§ 27-1-13-6 — Limitation on risks; effect of reinsurance

Indiana § 27-1-13-6

• Jurisdiction: Indiana
• Title 27: INSURANCE
• Art. 1: DEPARTMENT OF INSURANCE
• Ch. 13: Casualty, Fire, and Marine Insurance Company Powers

Text

(a) No company organized to make any kind or
kinds of insurance included in class II and class III of IC 27-1-5-1 may
take, on any one (1) risk of whatever nature, a sum exceeding one-tenth
(1/10) part of its paid-up capital, surplus, and contingent reserves, if
any, if a stock company, or one-tenth (1/10) part of its surplus and
contingent reserves, if any, if other than a stock company. No portion
of any such risk or hazard which shall have been reinsured in
accordance with any regulations that the commissioner may enact
pursuant to this section shall be included in determining the limitation
of risk prescribed in this section. This section shall not apply to marine
insurances, companies organized to make life insurance, or companies
organized to issue title insurance.
(b) No stock or mutual insurance company transacting fidelity or
surety business in this state shall expose itself to any loss on any one
(1) fidelity or surety risk or hazard in an amount exceeding ten percent
(10%) of its capital, surplus and contingent reserves, if any, unless it
shall be protected in excess of that amount by: (a) Reinsurance in a
company authorized to transact the fidelity or surety business in this
state, provided that such reinsurance is in such form as to enable the
obligee or beneficiary to maintain an action thereon against the
company reinsured jointly with such reinsurer and, upon recovering
judgment against such reinsured, to have recovery against such
reinsurer for payment to the extent in which it may be liable under such
reinsurance and in discharge thereof; or (b) the cosuretyship of such a
company similarly authorized; or (c) deposit with it in pledge or
conveyance to it in trust for its protection of property; or (d)
conveyance or mortgage for its protection; or (e) in case a suretyship
obligation was made on behalf or on account of a fiduciary holding
property in a trust capacity, deposit or other disposition of a portion of
the property so held in trust that no future sale, mortgage, pledge or
other disposition can be made thereof without the consent of such
company; except by decree or order of a court of competent
jurisdiction. However (1) such a company may execute what are known
as transportation or warehousing bonds for United States internal
revenue taxes to an amount equal to fifty percent (50%) of its capital,
surplus and contingent reserves, if any; (2) when the penalty of the
suretyship obligation exceeds the amount of a judgment described
therein as appealed from and thereby secured, or exceeds the amount
of the subject-matter in controversy or of the estate in the hands of the
fiduciary for the performance of whose duties it is conditioned, the
bond may be executed if the actual amount of the judgment or the
subject-matter in controversy or estate not subject to supervision or
control of the surety is not in excess of such limitation; and (3) when
the penalty of the suretyship obligation executed for the performance
of a contract exceeds the contract price, the latter shall be taken as the
basis for estimating the limit of risk within the meaning of this section.
No such company may, anything to the contrary in this section
notwithstanding, execute suretyship obligations guaranteeing the
deposits of any single financial institution in an aggregate amount in
excess of ten percent (10%) of the capital, surplus and contingent
reserves, if any, of such corporate surety, unless it is protected in
excess of that amount by credits in accordance with subdivisions (a),
(b), (c) or (d) of this subsection.
Formerly: Acts 1935, c.162, s.175. As amended by Acts 1982,
P.L.162, SEC.1; P.L.260-1983, SEC.4.