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within policy limits. The insolvent insurer then requested that the Mississippi
Insurance Guaranty Association (“MIGA”) pay the $300,000 statutory maximum
toward the claim for a judgment in excess of the primary insurer/assignor’s own
policy limits. The court held that the assignor’s claim to MIGA was not a
“covered claim” within the meaning of the Insurance Guaranty Act, but rather,
the assignment was a disguised subrogation attempt by the primary
insurer/assignor. The court reasoned that, to be entitled to subrogation, the
assignor would have to show that it paid something that it was not legally
obligated to pay. In this context, the assignor was the primary insurer and, in
failing to settle the claim within policy limits, was obligated to pay in full the sum
of the judgment obtained against it.
New York
Armienti & Brooks, P.C. v. Acceleration Nat’l Ins. Co., 710 N.Y.S.2d 74 (App. Div.
2000). The court dismissed an action filed by a law firm seeking to recover fees,
incurred in defending insureds of an insolvent insurer, from the insolvent
insurer’s close affiliate. The court held that the affiliated insurer was not
contractually bound to pay the firm, and there was no evidence the insolvent
insurer had agreed to amounts claimed by the law firm.
In re Liquidation of Midland Ins. Co., No. 41294/1986, 2008 WL 151786 (N.Y. Sup.
Jan. 14, 2008). The liquidator’s procedure for allowance of claims did not take
into account contractual provisions of the reinsurance agreements between the
insolvent insurer and the reinsurer, although the reinsurer failed to demonstrate
that the permanent injunction entered in the liquidation proceeding should be
lifted to allow the reinsurer to sue the insolvent insurer or the liquidator and it
remained to be shown whether the reinsurer had viable defenses to payment of
reinsurance claims based on the liquidator’s alleged claims mishandling. The
reinsurer would have opportunity to litigate defenses as to any claim not yet
judicially approved during the court approval process in a hearing before a
referee and the court would direct certain changes to the liquidator’s
procedures for allowance of claims where existing procedures might conflict
with reinsurance agreements.
Jason v. Superintendent of Insurance, 67 A.D.2d 850, 413 N.Y.S.2d 17 (1979),
affirmed, 49 N.Y.2d 716, 425 N.Y.S.2d 804, 402 N.E.2d 143. The court held that
when an insured doctor filed a late proof of claim, the doctor was not entitled
to an order nunc pro tunc deeming it to have been timely filed even if the
doctor could not have filed any information concerning a claim against the
doctor by the deadline.
Matter of Allcity Ins. Co., 66 A.D.2d 531, 413 N.Y.S.2d 929 (N.Y. A.D. 1979),
motion dismissed, 48 N.Y.2d 629, 421 N.Y.S.2d 192, 396 N.E.2d 474. The
insurance code provides that those owed wages by an insolvent insurer are to
be paid before payment of every other debt or claim, and also that preferred
creditors and secured creditors are to be paid to the extent of their security.
The court held that these sections are in regard to priority of payment and not
to procedure for proof and resolution of claims.
People v. Grand Lodge, 70 Hun. 439, 24 N.Y.S. 376 (1893). An administrator of
a deceased policyholder should not have been permitted to intervene and sue
the receiver of an assessment company to collect monies owing under the
policy in an attorney‐general's suit for dissolution of the company, but rather
should have proved the claim before the referee appointed for that particular
purpose.
Oregon Averill v. Halman, 155 Or. 125, 60 P.2d 968 (1936), rehearing denied, 62 P.2d 939
(1936). The Oregon Supreme Court held that the claimant had not met the
requirements of the law outlining the procedure in a case of this nature and
that the claim must be proved to the satisfaction of the insurance