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Texas Insurance Code - Section 442.205. Offsets

Legal Research Home > Texas Lawyer > Insurance Code > Texas Insurance Code - Section 442.205. Offsets

§ 442.205. OFFSETS.  (a) Except as provided by Subsection 
(b), the receiver shall set off mutual debts and mutual credits 
arising out of one or more contracts between the insurer and another 
person in connection with a claim or delinquency proceeding, and 
the receiver may allow or pay only the balance.
	(b)  The receiver may not allow an offset in favor of a person 
if:           
		(1)  the obligation of the insurer to the person would 
not, on the date of the commencement of the delinquency proceeding 
or as otherwise provided by Section 442.102, entitle the person to 
share as a claimant in the assets of the insurer;
		(2)  the obligation of the insurer to the person was 
purchased by or transferred to the person after the commencement of 
the delinquency proceeding or for the purpose of increasing offset 
rights;
		(3)  the obligation of the person is to pay:                                  
			(A)  an assessment levied against the members of a 
mutual insurer, a reciprocal or interinsurance exchange, or a 
Lloyd's plan;  or
			(B)  a balance on a subscription to the capital 
stock of a stock insurance corporation;
		(4)  the obligation of the person is as a trustee or 
fiduciary;  or         
		(5)  the obligation between the person and the insurer 
arises from a reinsurance transaction in which the person or the 
insurer assumed risks and obligations from the other party and then 
ceded to that party substantially the same risks and obligations.
	(c)  The receiver shall provide a person with an accounting 
statement identifying each debt that is due and payable.  A person 
shall promptly pay to the receiver any amount due and payable to the 
insurer against which the person asserts an offset of mutual 
credits that may become due and payable from the insurer in the 
future.  Notwithstanding Subchapter L or any other provision of 
this chapter, the receiver shall promptly and fully refund, to the 
extent of the person's prior payment, any mutual credits that 
become due and payable to the person by the insurer.

Added by Acts 2005, 79th Leg., ch. 727, § 1, eff. April 1, 2007.           

Last modified: August 10, 2007