40-3633. Mutual debts and mutual credits; setoff; accounting statements; debts currently due and payable. (a) Mutual debts or mutual credits whether arising out of one or more contracts between the insurer and another person in connection with any action or proceeding under this act, shall be setoff and the balance only shall be allowed or paid, except as provided in subsections (b) and (c) of this section.
(b) No setoff, except as provided in K.S.A. 40-3602, and amendments thereto, shall be allowed in favor of any person where:
(1) The obligation of the insurer to the person would not at the date of the filing of a petition for liquidation 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 with a view to its being used as a setoff;
(3) the obligation of the insurer is owed to an affiliate of such person, or any other entity or association other than the person;
(4) the obligation of the person is owed to an affiliate of the insurer, or any other entity or association other than the insurer;
(5) the obligations of the person is to pay an assessment levied against the members or subscribers of the insurer, or is to pay a balance upon a subscription to the capital stock of the insurer, or is in any other way in the nature of a capital contribution; or
(6) the obligations between the person and the insurer arise out of transactions where either the person or the insurer has assumed risks and obligations from the other party and then has ceded back to that party substantially the same risks and obligations.
(c) The receiver shall provide persons with accounting statements identifying debts which are currently due and payable. Accounts currently due and payable as identified by such accounting statements shall be promptly paid to the receiver. However, persons making such payments may setoff against such payments mutual credits currently due and payable by the insurer and may assert setoff of mutual credits which become due and payable from the insurer in the future. Notwithstanding K.S.A. 40-3641, the receiver shall promptly and fully refund to the extent of the person's prior payments any mutual credits so asserted that may become due and payable to the person by the insurer.
(d) This section shall apply to all contracts entered into, renewed, extended or amended on or after the effective date of this act.
History: L. 1991, ch. 125, ยง 29; July 1.
Structure Kansas Statutes
Article 36 - Impaired Or Insolvent Insurers
40-3609 Same; relief granted by court upon application of receiver; limitation.
40-3611 Same; proceeding commenced prior to effective date of act.
40-3612 Same; restrictions upon insurers subject to delinquency proceedings.
40-3616 Rehabilitation of insurer; application by commissioner for order of court; grounds.
40-3621 Liquidation of insurer; petition by commissioner; grounds.
40-3623 Same; continuation of insurance policies in effect at time of order of liquidation.
40-3625 Same; authority and responsibility of liquidator; limitation.
40-3632 Claims of creditors; allowance; avoidance; filing.
40-3634 Payment of reinsurance upon insolvency of ceding insurer.
40-3635 Insurer determined insolvent; proposal to disburse assets; application by liquidator.
40-3636 Claims; proof of claims, form and filing; late filings.
40-3638 Same; claims which may be allowed; limitations.
40-3640 Same; value of security held by secured creditor.
40-3641 Claims; priority of distribution; classes established.
40-3643 Unclaimed fund; deposit in accordance with unclaimed property act.
40-3644 Discharge of liquidator; orders of court.
40-3645 Liquidation proceedings; reopening after termination; order of court.
40-3646 Same; disposition of records; direction by court.
40-3647 Receiverships; audits; filing and payment of costs.
40-3651 Same; appointment of ancillary receiver; order of court; authority of ancillary receiver.
40-3652 Same; supervision or seizure proceedings, authority of commissioner.
40-3659 Qualified financial contracts; procedures; duties of receiver.