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until the end of the calendar year, the agencies were entitled to set‐off their
share of profits from the amount of premiums owed to the insolvent insurer;
(2) that the insurance agencies' obligations to insurer to collect and remit
premiums, and insurer's obligation to agencies for share or profit, were mutual
and thus could be offset; and (3) that the insurance agencies' delay in paying
premiums to insolvent insurer in order to assure payment of insurer's profit
sharing obligation did not preclude agencies from offsetting amount owed by
insurer against agencies' debt to insurer regarding unpaid premiums
Texas
Wheeler v. Clark, 306 S.W.2d 158 (Tex. Civ. App. 1957) writ ref. When agent of
insolvent insurer refunded policyholders for unearned premiums or secured
new policies for them, and took assignments from them for their claims
against the receiver, the agent was not allowed to offset these amounts
against unearned commissions the agent owed the receiver. Otherwise, the
agent could become a preferred creditor of the estate.
Utah Old Standard Life Ins. Co. in Rehab. v. Duckhunt Family Ltd. P’ship, No. 2:05‐
CV‐00536 PGC, 2006 U.S. Dist. LEXIS 36781 (D. Utah June 2, 2006). Receiver
of insolvent insurance company sought an order to determine the validity
and priority of certain trust deeds. Defendant filed an answer and
counterclaim alleging various causes of action against the insolvent
insurance company. The receiver sought to dismiss, stay, or remand the
claims of Duckhunt on the basis of the McCarran‐Ferguson Act, the Younger
and Burford abstention doctrines, and the absolute immunity from suit
provided by the state receivership order. The court denied the receiver’s
motion. The McCarran‐Ferguson Act, the Younger and Burford abstention
doctrines, and the receivership order do not prevent the application of
federal jurisdiction where the receiver has availed itself of the federal forum
and the defendant’s counterclaims were filed in response thereto.
R&R Indus. Park, L.L.C. v. Utah Prop. & Cas. Ins. Guar. Ass’n, 199 P.3d 917 (Utah
2008). A fire was caused by material stored by CDR, the insured, at an industrial
park. CDR’s insurance company entered receivership and the Utah Property
and Casualty Insurance Guaranty Association (“UPCIGA”) assumed the role of
insurer of CDR. Other parties, R&R and AlumaTek, were damaged by the fire
caused by CDR, and each collected insurance from their own (third party)
insurance carriers. R&R collected insurance for both lost profits and property
damage. R&R, AlumaTek, and UPCIGA attended a mediation to resolve what
portions of the claims UPCIGA would pay. The three parties sought a
declaratory judgment to determine whether, in settling the claims, UPCIGA
would only be required to pay “one covered claim per claimant” and whether
UPCIGA would be entitled to offset the amounts that R&R and AlumaTek’s own
insurers had paid for the damages suffered. The supreme court held that the
Guaranty Act in Utah applies to multiple claims because to allow for only one
claim out of a single occurrence would defeat the remedial nature of the Act.
The court further held that UPCIGA could not offset amounts that R&R and
AlumaTek recovered from third‐party insurers.
Virginia Swiss Re Life Company America v. Gross, 253 Va. 139, 479 S.E.2d 857 (1997).
Protective Life Insurance Company (“Protective”), Fidelity Bankers Life
Insurance Company (“Fidelity”), and North American Reassurance Company,
now known as Swiss Re Life Company of America (“Swiss Re”), entered into
reciprocal treaties of reinsurance. Swiss Re agreed to indemnify Protective
for any payments above levels established in schedules and interest for the
policies acquired from Fidelity and Fidelity agreed to indemnify Swiss Re for
the payments. Fidelity went into receivership and the Commissioner of
Insurance was appointed deputy receiver.