Download PDF - Goodmans

claimed. Although the code allows the insurance commissioner to apply to the
court for a receivership order, the commissioner did not properly do so here.
Further, the court noted that the penalties prescribed by statute for violation
of any rules or regulations regarding transaction of the insurance business
were limited to instances where the company violated such rules while
conducting its business through its officers and agents. The order placing a
receiver in charge of the assets and business of the company could not have
contained a rule for the regulation of the business of that company.
Republic Life Ins. Co. v. Swigert, 135 Ill. 150, 25 N.E. 680 (1894). In upholding the
constitutionality of the liquidation law, the court noted that a receiver
appointed under the statute will have no greater powers that the insolvent
company represented in winding up its affairs and that the receiver does not
represent its creditors or shareholders, although the receiver can litigate on
behalf of the insolvent company for the benefit of the shareholders and
creditors. The powers of a receiver can be enlarged by legislative enactment,
but generally, the receiver is a mere administrator of the estate or custodian
of the property.
Selcke v. Hartford Fire Ins. Co., No. 1‐91‐3757 (Ill. App. Ct., 1st Dist., November 5,
1992). Insurance company sought declaration that Rehabilitator of insolvent
reinsurer did not have standing to pursue insurance company creditor's claims
against insolvent reinsurer's parent. Appellate Court held that Rehabilitator
was not generally empowered to assert creditors' claims against parent, on
the grounds that, under express language of Illinois Insurance Code,
rehabilitator's authority is limited to "property, contracts, and rights of action
of the company" existing upon entry of rehabilitation or liquidation order, and
that the statute was consistent with common law of receiverships. Court held
that Rehabilitator lacked standing to pursue creditor's alter ego claims against
insolvent reinsurer's parent on the grounds that, under alter ego doctrine,
third parties and not a subsidiary may pierce corporate veil to reach the
corporate parent. Court also held that Rehabilitator lacked standing to pursue
creditor's fraud claims against parent, on ground that by requiring reliance,
such claims are presumptively personal.
Indiana Bennett v. Indiana Life and Health Insurance Guaranty Association, 688
N.E.2d 171 (Ind. Ct. App. 1997). Two pension plan trustees purchased
guaranteed investment contracts from Executive Life Insurance Company,
which was later declared insolvent. The plan trustees sought coverage
under the Indiana Life and Health Insurance Guaranty Act. The Insurance
Commissioner rejected the Indiana Life and Health Insurance Guaranty
Association’s argument that Executive’s obligations were solely to the
trustees, and not to the plan participants, and ordered the Association to
cover, up to the statutory limit, all plan participants who resided in Indiana.
Although the trial court reversed the Commissioner’s order, the appellate
court reversed the trial court, and agreed that the Association owed a duty
to make payments to all resident plan participants. In addition, the appellate
court reversed the trial court’s ruling that the Commissioner’s order was
preempted by ERISA, since the Commissioner’s order was directed towards
the regulation of insurance.
Hatcher v. Haupert, 655 N.E.2d 1229 (Ind. Ct. App. 1995). The trustee of a
retirement plan sued the Indiana Insurance Commissioner for failing to place
into liquidation at an earlier date a life insurance company which had sold an
annuity contract to the plan. The court held that the Commissioner’s
decisions regarding whether and when to place an insurance company in