{"data":{"id":"us-ok/okla.-stat.-tit.-36-36-1927.1","jurisdiction":"us-ok","citation":"Okla. Stat. tit. 36, § 36-1927.1","heading":"Priority of distribution of claims from insurer's","body":"estate.\n\nA. The priority of distribution of claims from the insurer's\n\nestate shall be in accordance with the order in which each class of\n\nclaims is set forth in this section. Before the members of the next\n\nclass receive any payment, every claim in each class shall be:\n\n1. Paid in full; or\n\n2. Protected by adequate funds retained for such payment.\n\nOnce such funds are approved by the court and paid or retained by\n\nthe liquidator, the insurer's estate shall have no further liability\n\nto members of that class except to the extent of the retained funds\n\nand any other undistributed funds. Payment of retained funds\n\npursuant to court order under this section extinguishes the\n\npotential liability of the receiver to the United States or any\n\nother governmental entity. No subclasses shall be established\n\nwithin any class except as otherwise provided by law. No claim by a\n\nshareholder, policyholder or other creditor shall be permitted to\n\ncircumvent the priority classes through the use of equitable\n\nremedies. The order of distribution of claims shall be as provided\n\nin subsection B of this section.\n\nB. 1. Class 1. The reasonable costs and expenses of\n\nadministration expressly approved by the receiver, including but not\n\nlimited to the following:\n\na. the actual and necessary costs of preserving or\n\nrecovering the assets of the insurer,\n\nb. compensation for all authorized services rendered in\n\nthe conservation, rehabilitation or liquidation,\n\nc. any necessary filing or recordation fees,\n\nd. the fees and mileage payable to witnesses, including\n\nexperts, and other litigation costs and expenses,\n\ne. authorized reasonable attorney fees and other\n\nprofessional services rendered in the conservation,\n\nrehabilitation or liquidation, and\n\nf. any reasonable expenses that were incurred in\n\nfurtherance of activities that provided a material\n\neconomic benefit to the estate.\n\n2. Class 2. The administrative expenses of guaranty\n\nassociations. For purposes of this section these expenses shall be\n\nthe reasonable expenses incurred by guaranty associations where the\n\nexpenses are not payments or expenses which are required to be\n\nincurred as direct policy benefits in fulfillment of the terms of\n\nthe insurance contract or policy, and that are of the type and\n\nnature that, but for the activities of the guaranty association\n\notherwise would have been incurred by the receiver, including but\n\nnot limited to evaluations of policy coverage, activities involved\n\nin the adjustment and settlement of claims under policies, including\n\nthose of in-house or outside adjusters, and the reasonable expenses\n\nincurred in connection with the arrangements for ongoing coverage\n\nthrough transfer to other insurers, policy exchanges or maintaining\n\npolicies in force. The receiver may in his or her sole discretion\n\napprove as an administrative expense under this section any other\n\nreasonable expenses of the guaranty association if the receiver\n\nfinds:\n\na. the expenses are not expenses required to be paid or\n\nincurred as direct policy benefits by the terms of the\n\npolicy, and\n\nb. the expenses were incurred in furtherance of\n\nactivities that provided a material economic benefit\n\nto the estate as a whole, irrespective of whether the\n\nactivities resulted in additional benefits to covered\n\nclaimants.\n\nThe court shall approve such expenses unless it finds the receiver\n\nabused his or her discretion in approving the expenses. If the\n\nreceiver determines that any administrative expenses of a guaranty\n\nassociation were not reasonable expenses, but were nevertheless paid\n\nout of a statutory deposit or the proceeds of any bond or other\n\nasset located in another state or foreign country, then the court\n\nshall adjudge the Class 3 claims of that association to have been\n\npaid to the extent of the amount of unreasonable expenses thus paid\n\nfrom those assets.\n\nIf the receiver determines that the assets of the estate will be\neasonable expenses, but were nevertheless paid\n\nout of a statutory deposit or the proceeds of any bond or other\n\nasset located in another state or foreign country, then the court\n\nshall adjudge the Class 3 claims of that association to have been\n\npaid to the extent of the amount of unreasonable expenses thus paid\n\nfrom those assets.\n\nIf the receiver determines that the assets of the estate will be\n\nsufficient to pay all Class 1 claims in full, Class 2 claims shall\n\nbe paid, provided that the liquidator shall secure from each of the\n\nassociations receiving disbursements pursuant to this section an\n\nagreement to return to the liquidator such disbursements, together\n\nwith investment income actually earned on such disbursements, as may\n\nbe required to pay Class 1 claims. No bond shall be required of any\n\nsuch association.\n\n3. Class 3. All claims under policies including claims of the\n\nfederal or any state or local government for losses incurred (\"loss\n\nclaims\") including third-party claims, claims for unearned premiums,\n\nall claims of a guaranty association for payment of covered claims\n\nor covered obligations of the insurer and all claims of a guaranty\n\nassociation for reasonable expenses other than those included in\n\nClass 2. All claims under life and health insurance and annuity\n\npolicies, whether for death proceeds, health benefits, annuity\n\nproceeds, or investment values shall be treated as loss claims.\n\nThat portion of any loss, indemnification for which is provided by\n\nother benefits or advantages recovered by the claimant, shall not be\n\nincluded in this class, other than benefits or advantages recovered\n\nor recoverable in discharge of familial obligation of support or by\n\nway of succession at death or as proceeds of life insurance, or as\n\ngratuities. No payment by an employer to his employee shall be\n\ntreated as a gratuity.\n\nNotwithstanding the foregoing, the following claims shall be\n\nexcluded from Class 3 priority:\n\na. obligations of the insolvent insurer arising out of\n\nreinsurance contracts,\n\nb. obligations incurred after the expiration date of the\n\ninsurance policy or after the policy has been replaced\n\nby the insured or canceled at the insured's request or\n\nafter the policy has been canceled as provided in this\n\nact. Notwithstanding the provisions of this\n\nparagraph, earned premium claims on policies, other\n\nthan reinsurance agreements, shall not be excluded,\n\nc. obligations to insurers, insurance pools or\n\nunderwriting associations and their claims for\n\ncontribution, indemnity or subrogation, equitable or\n\notherwise,\n\nd. any claim which is in excess of any applicable limits\n\nprovided in the insurance policy issued by the\n\ninsolvent insurer,\n\ne. any amount accrued as punitive or exemplary damages\n\nunless expressly covered under the terms of the\n\npolicy, and\n\nf. tort claims of any kind against the insurer, and\n\nclaims against the insurer for bad faith or wrongful\n\nsettlement practices.\n\n4. Class 4. Claims of the federal government other than those\n\nclaims included in Class 3.\n\n5. Class 5. Debts due employees for services, benefits,\n\ncontractual or otherwise due arising out of such reasonable\n\ncompensation to employees for services performed to the extent that\n\nthey do not exceed two (2) months of monetary compensation and\n\nrepresent payment for services performed within six (6) months\n\nbefore the filing of the petition for liquidation or, if\n\nrehabilitation preceded liquidation, within one (1) year before the\n\nfiling of the petition for rehabilitation. Principal officers and\n\ndirectors shall not be entitled to the benefit of this priority\n\nexcept as otherwise approved by the liquidator and the court. This\n\npriority shall be in lieu of any other similar priority which may be\n\nauthorized by law as to wages or compensation of employees.\n\n6. Class 6. Claims of any person, including claims of state or\ne the\n\nfiling of the petition for rehabilitation. Principal officers and\n\ndirectors shall not be entitled to the benefit of this priority\n\nexcept as otherwise approved by the liquidator and the court. This\n\npriority shall be in lieu of any other similar priority which may be\n\nauthorized by law as to wages or compensation of employees.\n\n6. Class 6. Claims of any person, including claims of state or\n\nlocal governments, except those specifically classified elsewhere in\n\nthis section.\n\n7. Class 7. Claims for commissions and service fees, and\n\nclaims of attorneys for fees and expenses owed them by a person for\n\nservices rendered in opposing a formal delinquency proceeding. In\n\norder to prove the claim, the claimant must show that the insurer\n\nwhich is the subject of the delinquency proceeding incurred such\n\nfees and expenses based on its best knowledge, information and\n\nbelief, formed after reasonable inquiry indicating opposition was in\n\nthe best interests of the person, was well grounded in fact and was\n\nwarranted by existing law or a good-faith argument for the\n\nextension, modification or reversal of existing law, and that\n\nopposition was not pursued for any improper purpose, such as to\n\nharass or to cause unnecessary delay or needless increase in the\n\ncost of the litigation.\n\n8. Class 8. Claims of any state or local government for a\n\npenalty or forfeiture, but only to the extent of the pecuniary loss\n\nsustained from the act, transaction or proceeding out of which the\n\npenalty or forfeiture arose, with reasonable and actual costs\n\noccasioned thereby. The remainder of such claims shall be postponed\n\nto the class of claims under paragraph 9 of this subsection.\n\n9. Class 9. Surplus or contribution notes or similar\n\nobligations, premium refunds on assessable policies, interest on\n\nclaims of Classes 1 through 8 and any other claims specifically\n\nsubordinated to this class.\n\n10. Class 10.\n\na. Claims of shareholders or other owners arising out of\n\ntheir capacity as shareholders or other owners, or\n\narising in any other capacity or facts except as they\n\nmay be qualified in Class 3 or 4 above; provided,\n\nhowever, that no shareholder, member or other owner\n\nshall be entitled to, or receive, any distribution\n\nfrom the insolvent insurer's estate under this\n\nparagraph, if:\n\n(1) the intentional wrongdoing, fraud, gross\n\nnegligence, negligence or other act, failure to\n\nact, transaction or proceeding of such\n\nshareholder, member or owner, alone or in concert\n\nwith others, or of a director or officer of the\n\ninsolvent insurer, is found by a court of\n\ncompetent jurisdiction or by the receiver in his\n\nor her reasonable discretion, to have caused, or\n\nto have been a contributing factor to, the\n\ninsolvency of the insolvent insurer,\n\n(2) funds were collected from the shareholder, member\n\nor other owner, either directly or through an\n\ninsurance carrier, fidelity bond issuer or other\n\nentity, as a consequence of, or related to, a\n\nclaim made or brought by the receiver of said\n\ninsurer, or\ner in his\n\nor her reasonable discretion, to have caused, or\n\nto have been a contributing factor to, the\n\ninsolvency of the insolvent insurer,\n\n(2) funds were collected from the shareholder, member\n\nor other owner, either directly or through an\n\ninsurance carrier, fidelity bond issuer or other\n\nentity, as a consequence of, or related to, a\n\nclaim made or brought by the receiver of said\n\ninsurer, or\n\n(3) any of the funds available for distribution\n\nconsist of punitive damages recovered by the\n\nreceiver of said estate from any source based\n\nupon any claim made or brought by the receiver.\n\nIn the event there is no eligible shareholder, member\n\nor other owner entitled to distribution in accordance\n\nwith this paragraph, the remaining funds and other\n\nproperty of the insolvent insurer's estate, if any,\n\nshall be distributed to a fund established and held in\n\nthe name of, and for the use and benefit of, the\n\nreceiver, through the Oklahoma Receivership Office or\n\nany similar entity established by the receiver, which\n\nshall be used in the administration of other insurers\n\nin rehabilitation or liquidation.\n\nb. All funds distributed to the receiver under this\n\nparagraph shall be utilized by the receiver's staff\n\nengaged in the rehabilitation or liquidation of\n\ninsolvent insurance business companies for the\n\nfollowing purposes:\n\n(1) the administration of liquidations of estates\n\nwhich temporarily or permanently do not have the\n\nfinancial capability to administer the\n\nliquidation, including the prosecution of claims\n\nof the receiver, or\n\n(2) the prosecution of petitions to place insurers in\n\nrehabilitation or liquidation.\n\nIn the event such funds are distributed to or for an\n\ninsolvent insurer, the receiver shall obtain from the\n\ninsurer a promissory note or other evidence of\n\nindebtedness, secured by collateral if possible, for\n\nthe amount distributed, which shall be treated as a\n\nClass 1 expense under paragraph 1 of this subsection.\n\nThe receiver shall make good-faith efforts to collect\n\nreimbursement of any such loans. No funds distributed\n\nto the receiver under this paragraph shall be used to\n\npay claims other than Class 1 claims under paragraph 1\n\nof this subsection. The funds are not funds of the\n\nState of Oklahoma and are not funds of the Oklahoma\n\nInsurance Department or any other agency of the State\n\nof Oklahoma.\n\nThis paragraph shall apply to the administration of all receivership\n\nestates open and ongoing as of November 1, 2014, and to all\n\nreceivership proceedings commenced after November 1, 2014.\n\nC. If any claimant of this state, another state or foreign\n\ncountry shall be entitled to or shall receive a dividend upon his or\n\nher claim out of a statutory deposit or the proceeds of any bond or\n\nother asset located in another state or foreign country, unless such\n\ndeposit or proceeds shall have been delivered to the domiciliary\n\nliquidator, then the claimants shall not be entitled to any further\n\ndividend from the receiver until and unless all other claimants of\n\nthe same class, irrespective of residence or place of the acts or\n\ncontracts upon which their claims are based, shall have received an\n\nequal dividend upon their claims, and after such equalization, such\n\nclaimants shall be entitled to share in the distribution of further\n\ndividends by the receiver, along with and like all other creditors\n\nof the same class, wheresoever residing.\n\nD. Upon the declaration of a dividend, the receiver shall apply\n\nthe amount of the dividend against any indebtedness owed to the\n\ninsurer by the person entitled to the dividend. There shall be no\n\nclaim allowed for any deductible charged by a guaranty association\n\nor entity performing a similar function.\n\nE. This section shall apply to pending and future claims in\n\nexisting delinquency proceedings as well as to claims in delinquency\n\nproceedings arising after the effective date of this section.\nany indebtedness owed to the\n\ninsurer by the person entitled to the dividend. There shall be no\n\nclaim allowed for any deductible charged by a guaranty association\n\nor entity performing a similar function.\n\nE. This section shall apply to pending and future claims in\n\nexisting delinquency proceedings as well as to claims in delinquency\n\nproceedings arising after the effective date of this section.\n\nF. If any provision of this section or the application thereof\n\nto any person or circumstances is held invalid, such invalidity\n\nshall not affect other provisions or application of this section to\n\nthe extent such other provisions or application can be given effect\n\nwithout the invalid provision or application.","path":["OK Code","Title 36"],"source_url":"https://www.oklegislature.gov/OK_Statutes/CompleteTitles/os36.pdf","current_through":"2026-08-14","vintage":"open-us-law v2026.08, retrieved 2026-09-14","retrieved_at":"2026-09-14T18:32:36Z","sha256":"4741f9185222f3168e676ffaad12b802c01c52232d56e3a2dc182bb10754efef","source_id":"us-ok","stale":false,"prev":"us-ok/okla.-stat.-tit.-36-36-1926.1","next":"us-ok/okla.-stat.-tit.-36-36-1928"},"notice":"GroundRules: Original legal text. Not legal advice."}