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Texas Insurance Code - Not Codified - Section 21A.253. Allowance Of Claims

Legal Research Home > Texas Laws > Insurance Code - Not Codified > Texas Insurance Code - Not Codified - Section 21A.253. Allowance Of Claims

Sec. 21A.253. ALLOWANCE OF CLAIMS.  (a) Except as provided
in Subsections (i) and (l), the liquidator shall review all claims
duly filed in the liquidation proceeding and shall further
investigate as the liquidator considers necessary.  Consistent with
the provisions of this chapter, the liquidator may allow, disallow,
or compromise the amount for which claims will be recommended to the
receivership court, unless the liquidator is required by law to
accept claims as settled by a person or organization, including a
guaranty association, subject to any statutory or contractual
rights of the affected reinsurers to participate in the claims
allowance process.  No claim under a policy of insurance may be
allowed for an amount in excess of the applicable policy limits.
	(b)  Pursuant to the review, the liquidator shall provide
written notice of the claim determination by any means authorized
by Section 21A.007 to the claimant or the claimant's attorney and
may provide notice to any reinsurer that is or may be liable in
respect of the claim.  The notice must set forth the amount of the
claim allowed by the liquidator, if any, and the priority class of
the claim as established in Section 21A.301.
	(c)  Not later than the 45th day after the mailing of the
notice as set forth in Subsection (b), those noticed may submit
written objections to the liquidator.  Any submitted objections
must clearly set out all facts and the legal basis, if any, for the
objections and the reasons why the claim should be allowed at a
different amount or in a different priority class.  If no timely
objection is filed, the determination is final.
	(d)  A claim that has not become mature as of the coverage
termination date established under Section 21A.201 because payment
on the claim is not yet due may be allowed as if it were mature.  A
claim that is allowed under this subsection may be discounted to
present value based upon a reasonable estimated date of the
payment, if the liquidator determines that the present value of the
payment is materially less than the amount of the payment.
	(e)  A judgment or order against an insured or the insurer
entered after the date of the initial filing of a successful
petition for receivership, or within 120 days before the initial
filing of the petition, and a judgment or order against an insured
or the insurer entered at any time by default or by collusion need
not be considered as evidence of liability or of the amount of
damages.
	(f)  Claims under employment contracts by directors,
officers, or persons in fact performing similar functions or having
similar powers are limited to payment for services rendered prior
to any order of receivership, unless explicitly approved in writing
by:
	(1)  the commissioner prior to an order of receivership;
	(2)  the rehabilitator before the entry of an order of
liquidation;  or
	(3)  the liquidator after the entry of an order of
liquidation.
	(g)  The total liability of the insurer to all claimants
arising out of the same act or policy may not be greater than the
insurer's total liability would have been were the insurer not in
liquidation.
	(h)  The liquidator shall disallow claims for de minimis
amounts as determined by the receivership court as being reasonable
and necessary for administrative convenience.
	(i)  A claim that does not contain all the applicable
information required by Section 21A.252 need not be further
reviewed or adjudicated, and may be denied or disallowed by the
liquidator subject to the notice and objection procedures in this
section.
	(j)  The liquidator may reconsider a claim on the basis of
additional information and amend the recommendation to the
receivership court.  The claimant must be afforded the same notice
and opportunity to be heard on all changes in the recommendation as
in its initial determination.  The receivership court may amend its
allowance or disallowance as appropriate.
	(k)  The liquidator is not required to process claims for any
class until it appears reasonably likely that property will be
available for a distribution to that class.  If there are
insufficient assets to justify processing all claims for any class
listed in Section 21A.301, the liquidator shall report the facts to
the receivership court and make such recommendations as may be
appropriate for handling the remainder of the claims.
	(l)  Any claim by a lessor for damages resulting from the
termination of a lease of real property shall be disallowed to the
extent that the claim exceeds:
	(1)  the rent reserved by the lease, without acceleration,
for the longer of one year or 15 percent of the remaining term of the
lease, not to exceed three years, following the earlier of:
	(A)  the date of the filing of the petition;  or
	(B)  the date on which the lessor repossessed or the lessee
surrendered the leased property;  and
	(2)  any unpaid rent due under the lease, without
acceleration, on the earlier of the dates described by Subdivision
(1).
	(m)  If a claim is fully covered by a guaranty association,
the liquidator has no obligation to process the claim in accordance
with this section and may refuse to process the claim in accordance
with this section.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.

Last modified: August 11, 2007