Download PDF - Goodmans

policyholders is governed by the terms of the contract.
liquidator is bound by the terms of the contract.
The statutory
Commonwealth ex rel. Schnader v. Keystone Indemnity Exchange, 338 Pa. 405,
11 A.2d 887 (1940). The rate of assessments levied in the liquidation of a
reciprocal insurance exchange is discretionary unless statutorily fixed. Unless
abuse of discretion is established, such rate will be sustained.
Commonwealth v. Bankers Mutual Fire Ins. Co. of Lancaster, Pa., 45 D.& C. 2d
558 (1968). When the liquidator of a domestic mutual fire and casualty
company uses a 500 per cent loading factor, exceptions to it will be dismissed
where collection is sought after the company has been dissolved nearly 11
years and where it appears that the liquidator computed the factor with care
and precision and that the decision regarding the amount of loading was
proper and reasonable. The liquidator is not bound by a policy provision
limiting the time for making an assessment or by a regulatory time limit.
Commonwealth v. Yellow Cab Co. of Allentown, Inc., 39 D. & C. 2d 86 (1965).
The insurance commissioner's assessment order, which required policyholders
to pay an assessment computed by multiplying the total monthly assessment
factors for the months when each policy was in force by the cash premiums
stated in the policy was sustained. The defendant claimed that the assessment
factor should e multiplied by only the portion of the premium earned before
cancellation of the policy before the end of a full year of coverage. Also
sustained was the insurance commissioner's denial of a set off against the
assessment of the amount of a settlement on a claim against the policyholder.
Moore v. Reifsnyder, 22 Pa. Super. 326 (1903). The amount of assessments and
their necessity are determined by the court which authorizes the receiver of a
mutual insurance company to make assessments. The decree of that court
cannot be collaterally attacked.
Taggart v. Graham, 108 Pa. Super. 320, 165 A.68 (1933), affirmed Taggart v. De
Fillippo, 315 Pa. 438, 173 A. 423 (1934). A holder of mutual insurance company
certificates could not set off assessments against a claim for insured losses.
Tanner v. O.M. Weber Co., Inc., 59 Pa. Super. 14 (1915). Where a party has been
fraudulently induced by officers of a mutual insurance company to become a
member, that party may not use the fraud as a defense to an action for
assessments by the company's receiver where innocent third parties
subsequently joined the company.
South Carolina
In Re Banks, 85 S.C. 37, 67 S.E. 19 (1910). It was held that a policyholder of an
insolvent mutual insurer cannot offset any claims against the insurer from the
receiver's claim for assessment.
Pink v. Aaron, 196 S.C. 423, 13 S.E.2d 489 (1941). New York court liquidating
insolvent mutual insurer ordered an assessment against all members of the
company. The New York liquidator sought to collect the amounts due from
South Carolina insureds by joining them all in one action. The court held that
each assessment must be pursued in a separate legal action; a single action in
equity against all policyholders could not be maintained.
Wetmore v. McElroy, 96 S.C. 182, 80 S.E. 266 (1913). It was held that receiver of
insolvent mutual insurer was estopped from collecting assessment from
member of the insurer where agent of the insurer had guaranteed member
against liability for premium assessments in return for paying triple the normal
premium.