claims of the federal or any state or local government for losses incurred (“loss claims”) including third party claims and all claims of a guaranty association or foreign guaranty association including reasonable allocated loss adjustment expenses and all claims of a life and health insurance guaranty association or foreign guaranty association which covers claims of life and health insurance policies, relating to the handling of such claims. All claims under life insurance and annuity policies and funding agreements, whether for death proceeds, annuity proceeds or investment values shall be treated as loss claims. That portion of any 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 obligation of support or by way of succession at death or as proceeds of life insurance, or as gratuities. No payment by an employer to his employee shall be treated as a gratuity. Early distributions to guaranty associations and foreign guaranty associations may be made in the manner provided in section 375.1205, provided that such guaranty associations and foreign guaranty associations agree to indemnify the liquidator if a shortage occurs in the insurer’s estate of property necessary to settle claims as provided by this section. Any early distributions shall not increase the proportionate share of such guaranty associations and foreign guaranty associations, of distributions of the insurer’s estate. The liquidator shall have authority to inquire into the reasonableness of any allocated loss adjustment expenses claimed by a guaranty association or foreign guaranty association and such claim shall not be allowed if it is found to be unreasonable.

Class 3. Claims of the United States government other than those claims included in class 2.

Class 4. Reasonable compensation to employees for services performed; do not exceed two months of monetary compensation; performed within one year before the filing; Principal officers and directors shall not be entitled

Class 5. Claims under nonassessable policies for unearned premiums or other premium refunds and claims of general creditors including claims of ceding and assuming companies in their capacity as such.

Class 6. Claims of any state or local government with P&F clause

Class 7. Claims filed late or any other claims

Class 8. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with law.

Class 9. The claims of shareholders or other owners in their capacity as shareholders.

Montana

Every claim in each class must be paid in full or adequate funds retained for the payment before the members of the next class receive any payment.

Subclasses may not be established within any class.

Class 1. the costs and expenses of administration, including the reasonable expenses of a guaranty association or foreign guaranty association in handling claims.

Class 2. all claims under policies for losses incurred, including third-party claims, all claims against the insurer for liability for bodily injury or for injury to or destruction of tangible property that are not under policies, and all claims of a guaranty association or foreign guaranty association for payment of covered claims or covered obligations of the insurer. All claims under life and health insurance and annuity policies, whether for death proceeds, health benefits, annuity proceeds, or investment values, must be treated as loss claims. The portion of any loss, indemnification that is provided by other benefits, or advantages recovered by the claimant may 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 may not be treated as a gratuity.

Class 3. claims of the federal government.

Class 4. debts due to employees for services performed; do not exceed $1,000; performed within 1 year; Officers and directors may not be entitled

Class 5. claims of general creditors.

Class 6. claims of any state or local government with P&F clause

Class 7. claims filed late or any other claims

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.

Class 9. the claims of shareholders or other owners.

Nebraska

Every claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class receive any payment.

No subclasses shall be established within any class.

Class 1. The costs and expenses of administration during rehabilitation and liquidation, including the reasonable expenses of a guaranty association or foreign guaranty association for unallocated loss adjustment expenses

Class 2. All claims under policies, including such claims of the federal or any state or local government, for losses incurred, including third-party claims, all claims against the insurer for liability for bodily injury or for injury to or destruction of tangible property which are not under policies, and all claims of a guaranty association or foreign guaranty association. All claims under life insurance and annuity policies, funding agreements, guaranteed interest contracts, guaranteed investment contracts, synthetic guaranteed investment contracts, and deposit administration contracts, whether for death proceeds, annuity proceeds, or investment values, shall be treated as loss claims. That portion of any 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 obligation of support or by way of succession at death or as proceeds of life insurance or as gratuities. No payment by an employer to his or her employee shall be treated as a gratuity;

Class 3. Claims of the federal government

Class 4. Reasonable compensation to employees for services performed; do not exceed two months of monetary compensation; performed within one year before the filing; Principal officers and directors of the insurer shall not be entitled

Class 5. Claims under nonassessable policies for unearned premium or other premium refunds and claims of general creditors, including claims of ceding and assuming insurers in their capacity as such;

Class 6. Claims of any state or local government with P&F clause

Class 7. Claims filed late or any other claims

Class 8. Surplus or contribution notes or similar obligations and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with law; and

Class 9. The claims of shareholders or other owners in their capacity as shareholders.

Nevada

Each claim in each class must be paid in full or adequate money retained for the payment before the members of the next class receive any payment.

No subclasses may be established within any class.

Class a. Administration costs and expenses, no GF

Class b. All claims under policies, any claims against an insured for liability for bodily injury or for injury to or destruction of tangible property which are covered claims under policies, including any such claims of the Federal Government or any state or local government, and any claims of the Nevada Insurance Guaranty Association, the Nevada Life and Health Insurance Guaranty Association and other similar statutory organizations in other jurisdictions. Any claims under life insurance and annuity policies, whether for death proceeds, annuity proceeds or investment values, must be treated as loss claims. That portion of any loss for which indemnification is provided by other benefits or advantages recovered or recoverable by the claimant may not be included in this class, other than benefits or advantages recovered or recoverable in discharge of familial obligations of support or because of succession at death or as proceeds of life insurance, or as gratuities. No payment made by an employer to his employee may be treated as a gratuity.

Class c. Unearned premiums and small loss claims, including claims under nonassessable policies for unearned premiums or other premium refunds.

Class d. claims of the Federal Government.

Class e. claims of any state or local government, including, but not limited to, a claim of a state or local government for a penalty or forfeiture.

Class f. Wage debts due employees for services performed; not to exceed an amount equal to 2 months of monetary compensation; performed within 6 months before the filing of the petition for liquidation; Officers of the insurer are not entitled

Class g. Residual classification, including any other claims not falling within other classes pursuant to the provisions of this section, and P&F

Class h. Judgment claims based solely on judgments.

Class i. Interest on claims already paid

Class j. Miscellaneous subordinated claims, with interest as provided in paragraph (i):

Class k. Preferred ownership claims, including surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Interest at the legal rate must be added to each claim, as provided in paragraphs (i) and (j).

Class l. Proprietary claims of shareholders or other owners.

New Hampshire

The first $50 of the amount allowed on each claim in the classes under paragraphs II, V, and VI except claims of the guaranty associations as defined in RSA 404-B, 404-H, 404-D, and 408-B shall be deducted from the claim. Claims may not be cumulated by assignment to avoid application of the $50 deductible provision.

Subject to the $50 deductible provision, every claim 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.

No subclasses shall be established within any class.

Class I. The costs and expenses of administration no GF

Class II. Policy Related Claims. All claims by policyholders, including claims for unearned premiums in excess of $50, beneficiaries, and insureds arising from and within the coverage of and not in excess of the applicable limits of insurance policies and insurance contracts issued by the company, 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 company and claims of the New Hampshire Insurance Guaranty Association, the New Hampshire Life and Health Insurance Guaranty Association and any similar organization in another state. All 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 any loss for which indemnification is provided by other benefits or advantages recovered or recoverable 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. No payment made by an employer to an employee shall be treated as a gratuity.

Class III. Claims of the Federal Government.

Class IV. Debts due to employees for services performed; not to exceed $1,000; earned within one year before the filing; Officers shall not be entitled

Class V. All other claims including claims of any state or local government, with P&F clause

Class VI. Claims based solely on judgments.

Class VII. Interest at the legal rate compounded annually on all claims in the classes under paragraphs I through VI

Class VIII. The remaining claims or portions of claims not already paid, with interest,

Class IX. Preferred Ownership Claims. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Interest at the legal rate shall be added to each claim, as in paragraphs VII and VIII.

Class X. Proprietary Claims. The claims of shareholders or other owners.

New Jersey

Class 1. Expenses of administration;

Class 2. Compensation actually owing to employees other than officers of an insurer, for services rendered within 3 months prior; not exceeding $1,000 for each such employee

Class 3. Claims for taxes and debts due to Federal or any state or local government which are secured by liens perfected prior to the commencement of delinquency proceedings;

Class 4. Claims by policyholders, beneficiaries and insurers arising from and within the coverage of and not in excess of the applicable limits of insurance policies and insurance contracts issued by the company and liability claims against insurers which claims are within the coverage of and not in excess of the applicable limits of insurance policies and insurance contracts issued by the company and claims presented by the New Jersey Property-Liability Insurance Guaranty Association and claims presented by any similar organization in another state.

Class 5. All other claims.

New Mexico

The first fifty dollars ($50.00) of the amount allowed on each property, casualty or fidelity claim in the classes under Subsections B through F of this section, shall be deducted from the claim and included in the class under Subsection I of this section.

Claims may not be cumulated by assignment to avoid application of the fifty dollar ($50.00) deductible provision.

Subject to the fifty dollar ($50.00) deduction, every claim in each class shall be paid in full or adequate funds retained for payment before the members of the next class receive any payment.

No subclasses shall be established within any class.

Class A. The costs and expenses of administration, including the reasonable expenses of a guaranty association for unallocated loss adjustment expense;

Class B. Debts due to employees of the insurer for services performed, not to exceed one thousand dollars ($1,000) to each employee, and earned within three months before commencement of delinquency proceedings; officers shall not be entitled

Class C. All claims under policies or contracts for losses incurred, including third party claims and all claims of guaranty associations not specified in Subsection A of this section. That portion of any loss for which indemnification is provided by other benefits or advantages recovered or recoverable 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. No payment made by an employer to his employee shall be treated as a gratuity;

Class D. Claims under nonassessable policies for unearned premiums or other premium refunds;

Class E. All other claims, including claims of the federal or any state or local government with P&F clause

Class F. Claims based on judgments.

Class G. Interest at the legal rate compounded annually on all claims in the classes under Subsections A through I of this section

Class H. The remaining claims or portions of claims not already paid, with interest as in Subsection G of this section:

Class I. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Interest at the legal rate shall be added to each claim, as in Subsections G and H of this section; and

Class J. Proprietary claims. The claims of shareholders or other owners.

New York

Every claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class receive any payment.

No subclasses shall be established within any class.

No claim by a shareholder, policyholder or other creditor shall be permitted to circumvent the priority classes through the use of equitable remedies.

Class one. Claims with respect to the actual and necessary costs and expenses of administration, incurred by the liquidator, rehabilitator or conservator under this article.

Class two. All claims under policies including such claims of the federal or any state or local government for losses incurred, third party claims, claims for unearned premiums, and all claims of a security fund, guaranty association or the equivalent except claims arising under reinsurance contracts.

Class three. Claims of the federal government except those under class two above.

Class four. Claims for wages owing to employees of an insurer; for services rendered within one year before commencement; not exceeding one thousand two hundred dollars to each employee

Class five. Claims of state and local governments except those under class two above.

Class six. Claims of general creditors including, but not limited to, claims arising under reinsurance contracts.

Class seven. Claims filed late or any other claims

Class eight. Claims for advanced or borrowed funds made pursuant to section one thousand three hundred seven of this chapter.

Class nine. Claims of shareholders or other owners in their capacity as shareholders.

North Carolina

Every claim in each class shall be paid in full or adequate funds shall be retained for payment before the members of the next class receive any payment.

No subcategories shall be established within the categories in a class.

Class 1. The receiver’s expenses for the administration and conservation of assets of the insurer.

Class 2. Claims or portions of claims for benefits under policies and for losses incurred, including claims of third parties under liability policies; claims of HMO enrollees and HMO enrollees’ beneficiaries; claims for unearned premiums; claims for funds or consideration held under funding agreements, as defined in G.S. 58-7-16; claims under life insurance and annuity policies, whether for death proceeds, annuity proceeds, or investment values; and claims of domestic and foreign guaranty associations, including claims for the reasonable administrative expenses of domestic and foreign guaranty associations; but excluding claims of insurance pools, underwriting associations, or those arising out of reinsurance agreements, claims of other insurers for subrogation, and claims of insurers for payments and settlements under uninsured and underinsured motorist coverages.

(2a) For HMOs, claims of providers and participating providers, as defined in G.S. 58-67-5(h) and G.S. 58-67-5(1), {Footnote 1} who are obligated by statute, agreement, or court order to hold enrollees harmless from liability for services provided and covered by an HMO.

(2b) For prepaid health plans licensed under Article 93 of this Chapter, claims of providers who are obligated by statute, agreement, or court order to hold enrollees harmless, except for copayments and deductibles, from liability for health care services provided and covered by a prepaid health plan.

Class 3. Claims of the federal or any state or local government or taxing authority, including claims for taxes.

Class 4. Compensation actually owing to employees other than officers of the insurer for services rendered within three months before the commencement of a delinquency proceeding; not exceeding one thousand dollars ($1,000) for each employee

Class 5. Claims of general creditors, including claims of insurance pools, underwriting associations, or those arising out of reinsurance agreements; claims of other insurers for subrogation; and claims of insurers for payments and settlements under uninsured and underinsured motorist coverages.

North Dakota

Every claim in each class must be paid in full or adequate funds retained for such payment before the members of the next class receive any payment.

No subclasses may be established within any class.

Class 1. The costs and expenses of administration during rehabilitation and liquidation, including the reasonable expenses of a guaranty association or foreign guaranty association for unallocated loss adjustment expenses.

Class 2. All claims under policies including such claims of the federal or any state or local government for losses incurred, (“loss claims”) including third-party claims and all claims of a guaranty association or foreign guaranty association. All claims under life insurance and annuity policies, whether for death proceeds, annuity proceeds, or investment values must be treated as loss claims. That portion of any loss, indemnification for which is provided by other benefits, or advantages recovered by the claimant, may not be included in this class, other than benefits or advantages recovered or recoverable in discharge of familial obligation of support or by way of succession at death or as proceeds of life insurance, or as gratuities. No payment by an employer to employees may be treated as a gratuity.

Class 3. Claims of the federal government not included in class 2.

Class 4. Reasonable compensation to employees for services performed; do not exceed two months of monetary compensation; performed within one year before the filing; Principal officers and directors are not entitled

Class 5. Claims under nonassessable policies for unearned premium or other premium refunds and claims of general creditors including claims of ceding and assuming companies in their capacity as such.

Class 6. Claims of any state or local government with P&F clause

Class 7. Claims filed late or any other claims

Class 8. Surplus or contribution notes, or similar obligations, and premium funds on assessable policies. Payment to member of domestic mutual insurance companies must be limited in accordance with law.

Class 9. The claims of shareholders or other owners in their capacity as shareholders.

Ohio

Every claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class receive any payment.

No subclasses shall be established within any class.

Class 1. The costs and expenses of administration, including the reasonable expenses of a guaranty association or foreign guaranty association in handling claims.

Class 2. All claims under policies for losses incurred, including third party claims, all claims of contracted providers against a medicaid health insuring corporation for covered health care services provided to medicaid recipients, all claims against the insurer for liability for bodily injury or for injury to or destruction of tangible property that are not under policies, and all claims of a guaranty association or foreign guaranty association. All 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 any 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. No payment by an employer to an employee shall be treated as a gratuity. Claims under nonassessable policies for unearned premium or other premium refunds.

Class 3. Claims of the federal government.

Class 4. Debts due to employees for services performed; do not exceed one thousand dollars; services performed within one year before the filing; Officers and directors shall not be entitled

Class 5. Claims of general creditors.

Class 6. Claims of any state or local government with P&F clause

Class 7. Claims filed late or any other claims

Class 8. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with law.

Class 9. Interest at the legal rate compounded annually on all claims in the classes prescribed

Class 10. The claims of shareholders or other owners.

Oklahoma

Before the members of the next class receive any payment, every claim in each class shall be: Paid in full; or Protected by adequate funds retained for such payment.

No subclasses shall be established within any class except as otherwise provided by law.

No claim by a shareholder, policyholder or other creditor shall be permitted to circumvent the priority classes through the use of equitable remedies.

Class 1. The reasonable costs and expenses of administration expressly approved by the receiver, no GF

Class 2. The administrative expenses of guaranty associations.

Class 3. All claims under policies including claims of the federal or any state or local government for losses incurred (“loss claims”) including third-party claims, claims for unearned premiums, all claims of a guaranty association for payment of covered claims or covered obligations of the insurer and all claims of a guaranty association for reasonable expenses other than those included in Class 2. All claims under life and health insurance and annuity policies, whether for death proceeds, health benefits, annuity proceeds, or investment values shall be treated as loss claims. That portion of any 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 obligation of support or by way of succession at death or as proceeds of life insurance, or as gratuities. No payment by an employer to his employee shall be treated as a gratuity.

Notwithstanding the foregoing, the following claims shall be excluded from Class 3 priority:

1. obligations of the insolvent insurer arising out of reinsurance contracts,

2. obligations incurred after the expiration date of the insurance policy or after the policy has been replaced by the insured or canceled at the insured’s request or after the policy has been canceled as provided in this act. Notwithstanding the provisions of this paragraph, earned premium claims on policies, other than reinsurance agreements, shall not be excluded,

3. obligations to insurers, insurance pools or underwriting associations and their claims for contribution, indemnity or subrogation, equitable or otherwise,

4. any claim which is in excess of any applicable limits provided in the insurance policy issued by the insolvent insurer,

5. any amount accrued as punitive or exemplary damages unless expressly covered under the terms of the policy, and

6. tort claims of any kind against the insurer, and claims against the insurer for bad faith or wrongful settlement practices.

Class 4. Claims of the federal government other than those claims included in Class 3.

Class 5. Debts due employees for services; do not exceed two (2) months of monetary compensation; performed within six (6) months before the filing of the petition for liquidation; Principal officers and directors shall not be entitled

Class 6. Claims of any person, including claims of state or local governments, except those specifically classified elsewhere in this section.

Class 7. Claims for commissions and service fees, and claims of attorneys for fees and expenses owed them by a person for services rendered in opposing a formal delinquency proceeding. In order to prove the claim, the claimant must show that the insurer which is the subject of the delinquency proceeding incurred such fees and expenses based on its best knowledge, information and belief, formed after reasonable inquiry indicating opposition was in the best interests of the person, was well grounded in fact and was warranted by existing law or a good-faith argument for the extension, modification or reversal of existing law, and that opposition was not pursued for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of the litigation.

Class 8. Claims of any state or local government with P&F clause

Class 9. Surplus or contribution notes or similar obligations, premium refunds on assessable policies, interest on claims of Classes 1 through 8 and any other claims specifically subordinated to this class.

Class 10.

1. Claims of shareholders or other owners arising out of their capacity as shareholders or other owners, or arising in any other capacity or facts except as they may be qualified in Class 3 or 4 above; provided, however, that no shareholder, member or other owner shall be entitled to, or receive, any distribution from the insolvent insurer’s estate under this paragraph, if:

1. the intentional wrongdoing, fraud, gross negligence, negligence or other act, failure to act, transaction or proceeding of such shareholder, member or owner, alone or in concert with others, or of a director or officer of the insolvent insurer, is found by a court of competent jurisdiction or by the receiver in his or her reasonable discretion, to have caused, or to have been a contributing factor to, the insolvency of the insolvent insurer,

2. funds were collected from the shareholder, member or other owner, either directly or through an insurance carrier, fidelity bond issuer or other entity, as a consequence of, or related to, a claim made or brought by the receiver of said insurer, or

3. any of the funds available for distribution consist of punitive damages recovered by the receiver of said estate from any source based upon any claim made or brought by the receiver.

Oregon

Class 1. Expenses of administration of the delinquency proceedings and expenses of the Oregon Insurance Guaranty Association or similar organization

Class 2. All claims under policies, including third party claims and claims under nonassessable policies for unearned premiums, and all claims by the Oregon Insurance Guaranty Association, the Oregon Life and Health Insurance Guaranty Association or any similar organization in another state for payment of covered claims or contractual obligations;

Class 3. Claims legally due and owing by the insurer to the United States;

Class 4. If the insurer is domiciled in this state, compensation or wages actually owing to salaried employees other than officers of the insurer, for services rendered within three months prior to the commencement of the delinquency proceeding, but not exceeding $2,000 for each such employee;

Class 5. Claims legally due and owing by the insurer to this state; and

Class 6. Claims, including special deposit claims, owing to any person, including this state, that by the laws of this state is entitled to priority.

Pennsylvania

Every claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class receive any payment.

No subclasses shall be established within any class.

Class a. The costs and expenses of administration, including the expenses of a guaranty association in handling claims.

Class b. All claims under policies for losses wherever incurred, including third party claims, and all claims against the insurer for liability for bodily injury or for injury to or destruction of tangible property which are not under policies, shall have the next priority. All 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 any 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. No payment made by an employer to his employe shall be treated as a gratuity.

Class c. Claims of the Federal government

Class d. Debts due to employes for services performed; do not exceed one thousand dollars ($1,000) and represent payment for services performed within one year before the filing; Officers and directors shall not be entitled

Class e. Claims under nonassessable policies for unearned premium or other premium refunds and claims of general creditors.

Class f. Claims of state or local government with P&F clause

Class g. Claims filed late.

Class h. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with law.

Class i. The claims of shareholders or other owners.

Rhode Island

Every claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class receive any payment.

No subclasses shall be established within any class except as provided in Section 27- 14.3-25(a)(12).

No claim by a shareholder, policyholder, or other creditor shall be permitted to circumvent the priority classes through the use of equitable remedies.

Class 1. The costs and expenses of administration expressly approved by the receiver, no GF

Class 2. The administrative expenses of guaranty associations.

Class 3.

1. All claims under policies including claims of the federal or any state or local government for losses incurred, (“loss claims”) including third party claims, claims for unearned premiums, and all claims of guaranty association for reasonable expenses other than those included in Class 2. All claims under life and health insurance and annuity policies, whether for death proceeds, health benefits, annuity proceeds, or investment values shall be treated as loss claims. That portion of any 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 obligation of support or by way of succession at death or as proceeds of life insurance, or as gratuities. No payment by an employer to his or her employee shall be treated as a gratuity;

2. Notwithstanding the foregoing, the following claims shall be excluded from Class 3 priority:

1. Obligations of the insolvent insurer arising out of reinsurance contracts;

2. Obligations incurred after the expiration date of the insurance policy or after the policy has been replaced by the insured or canceled at the insured’s request or after the policy has been canceled as provided in this chapter;

3. Obligations to insurers, insurance pools or underwriting associations and their claims for contribution, indemnity or subrogation, equitable or otherwise;

4. Any claim which is in excess of any applicable limits provided in the insurance policy issued by the insolvent insurer;

5. Any amount accrued as punitive or exemplary damages unless expressly covered under the terms of the policy; and

6. Tort claims of any kind against the insurer, and claims against the insurer for bad faith or wrongful settlement practices.

Class 4. Claims of the federal government

Class 5. Debts due to employees for services; do not exceed two (2) months of monetary compensation; performed within six (6) months before the filing of the petition for liquidation; Principal officers and directors shall not be entitled

Class 6. Claims of any person, including claims of state or local governments, except those specifically classified elsewhere in this section.

Class 7. Surplus claims of any state or local government for P&F

Class 8. Surplus or contribution notes or similar obligations, premium refunds on assessable policies, interest on claims of Classes 1 through 7 and any other claims specifically subordinated to this class.

Class 9. Claims of shareholders or other owners arising out of their capacity as shareholders or other owners, or any other capacity except as they may be qualified in Class 3 or 6 above.

South Carolina

Every claim in each class must be paid in full or adequate funds retained for the payment before the members of the next class receive any payment.

No subclasses may be established within any class.

Class 1. The costs and expenses of administration including the reasonable expenses of a guaranty association or foreign guaranty association in handling claims.

Class 2. Claims under policies, including claims of federal, state, and local governments, for losses incurred, loss claims, including third party claims, and claims of a guaranty association or foreign guaranty association. Claims under life insurance and annuity policies, whether for death proceeds, annuity proceeds, or investment values, must be treated as loss claims. That portion of a loss, indemnification for which is provided by other benefits or advantages recovered by the claimant, must 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. No payment by an employer to his employee may be treated as a gratuity.

Class 3. Claims under nonassessable policies for unearned premium or other premium refunds.

Class 4. Claims of the federal government

Class 5. Debts due to employees for services performed; do not exceed one thousand dollars; services performed within one year before the filing; Officers and directors are not entitled

Class 6. Claims of general creditors and claims against the insurer for liability for bodily injury or for injury to or destruction of tangible property which are not under policies.

Class 7. Claims of state and local governments with P&F clause

Class 8. Claims filed late or any other claims

Class 9. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies except premium refund claims of the federal government which must be included in the class of claims under item (4).

Class 10. Payments to members of domestic mutual insurance companies are limited in accordance with law.

Class 11. The claims of shareholders or other owners.

South Dakota

Every claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class receive any payment.

No subclasses may be established within any class.

Class 1. The costs and expenses of administration, including the reasonable expenses of a guaranty association or foreign guaranty association in handling claims;

Class 2. Debts due to employees for services performed; do not exceed one thousand dollars; services performed within one year before the filing; Officers and directors are not entitled

Class 3. All claims under policies for losses incurred, including third party claims, all claims against the insurer for liability for bodily injury or for injury to or destruction of tangible property which are not under policies, and all claims of a guaranty association or foreign guaranty association. All 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 any loss, indemnification for which is provided by other 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. No payment by an employer to this employee may be treated as a gratuity;

Class 4. Claims under nonassessable policies for unearned premium or other premium refunds and claims of general creditors;

Class 5. Claims of the federal or any state or local government with P&F clause

Class 6. Claims filed late or any other claims

Class 7. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with law;

Class 8. The claims of shareholders or other owners.

Tennessee

Every claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class receive any payment.

No subclasses shall be established within any class.

Class 1. The costs and expenses of administration during rehabilitation and liquidation, including the reasonable expenses of a guaranty association or foreign guaranty association for unallocated loss adjustment expenses;

Class 2. All claims under policies, including such claims of the federal or any state or local government for losses incurred (loss claims), including third party claims and all claims of a guaranty association or foreign guaranty association. All claims under life insurance and policies and annuities, which, for purposes of this section only, shall include guaranteed investment contracts and funding agreements, whether for death proceeds, annuity proceeds, or investment values shall be treated as loss claims. That portion of any 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 the discharge of familial obligation of support or by way of succession at death or as proceeds of life insurance, or as gratuities. No payment by an employer to such employer’s employee shall be treated as a gratuity;

Class 3. Claims of the federal government,

Class 4. Reasonable compensation to employees for services performed; do not exceed two (2) months of monetary compensation; performed within one (1) year before the filing; Principal officers and directors are not entitled

Class 5. Claims under nonassessable policies for unearned premium or other premium refunds, claims of general creditors, including claims of ceding and assuming companies in their capacity as such, and every claim arising under an unallocated annuity contract, except unallocated annuity contracts and defined government contribution plans qualified under the United States Internal Revenue Code, § 403(b) (26 U.S.C. § 403(b)), issued in connection with a separate account agreement providing, in effect, that the assets in the separate account shall not be chargeable with liabilities arising out of any other business of the insurer, to the extent that said claim is not satisfied and fully discharged out of the assets of the separate account equal to the reserves maintained in such account for such agreement;

Class 6. Claims of any state or local government with P&F clause

Class 7. Claims filed late or any other claims

Class 8. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with law; and

Class 9. The claims of shareholders or other owners in their capacity as shareholders.

Texas

Every claim in each class shall be paid in full, or adequate funds retained for their payment, before the members of the next class receive payment, and all claims within a class must be paid substantially the same percentage of the amount of the claim.

Except as provided by Subsections (a)(2), (a)(3), (i), and (k), subclasses may not be established within a class.

No claim by a shareholder, policyholder, or other creditor shall be permitted to circumvent the priority classes through the use of equitable remedies.

Class 1. (1) The costs and expenses of administration expressly approved or ratified by the liquidator, including the reasonable expenses of a guaranty association or similar

4. Except as expressly approved by the receiver, any expenses arising from a duty to indemnify the directors, officers, or employees of the insurer are excluded from this class and, if allowed, are Class 5 claims.

Class 2. (1) All claims under policies of insurance, including third-party claims; claims under annuity contracts, including funding agreements, guaranteed investment contracts, and synthetic guaranteed investment contracts; claims under nonassessable policies for unearned premium; claims of obligees and, subject to the discretion of the receiver, completion contractors, under surety bonds and surety undertakings other than bail bonds, mortgage or financial guaranties, or other forms of insurance offering protection against investment risk; claims by principals under surety bonds and surety undertakings for wrongful dissipation of collateral by the insurer or its agents; and claims incurred during the extension of coverage provided for in Section 443.152. For purposes of this subdivision, “annuity contract,” “funding agreement,” “guaranteed investment contract,” and “synthetic guaranteed investment contract” have the meanings assigned by Section 1154.003.

2. All other claims incurred in fulfilling the statutory obligations of a guaranty association not included in Class 1, including indemnity payments on covered claims and, in the case of the Life, Accident, Health, and Hospital Service Insurance Guaranty Association or another life and health guaranty association, all claims as a creditor of the impaired or insolvent insurer for all payments of and liabilities incurred on behalf of covered claims or covered obligations of the insurer and for the funds needed to reinsure those obligations with a solvent insurer.

3. Claims for benefits under a health care plan issued by a health maintenance organization.

4. Claims under insurance policies or contracts for benefits issued by an unauthorized insurer.

5. Notwithstanding any provision of this chapter, the following claims are excluded from Class 2 priority:

1. obligations of the insolvent insurer arising out of reinsurance contracts;

2. obligations, excluding unearned premium claims on policies other than reinsurance agreements, incurred after:

1. the expiration date of the insurance policy;

2. the policy has been replaced by the insured or canceled at the insured’s request; or

3. the policy has been canceled as provided by this chapter;

3. obligations to insurers, insurance pools, or underwriting associations and their claims for contribution, indemnity, or subrogation, equitable or otherwise;

4. any claim that is in excess of any applicable limits provided in the insurance policy issued by the insurer;

5. any amount accrued as punitive or exemplary damages unless expressly covered under the terms of the policy;

6. tort claims of any kind against the insurer and claims against the insurer for bad faith or wrongful settlement practices; and

7. claims of the guaranty associations for assessments not paid by the insurer, which must be paid as claims in Class 5.

Class 3. Claims of the federal government not included in Class 2.

Class 4. Debts due employees for services or benefits to the extent that the debts do not exceed $5,000 or two months salary, whichever is the lesser; services performed within one year before;

Class 5. Claims of other unsecured creditors not included in Classes 1 through 4, including claims under reinsurance contracts, claims of guaranty associations for assessments not paid by the insurer, and other claims excluded from Class 2.

Class 6. Claims of any state or local governments

Class 7. Claims of any state or local government for P&F

Class 8. late filed claims that would otherwise be classified in Classes 2 through 7.

Class 9. Surplus notes, capital notes or contribution notes or similar obligations, premium refunds on assessable policies, and any other claims specifically assigned to this class. Claims in this class are subject to any subordination agreements related to other claims in this class that existed before the entry of the liquidation order.

Class 10. Interest on allowed claims of Classes 1 through 9

Class 11. Claims of shareholders or other owners arising out of their capacity as shareholders or other owners, or any other capacity, except as they may be qualified in Class 2, 5, or 10. Claims in this class are subject to any subordination agreements related to other claims in this class that existed before the entry of the liquidation order.

Utah

All claims in each class shall be paid in full or adequate funds retained for the claim’s payment before a member of the next class receives payment.

All claims within a class shall be paid substantially the same percentage.

Subclasses may not be established within a class.

A claim by a shareholder, policyholder, or other creditor may not be permitted to circumvent the priority classes through the use of equitable remedies.

Class 1 cost or expense of administration expressly approved or ratified by the liquidator, no GF

Class 2 a reasonable expense of a guaranty association, including overhead, salaries, or other general administrative expenses allocable to the receivership

Class 3

1. a claim under a policy of insurance including a third party claim;

2. a claim under an annuity contract or funding agreement;

3. a claim under a nonassessable policy for unearned premium;

4. a claim of an obligee and, subject to the discretion of the receiver, a completion contractor under a surety bond or surety undertaking, except for:

   1. a bail bond;
   2. a mortgage guaranty;
   3. a financial guaranty; or
   4. other form of insurance offering protection against investment risk or warranties;

5. a claim by a principal under a surety bond or surety undertaking for wrongful dissipation of collateral by the insurer or its agents;

6. an indemnity payment on:

   1. a covered claim; or
   2. for a delinquency proceeding under this chapter that is initiated before May 8, 2018, a payment for the continuation of coverage made by an entity responsible for the payment of a claim or continuation of coverage of an insolvent health maintenance organization;

7. a claim for unearned premium;

8. a claim incurred during the extension of coverage provided for in Sections 31A-27a-402 and 31A-27a-403; or

9. all other claims incurred in fulfilling the statutory obligations of a guaranty association not included in Class 2, including:

   1. an indemnity payment on covered claims; and
   2. in the case of a life and health guaranty association, a claim:

   (Aa) as a creditor of the impaired or insolvent insurer for a payment of and liabilities incurred on behalf of a covered claim or covered obligation of the insurer; and (Bb) for the funds needed to reinsure the obligations described under this Subsection (2)(c)(i)(I)(II) with a solvent insurer; and

2. notwithstanding any other provision of this chapter, excludes the following which shall be paid under Class 7, except as provided in this section:

1. an obligation of the insolvent insurer arising out of a reinsurance contract;

2. an obligation that is incurred pursuant to an occurrence policy or reported pursuant to a claims made policy after:

   1. the expiration date of the policy;
   2. the policy is replaced by the insured;
   3. the policy is canceled at the insured’s request; or
   4. the policy is canceled as provided in this chapter;

3. an obligation to an insurer, insurance pool, or underwriting association and the insurer’s, insurance pool’s, or underwriting association’s claim for contribution, indemnity, or subrogation, equitable or otherwise, except for direct claims under a policy where the insurer is the named insured;

4. an amount accrued as punitive or exemplary damages unless expressly covered under the terms of the policy, which shall be paid as a claim in Class 9;

5. a tort claim of any kind against the insurer;

6. a claim against the insurer for bad faith or wrongful settlement practices; and

7. a claim of a guaranty association for assessments not paid by the insurer, which claims shall be paid as claims in Class 7; and

3. notwithstanding Subsection (2)(c)(ii)(B), does not exclude an unearned premium claim on a policy, other than a reinsurance agreement;

Class 4 a claim under a policy for mortgage guaranty, financial guaranty, or other forms of insurance offering protection against investment risk or warranties;

Class 5 a claim of the federal government not included in Class 3 or 4;

Class 6 a debt due an employee for services or benefits not to exceed $5,000 or two month’s salary; for services performed within one year before;

Class 7 a claim of an unsecured creditor not included in Classes 1 through 6, including:

1. a claim under a reinsurance contract;
2. a claim of a guaranty association for an assessment not paid by the insurer; and
3. other claims excluded from Class 3 or 4, unless otherwise assigned to Classes 8 through 13;

Class 8

1. a claim of a state or local government, except a claim specifically classified elsewhere in this section; or
2. a claim for services rendered and expenses incurred in opposing a formal delinquency proceeding;

Class 9 a claim for penalties, punitive damages, or forfeitures, unless expressly covered under the terms of a policy of insurance;

Class 10 a late filed claim that would otherwise be classified in Classes 3 through 9;

Class 11 a surplus note; a capital note; a contribution note; a similar obligation; a premium refund on an assessable policy; or any other claim specifically assigned to this class;

Class 12 which is a claim for interest on an allowed claim of Classes 1 through 11

Class 13 which is a claim of a shareholder or other owner

Vermont

Every claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class receive any payment.

No subclass shall be established within any class.

Class 1. The costs and expenses of administration, during conservation, rehabilitation and liquidation, no GF

Class 2. The administrative expenses of guaranty associations.

Class 3. All claims under policies including such claims of the federal or any state or local government for losses incurred, including third party claims, claims for unearned premiums, and all claims of a guaranty association or foreign guaranty association, other than claims included in Class 2, for payment of covered claims or covered obligations of the insurer. It shall include claims of members of a health maintenance organization, if the member is liable to any provider for services provided under the plan; provided, however, claims of providers obligated by statute or agreement to hold members of a health maintenance organization harmless from liability for services provided under the plan shall be Class 6 claims. All 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 any 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 obligation of support or by way of succession at death or as proceeds of life insurance, or as gratuities. No payment by an employer to his or her employee shall be treated as a gratuity.

Class 4. Claims of the federal government other than those claims included in Class 3.

Class 5. Debts due employees for services; do not exceed two months of monetary compensation; services performed within six months before the filing; Principal officers and directors shall not be entitled .

Class 6. Claims of any person, including claims of state or local governments, except those specifically classified elsewhere in this section.

Class 7. Claims of any state or local government for P&F

Class 8. Claims filed late or any other claims

Class 9. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with law.

Class 10. The claims of shareholders or other owners in their capacity as shareholders.

Virginia

1. Pay, after reserving for the payment of the costs and expenses of administration, according to the following priorities: (i) claims of secured creditors with a perfected security interest not voidable under § 38.2-1513 to the extent of the value of their security, (ii) claims of the associations for “covered claims” and “contractual obligations” as defined in §§ 38.2-1603 and 38.2-1701 and claims of other policyholders arising out of insurance contracts apportioned without preference, (iii) taxes owed to the United States and other debts owed to any person, including the United States, which by the laws of the United States are entitled to priority, (iv) wages entitled to priority as provided in § 38.2-1514, and (v) other creditors; and

2. Equitably allocate disbursements to each of the entitled associations; and

3. Secure an agreement from each of the entitled associations requiring the return to the Commission of any assets previously disbursed to the association required to pay claims entitled to priority in subdivision 1 of this subsection. No bond shall be required of any entitled association; and

4. Require a full report to be made by the association to the Commission accounting for all assets disbursed to the association, all disbursements made from these assets, any interest earned on these assets and any other matter as the Commission may require.

C. The Commission shall provide for disbursements to the association in an amount estimated at least equal to the claim payments made or to be made by the association for which the association could assert a claim against the Commission. In addition, the Commission shall provide that if the assets available for disbursement do not equal or exceed the amount of claim payments made or to be made by the associations, then disbursements shall be in the amount of available assets.

D. The Commission shall notify the affected associations and the commissioners of insurance in the other states of any disbursement made according to this section. The notice shall be deemed given when sent by certified mail at least thirty days prior to disbursement.

38.2-1514 Before the payment of any other debt of claim, other than those for which a higher priority is established above, compensation shall be paid to employees other than officers of an insurer for services rendered within three months before the commencement; not to exceed $1,000

Washington

Every claim in a class must be paid in full or adequate funds retained for payment before the members of the next class receive any payment;

no subclasses may be established within a class; and

no claim by a shareholder, policyholder, or other creditor may circumvent the priority classes through the use of equitable remedies.

Class 1. The costs and expenses of administration during rehabilitation and liquidation, including the reasonable expenses of a guaranty association or foreign guaranty association for unallocated loss adjustment expenses.

Class 2. Loss claims. For purposes of this section, loss claims are all claims under policies, including claims of the federal or a state or local government, for losses incurred, including third-party claims, and all claims of a guaranty association or foreign guaranty association. All claims under life insurance and annuity policies, whether for death proceeds, annuity proceeds, or investment values, are loss claims. That portion of any loss indemnification that is provided for by other benefits or advantages recovered by the claimant, is not 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. No payment by an employer to an employee may be treated as a gratuity. Loss claims also include claims under nonassessable policies for unearned premium or other premium refunds.

Class 3. Claims of the federal government, other than claims which are included as loss claims under subsection (2) of this section.

Class 4. Reasonable compensation to employees for services performed; do not exceed two months of monetary compensation; services performed within one year before the filing; Principal officers and directors are not entitled

Class 5. Claims of general creditors including claims of ceding and assuming companies in their capacity as such.

Class 6. Claims of any state or local government with P&F clause

Class 7. Claims filed late or any other claims

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.

Class 9. The claims of shareholders or other owners in their capacity as shareholders.

West Virginia

Every claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class receive any payment.

No subclasses may be established within any class.

No claim by a shareholder, policyholder or other creditor may be permitted to circumvent the priority classes through the use of equitable remedies.

Class I. The costs and expenses of administration, no GF

Class II. All claims for refund of unearned premiums under nonassessable policies and all claims of policyholders including claims of the federal or any state or local government as policyholders for losses incurred; third party claims of an insolvent insurer; and all reasonable claims of the West Virginia Insurance Guaranty Associations and associations or entities performing a similar function in other states.

Class III. Claims of the federal government other than as an insured policyholder.

Class IV. Debts due to employees for compensation; may not exceed two months of monetary compensation; services performed within six months before the filing; Principal officers and directors shall not be entitled

Class V. Claims of general creditors including claims of ceding and assuming companies in their capacity as such.

Class VI. Claims of any state or local government with P&F clause.

Class VII. Claims filed late or any other claims

Class VIII. Surplus or contribution notes, or similar obligations and premium refunds on assessable policies. Payments to members of domestic mutual corporations shall be limited in accordance with law.

Class IX. The claims of shareholders or other owners.

Wisconsin

The first $50 of the amount allowed on each claim in the classes under subs. (3) to (6), except for claims of the federal government under subs. (3) and (3c), shall be deducted from the claim and included in the class under sub. (8). Claims may not be cumulated by assignment to avoid application of the $50 deductible provision.

Subject to the $50 deductible provision, every claim 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.

No subclasses shall be established within any class.

That portion of any loss for which indemnification is provided by other benefits or advantages recovered or recoverable by the claimant shall not be included in the classes under subs. (3) and (3m), 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. No payment made by an employer to an employee shall be treated as a gratuity.

Class 1 The costs and expenses of administration, no GF.

Class 3 Loss claims. All claims under policies for losses incurred, including 3rd-party claims and federal, state and local government claims, except the first $200 of losses otherwise payable to any claimant under this subsection other than the federal government. All claims under life insurance and annuity policies, whether for death proceeds, annuity proceeds or investment values, shall be treated as loss claims. Claims may not be cumulated by assignment to avoid application of the $200 deductible provision.

Class 3c Federal government claims and interest.

Class 3m Claims against the insurer that are not under policies and that are for liability for bodily injury or for injury to or destruction of tangible property.

Class 3r Debts due to employees for services performed; not to exceed $1,000 to each employee; within one year before the filing; Officers shall not be entitled

Class 4 Unearned premiums and small loss claims. Claims under nonassessable policies for unearned premiums or other premium refunds and the first $200 of loss excepted by the deductible provision in sub. (3).

Class 5 All other claims, including claims of any state or local government with P&F clause

Class 6 Claims based solely on judgments.

Class 7 Interest on claims already paid.

Class 8 Miscellaneous subordinated claims.

Class 9 Bonds. The claims of the holders of bonds, under s. 611.33(2)(a), 613.33(1) or 614.33, including interest thereon.

Class 10 Contribution notes. The claims of the holders of contribution notes under ss. 611.33(2)(b), 613.33(2) and 614.33, including interest thereon.

Class 11 Proprietary claims. The claims of shareholders or other owners, including policyholders of a mutual insurance corporation within the limits of s. 645.72(2).

Wyoming

Class (i) The costs and expenses of the administration, insolvency, liquidation and rehabilitation, including the claims handling expenses of the Wyoming Insurance Guaranty Association and of any similar organization in any other state

Class (ii) Wages actually owing to employees, other than officers of insurers; rendered within three (3) months prior; not exceeding one thousand dollars ($1,000.00)

Class (iii) Claims by policyholders, beneficiaries, insureds and liability claims against insureds covered under insurance policies and insurance contracts issued by the company, as set forth in W.S. 26-28-114 through 26-28-117 and claims of the Wyoming Insurance Guaranty Association and any similar organization in another state as prescribed in W.S. 26-31-110;

Class (iv) All other claims of general creditors not falling within any other priority under this section, including claims for taxes and debts due the federal government or any state or local government which are not secured claims;

Class (v) Claims of guarantee association certificate holders, guarantee capital shareholders and surplus note holders;

Class (vi) Proprietary claims of shareholders, members or other owners.