C.R.S.
Section 10-3-541
Priority of distribution
- definitions
- repeal
(1)
The priority of distribution of claims from the insurer’s estate shall be in accordance with the order in which each class of claims is set forth in this section. 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. The order of distribution of claims shall be:(a)
Class 1.(I)
The costs and expenses of administration during rehabilitation and liquidation, including but not limited to the following:(A)
The actual and necessary costs of preserving or recovering the assets of the insurer;(B)
Compensation for all authorized services rendered in the rehabilitation and liquidation;(C)
Any necessary filing fees;(D)
The fees and mileage payable to witnesses;(E)
Authorized reasonable attorney fees and fees for other professional services rendered in the rehabilitation and liquidation; and(F)
The administrative expenses of guaranty associations; and(II)
Claims by member insurers for their pro rata share of the risk adjustment program payable by an impaired insurer or insolvent insurer if the commissioner determines that the failure of the impaired insurer or insolvent insurer to pay such risk adjustment program payments would result in the impairment or insolvency of the claimant member insurer and that such impairment or insolvency would be avoided by payment of the claim. The amount of the payment of the claim must not exceed the lesser of:(A)
The pro rata amount the claimant member insurer would be entitled to from the risk adjustment program but did not receive because the estate of the impaired or insolvent insurer has not made the full payment; or(B)
The amount needed to avoid the claimant member insurer’s impairment or insolvency.(b)
Class 2.(I)
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:(A)
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(B)
Issued to, for the benefit of, or in connection with, a specific employee benefit plan or governmental lottery;(II)
Claims where the risk is not borne by the insurer, such as the uninsured portion of:(A)
A minimum premium group insurance plan;(B)
A stop-loss group insurance plan; or(C)
An administrative-services only contract and the related uninsured plan liabilities;(III)
Claims under an unallocated annuity contract issued to an employee benefit plan protected under the federal pension benefit guaranty corporation; and(IV)
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.(c)
Intentionally left blank —Ed.(I)
Class 3.(II)
On and after May 15, 2023, through June 30, 2026, class 3 claims include all claims owed for the risk adjustment program.(d)
Class 4.(e)
Class 5.(f)
Class 6.(g)
Class 7.(h)
Class 8.(2.5)
The commissioner shall order a member insurer that received payments pursuant to subsection (1)(a)(II) of this section to refund to the estate of an impaired insurer or insolvent insurer any amounts received pursuant to subsection (1)(a)(II) of this section that duplicate payments the member insurer received from the risk adjustment program.(3)
As used in this section:(a)
“Impaired insurer” has the same meaning as set forth in section 10-20-103 (6.7).(b)
“Insolvent insurer” has the same meaning as set forth in section 10-20-103 (7).(c)
“Insurer’s estate” or “estate” means the general assets of such insurer less any assets held in separate accounts that, pursuant to section 10-7-402, are not chargeable with liabilities arising out of any other business of the insurer. To the extent, if any, assets maintained in the separate account are in excess of the amounts needed to satisfy claims under the separate account contracts, the excess shall be treated as part of the insurer’s estate.(d)
“Member insurer” has the same meaning as set forth in section 10-20-103 (8).(e)
“Risk adjustment program” means the program established pursuant to section 1343 of the federal “Patient Protection and Affordable Care Act”, Pub.L. 111-148, as amended by the federal “Health Care and Education Reconciliation Act of 2010”, Pub.L. 111-152, and as may be further amended, 42 U.S.C. sec. 18063, to provide payments to health insurance carriers that cover high-risk populations and to more evenly distribute the financial risk borne by carriers.(f)
“Separate account contract” means any life policy or contract, annuity contract, funding agreement, or guaranteed investment contract providing for the allocation of amounts received in connection with such policy, contract, or agreement to a separate account authorized by section 10-7-402.(4)
Subsections (1)(a)(II), (1)(c)(II), (2.5), (3)(a), (3)(b), (3)(d), and (3)(e) of this section and this subsection (4) are repealed, effective July 1, 2026.
Source:
Section 10-3-541 — Priority of distribution - definitions - repeal, https://leg.colorado.gov/sites/default/files/images/olls/crs2023-title-10.pdf (accessed Oct. 20, 2023).
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