HOUSE BILL 971275
BY REPRESENTATIVES C. Berry and Reeser;
also SENATOR Schroeder.
CONCERNING PRIORITY OF DISTRIBUTION OF INSURERS'
SEPARATE ACCOUNTS AND STRUCTURED SETTLEMENT ANNUITIES.
Be it enacted by the General Assembly of the State
of Colorado:
SECTION 1. 103541
(1) (b) (I) (A), Colorado Revised Statutes, 1994 Repl. Vol., as
amended, is amended, and the said 103541 is further
amended BY THE ADDITION OF A NEW SUBSECTION, to read:
103541. Priority of distribution.
(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:
(b) Class 2. All claims under policies
including such claims of the federal or any state or local government
including unearned premium claims, thirdparty 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; except that class 2 claims shall not include:
(I) Claims under annuity and deposit contracts,
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
(2) (a) AS USED IN THIS SECTION,
"INSURER'S ESTATE" MEANS THE GENERAL ASSETS OF SUCH
INSURER LESS ANY ASSETS HELD IN SEPARATE ACCOUNTS THAT, PURSUANT
TO SECTION 107402, 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.
(b) EVERY CLAIM UNDER A SEPARATE ACCOUNT
CONTRACT 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 SHALL BE SATISFIED OUT OF THE
ASSETS IN THE SEPARATE ACCOUNT EQUAL TO THE RESERVES AND OTHER
CONTRACT LIABILITIES MAINTAINED IN SUCH ACCOUNT FOR SUCH CONTRACT.
TO THE EXTENT, IF ANY, THAT THE SEPARATE ACCOUNT ASSETS ARE NOT
SUFFICIENT TO DISCHARGE SUCH CLAIMS DUE TO FRAUD, ERROR, OR OTHER
MALFEASANCE ON THE PART OF THE INSURER OR IF UNSATISFIED CLAIMS
ARISE FROM A CONTRACTUAL GUARANTEE MADE TO A CONTRACT HOLDER BY
THE INSURER'S GENERAL ACCOUNT, SUCH UNSATISFIED CLAIMS SHALL BE
TREATED AS A CLASS 2 CLAIM AGAINST THE INSURER'S ESTATE. ANY SUCH
CLASS 2 CLAIM SHALL BE SUBJECT TO THE APPLICABLE EXCEPTIONS FOR
THIS CLASS, EXCLUDING THE EXCEPTION FOR SEPARATE ACCOUNTS UNDER
SUBPARAGRAPH (IV) OF PARAGRAPH (b) OF SUBSECTION (1) OF THIS SECTION.
SECTION 2. Effective date. This
act shall take effect at 12:01 a.m. on the day following the expiration
of the ninetyday period after final adjournment of the general
assembly that is allowed for submitting a referendum petition
pursuant to article V, section 1 (3) of the state constitution;
except that, if a referendum petition is filed against this act
or an item, section, or part of this act within such period, then
the act, item, section, or part, if approved by the people, shall
take effect on the date of the official declaration of the vote
thereon by proclamation of the governor.
____________________________ ____________________________
Charles E. Berry Tom Norton
SPEAKER OF THE HOUSE PRESIDENT OF
OF REPRESENTATIVES THE SENATE
____________________________ ____________________________
Judith M. Rodrigue Joan M. Albi
CHIEF CLERK OF THE HOUSE SECRETARY OF
OF REPRESENTATIVES THE SENATE
APPROVED________________________________________
_________________________________________
Roy Romer
GOVERNOR OF THE STATE OF COLORADO