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Fields v. Fidelity General Ins. Co., 454 F.2d 682 (7th Cir. 1971). Ordinarily, once an
insurer has been ordered into statutory liquidation, shareholders may not bring
a derivative action on behalf of the insurer without first making demand on the
insurance commissioner as liquidator or petitioning the state court supervising
the liquidation estate for an order authorizing the shareholders to proceed.
Tenth Circuit
Alabama
Arkansas
Colorado
Inland Empire Ins. Co. v. Freed, 239 F.2d 289 (10th Cir. 1956). The Court of
Appeals held that a federally appointed receiver was proper where, as here,
the hopelessly insolvent insurance company had to be liquidated and was
doing business in 21 states and the states of its domicile and principal place of
doing business had conceded their inability to rehabilitate or liquidate for the
best interests of the company, its creditors, policyholders and stockholders.
Also important to the court's decision was the fact that only six states involved
had adopted the Uniform Insurers Liquidation Act and the only alternative to a
federal receiver was independent receivership proceedings in each state for
the liquidation of the company and distribution of its assets. Under the above
outlined special circumstances, the appointment of a federal receiver was
therefore necessary and proper.
American Benefit Life Ins. Co. v. Ussery, 373 So.2d 824 (Ala. 1979). When the
Attorney General, on behalf of state of Alabama and purportedly on behalf of
the insurance commissioner, appealed final order of rehabilitation court
establishing assets and liabilities of an insolvent insurer, the court held that
where commissioner had not authorized the appeal, the Attorney General
would not be permitted to intervene. The legislature intended the insurance
commissioner to exercise sole judgment as to the conduct of the delinquency
proceedings, and when acting as receiver, his primary obligations are to the
policyholders, the court, and the creditors of the insolvent insurance company.
Bullion v. Pope, 96 S.W.2d (1936). The Arkansas Supreme Court upheld the
lower court's vacation of an order appointing a receiver on a petition filed by
an insolvent insurer's stockholders when a second receiver had been
appointed on the petition of the Arkansas Attorney General after a
certification from the Arkansas insurance commissioner of the insurer's
insolvency.
Mosley v. Indus. Claim Appeals Office, 119 P.3d 576 (Colo. App. 2005). The
Colorado Insurance Guaranty Association (CIGA) is immune from liability of any
kind for any action taken by CIGA in the performance of its powers and duties,
including the handling of claims.
Connecticut Connecticut Life and Health Insurance Guaranty Association v. Jackson, 173
Conn. 352, 377 A.2d 1099 (1977). The court ruled that the guaranty association
must exhaust its administrative remedies with the insurance commissioner in a
dispute with the commissioner over the interpretation of a provision in the
guaranty fund law before it could bring an action for a declaratory judgment in
the courts.
Illinois The Chicago Mutual Life Indemnity Association v. Hunt, 127 Ill. 257, 20 N.E. 55
(1889). The court held that the Illinois Attorney General has power to proceed
against an Illinois mutual benefit association even though the Auditor of Public
Accounts has not specifically provided the Attorney General with findings and
conclusions. A proceeding brought by the Attorney General to dissolve a
mutual benefit association is not a criminal proceeding, but is a civil proceeding