Questions

ESSAY 1

Acacia life Insurance Case

  • The claims handling changes made by Clove in the case of Acacia Life Insurance are not in accordance to the laws in the New York state. This is because the claimants were not notified before the changes and the claimants also did not respond in writing to confirm the receipt of claim to first or third-party claimant within 15 business days after receipt. Since there was no communication between the insurer and the claimant, there was no notifications of statements, items and forms needed from the claimant to process the claim.
  • Cloves insistence that the insured with multiple claims before they can be paid on any of those claims is a concept that is known as good faith settlement of claims that are in excess of the policy limits against multiple insureds. Very few countries and states have addressed how proceeds of policy can be allocated in such a situation. Certain jurisdictions hold that the proceeded should be shared equally among insureds while another camp say that proceeds can be shared in good faith among few insureds.
  • Bayberry’s acquisition of Hawthorns shares does not comply to the laws of the New York State. According to Chapter II that deals with Directions on Prior to Approval. Every individual that has the intension to transfer even 1% or more but less than 5% of the already paid equity share capital of the involved insurers subject criteria of Fit & Proper of the acquirer that is concerned with getting the approval of the Authority. In short, the Authority who is Bayberry was legitimate but the due process was not followed to transfer ownership of shares.

 

ESSAY 2

 

GARNET INSURANCE COMPANY CASE

  • Opal’s conduct does not comply with the rules and regulations of management that states that no actions should be taken without the decision of the board of directors of a company. Opal being the manager of a portion of Garnet Insurance stock portfolio that succeeded in the first two years and now is on the failing streak. As much as Zircon acts as the investment advisor for Small capitalization Fund Lazulli cannot purport to speak on behalf of the company with the employee of Garnet Insurance without the knowledge of the company’s board of directors. As a result Garnet Insurance Company’s conduct also does not comply to the rules and regulations in corporate law and governance.
  • Crystal’s Removal

Crystal’s removal from the board of governors was justified and complied with the SAE manual since she has potential conflict of interests that could jeorpardize the decisions and activities of the board and Insurance company at large. The SAE conflict of Interest policy that states that board members shall not generate profit from their affiliation with SAE. From the report given, converting the fund fro a closed to open ended investment will increase the share price by 7%When the LT Corporate board meet they consider Crystal’s proposal but Ruby says that investors may take their investment at net value and withdraw all their funds and run away. To this Crystal says that she doesn’t care and the investors can do what they like. At this point she appear to be working not at the interest of the company but her own interest. Her dismissal was also in compliance with rules since a majority vote was cast in favor of her removal.

D Election of Malachi in Replacement of Crystal

The election of Malachi in replacement of Crystal was not accordance to the law and it was so because according to the SAE International Board Director’s Governance Manual, board members of an organization are at liberty to vote, present their opinions, and sort out relevant matters through consensus from the board. Consensus implies 70% full support by members and a majority vote prevails when consensus is not arrived. In the case of Malachi’s enjoinment in the board of directors, there was no voting, no consensus and no majority vote, hence unconstitutional.

 

 

ESSAY 3

Type of Proceeding under the Insurance Receivership Model Act that would scale back the Commissioners Objectives.

Being that Elm Insurance Commissioner in a bid to have more money for investment available have gone into massive borrowing. The company looses large amounts of money though these events, to a point that the company’s liabilities are more than the company assets. To scale down Elm’s burden of debt, the administration will have to go through delinquency insolvency. According to Insurance Receivership Model Act, delinquency is any proceeding that is put place against an insurer in order to liquidate, rehabilitate or conserve the insurers expenditure under section 201. A commissioner in this situation being the insurance commissioner that is used by the enacting state of New York to effect delinquency insolvency proceedings through court litigation as one of the means.

  • Commissioner’s Grounds of Delinquency Insolvency Proceedings

The first ground for a delinquency proceeding is the negligent borrowing the Insurance company makes in order to make billions of dollars in a risky investment that is reminiscent to money laundering but incurs huge losses. This is a case of negligence by the commissioner.

The second ground for delinquency proceeding is fraudulent report by Elm commissioner makes that reflects that the company adjusted capital is at 90% of its authorized level of control while in the real situation is that the company’s total adjusted capital is low, probable between 50-80% of the authorized level of control that makes the company to be able to function in low debts. This action by the commissioner is seen to be fraudulent against the insured members of the insurance company.

 

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