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Commissioner has reasonable grounds to believe that irreparable harm to the
insurer or policyholders may occur unless he acts immediately. In addition, the
Commissioner is not required to exhaust summary remedies to seek and
secure a court‐ordered receivership or other formal remedies available
through the court order. However, the granting of receivership is an extreme
remedy which should not be used unless other less drastic remedies are shown
to be inadequate. If the Commissioner chooses not to pursue any of the
summary remedies, or seeks to move from a summary remedy to a full courtordered
receivership, he must show that the more limited statutory remedies
would be inadequate to address the insurer's problem.
Florida
Fla. Orthopedics, Inc. v. American Ins. Co., 896 So.2d 1 (Fla. 3d DCA 2004). The
Florida Insurance Code provides criminal penalties for violations of, which are to
be enforced by the Department of Insurance. The code also provides a civil
remedy for violations of certain sections, but proscribes civil remedy for a
misrepresentation. 896 So.2d at 5 (citing § 626.901, Fla. Stat. (1997)).
Kentucky Minor v. Stephens, 898 S.W.2d 71 (Ky. 1995). The Supreme Court of
Kentucky concluded that when the Commissioner of Insurance proceeded to
rehabilitate/liquidate a life insurance company, that it was an aspect of the
states police power. This power, however, was not boundless. The court
explained that the test which a court must use to judge a plan of
rehabilitation/liquidation is reflected in Carpenter v. Pacific Mutual Life
Insurance Co. California, 10 Cal.2d 307, 74 P.2d 761 (Cal. 1937). If the plan
appears to be satisfactory, the court should defer to the executive judgment
of the Commissioner and approve the plan. Under KRS 304.33‐160(2), the
Commissioner is granted broad discretion and has full powers to deal with
the property and business of the insurer. The Commissioner, as a creature of
statute, has the right to propose a plan of reorganization and reinsurance.
The burden of proof is upon those contesting the Commissioner’s actions.
Louisiana
Mississippi
Brown v. Associated Insurance Consultants, Inc. v. Physicians Medical
Indemnity Association, Inc., v. Leme Reinsurance Limited, 951451 (La. App. 1
Cir. 4/4/96) 672 So.2d 324. The insurance commissioner brought a
proceeding to rehabilitate several insurers including Lloyd’s (Partnership).
The commissioner was serving as liquidator for another single business
enterprise that had an outstanding claim against Lloyd’s (Partnership). By
motion to the trial court, Defendants asserted that an ad hoc rehabilitator
should be appointed. The Trial Court refused to rule on the motion as moot
due to previously established cut off dates. The appellate court reviewed
this decision and ruled that the trial court has the power to control the
proceedings.
Sanders v. Neely, 197 Miss. 66, 19 So.2d 424 (1944). The court held that there
was no inconsistency between the right of a stockholder to inspect the books
and records of the company and the rights conferred on the insurance
commissioner by the insurance code. The commissioner does not examine the
company for information for the stockholder but to determine the company's
financial soundness. This examination takes place periodically, whenever the
commissioner deems it prudent or upon the request of five stockholders, or
five others pecuniarily interested in the company, who submit an affidavit with
their reasons for believing the company is unsound. The court pointed out
that the stockholder cannot make an affidavit of unsoundness without access
to the facts of unsoundness. The powers given to the commissioner to
suspend the licenses of insolvent companies, of those failing to comply with
the law or of those hazardous to the policyholders or public and to request