§ 27-6-10.1-2 — Credit allowed a domestic ceding insurer

Indiana § 27-6-10.1-2

• Jurisdiction: Indiana
• Title 27: INSURANCE
• Art. 6: REINSURANCE; INTERINSURANCE
• Ch. 10.1: Credit for Reinsurance

Text

Credit Allowed a Domestic Ceding Insurer.
Credit for reinsurance shall be allowed a domestic ceding insurer as
either an asset or a reduction from liability on account of reinsurance
ceded only when the reinsurer meets the requirements of Subsection A,
B, C, D, E, F, or G; provided further, that the insurance commissioner
may adopt by regulation pursuant to Section 5B of this chapter specific
additional requirements relating to or setting forth: (1) the valuation of
assets or reserve credits; (2) the amount and forms of security
supporting reinsurance arrangements described in Section 5B of this
chapter; and/or (3) the circumstances pursuant to which credit will be
reduced or eliminated. Credit shall be allowed under Subsection A, B,
or C only as respects cessions of those kinds or classes of business
which the assuming insurer is licensed or otherwise permitted to write
or assume in its state of domicile or, in the case of a U.S. branch of an
alien assuming insurer, in the state through which it is entered and
licensed to transact insurance or reinsurance. Credit shall be allowed
under Subsection C or D only if the applicable requirements of
Subsection H have been satisfied.
A. Credit shall be allowed when the reinsurance is ceded to an
assuming insurer that is licensed to transact insurance or
reinsurance in Indiana.
B. Credit shall be allowed when the reinsurance is ceded to an
assuming insurer that is accredited by the insurance commissioner
as a reinsurer in Indiana. In order to be eligible for accreditation,
a reinsurer must:
(1) file with the insurance commissioner evidence of its
submission to Indiana's jurisdiction;
(2) submit to Indiana's authority to examine its books and records;
(3) be licensed to transact insurance or reinsurance in at least one
(1) state, or in the case of a U.S. branch of an alien assuming
insurer, be entered through and licensed to transact insurance or
reinsurance in at least one (1) state;
(4) file annually with the insurance commissioner a copy of its
annual statement filed with the insurance department of its state
of domicile and a copy of its most recent audited financial
statement; and
(5) demonstrate to the satisfaction of the insurance commissioner
that it has adequate financial capacity to meet its reinsurance
obligations and is otherwise qualified to assume reinsurance from
domestic insurers. An assuming insurer is deemed to meet this
requirement as of the time of its application if it maintains a
surplus as regards policyholders in an amount not less than twenty
million dollars ($20,000,000) and its accreditation has not been
denied by the insurance commissioner within ninety (90) days
after submission of its application.
C. (1) Credit shall be allowed when the reinsurance is ceded to an
assuming insurer that is domiciled in, or in the case of a U.S.
branch of an alien assuming insurer is entered through, a state that
employs standards regarding credit for reinsurance substantially
similar to those applicable under this statute and the assuming
insurer or U.S. branch of an alien assuming insurer:
(a) maintains a surplus as regards policyholders in an amount
not less than twenty million dollars ($20,000,000); and
(b) submits to the authority of Indiana to examine its books and
records.
(2) The requirement of Paragraph (1)(a) of this subsection does
not apply to reinsurance ceded and assumed pursuant to pooling
arrangements among insurers in the same holding company
system.
D. (1) Credit shall be allowed when the reinsurance is ceded to an
assuming insurer that maintains a trust fund in a qualified U.S.
financial institution, as defined in Section 4B of this chapter, for
the payment of the valid claims of its U.S. ceding insurers, their
assigns, and successors in interest. To enable the insurance
commissioner to determine the sufficiency of the trust fund, the
assuming insurer shall report annually to the insurance
commissioner information substantially the same as that required
to be reported on the NAIC Annual Statement form by licensed
insurers. The assuming insurer shall submit to examination of its
books and records by the insurance commissioner and bear the
expense of examination.
(2) (a) Credit for reinsurance shall not be granted under this
subsection unless the form of the trust and any amendments to the
trust have been approved by:
(i) the insurance commissioner of the state where the trust is
domiciled; or
(ii) the insurance commissioner of another state who,
pursuant to the terms of the trust instrument, has accepted
principal regulatory oversight of the trust.
(b) The form of the trust and any trust amendments also shall be
filed with the insurance commissioner of every state in which
the ceding insurer beneficiaries of the trust are domiciled. The
trust instrument shall provide that contested claims shall be
valid and enforceable upon the final order of any court of
competent jurisdiction in the United States. The trust shall vest
legal title to its assets in its trustees for the benefit of the
assuming insurer's U.S. ceding insurers, their assigns, and
successors in interest. The trust and the assuming insurer shall
be subject to examination as determined by the insurance
commissioner.
(c) The trust shall remain in effect for as long as the assuming
insurer has outstanding obligations due under the reinsurance
agreements subject to the trust. No later than February 28 of
each year the trustee of the trust shall report to the insurance
commissioner in writing the balance of the trust, provide a
listing of the trust's investments at the preceding year end, and
certify the date of termination of the trust, if so planned, or
certify that the trust will not expire prior to the following
December 31.
(3) The following requirements apply to the following categories
of assuming insurer:
(a) The trust fund for a single assuming insurer shall consist of
funds in trust in an amount not less than the assuming insurer's
liabilities attributable to reinsurance ceded by U.S. ceding
insurers, and, in addition, the assuming insurer shall maintain
a trusteed surplus of not less than twenty million dollars
($20,000,000), except as provided in Paragraph 3(b) of this
subsection.
(b) At any time after the assuming insurer has permanently
discontinued underwriting new business secured by the trust for
at least three (3) full years, the insurance commissioner with
principal regulatory oversight of the trust may authorize a
reduction in the required trusteed surplus, but only after a
finding, based on an assessment of the risk, that the new
required surplus level is adequate for the protection of U.S.
ceding insurers, policyholders, and claimants in light of
reasonably foreseeable adverse loss development. The risk
assessment may involve an actuarial review, including an
independent analysis of reserves and cash flows, and shall
consider all material risk factors, including when applicable the
lines of business involved, the stability of the incurred loss
estimates and the effect of the surplus requirements on the
assuming insurer's liquidity or solvency. The minimum required
trusteed surplus may not be reduced to an amount less than
thirty percent (30%) of the assuming insurer's liabilities
attributable to reinsurance ceded by U.S. ceding insurers
covered by the trust.
(c) (i) In the case of a group including incorporated and
individual unincorporated underwriters:
(I) for reinsurance ceded under reinsurance agreements with
an inception, amendment, or renewal date on or after January
1, 1993, the trust shall consist of a trusteed account in an
amount not less than the respective underwriters' several
liabilities attributable to business ceded by U.S. domiciled
ceding insurers to any underwriter of the group;
(II) for reinsurance ceded under reinsurance agreements with
an inception date on or before December 31, 1992, and not
amended or renewed after that date, notwithstanding the other
provisions of this chapter, the trust shall consist of a trusteed
account in an amount not less than the respective
underwriters' several insurance and reinsurance liabilities
attributable to business written in the United States; and
(III) in addition to these trusts, the group shall maintain in
trust a trusteed surplus of which one hundred million dollars
($100,000,000) shall be held jointly for the benefit of the U.S.
domiciled ceding insurers of any member of the group for all
years of account; and
(ii) the incorporated members of the group shall not be
engaged in any business other than underwriting as a member
of the group and shall be subject to the same level of
regulation and solvency control by the group's domiciliary
regulator as are the unincorporated members; and
(iii) within ninety (90) days after its financial statements are
due to be filed with the group's domiciliary regulator, the
group shall provide to the insurance commissioner an annual
certification by the group's domiciliary regulator of the
solvency of each underwriter member; or if a certification is
unavailable, financial statements, prepared by independent
public accountants, of each underwriter member of the group.
(d) In the case of a group of incorporated underwriters under
common administration, the group shall:
(i) have continuously transacted an insurance business
outside the United States for at least three (3) years
immediately prior to making application for accreditation;
(ii) maintain aggregate policyholders' surplus of at least ten
billion dollars ($10,000,000,000);
(iii) maintain a trust fund in an amount not less than the
group's several liabilities attributable to business ceded by
U.S. domiciled ceding insurers to any member of the group
pursuant to reinsurance contracts issued in the name of the
group;
(iv) in addition, maintain a joint trusteed surplus of which one
hundred million dollars ($100,000,000) shall be held jointly
for the benefit of U.S. domiciled ceding insurers of any
member of the group as additional security for these
liabilities; and
(v) within ninety (90) days after its financial statements are
due to be filed with the group's domiciliary regulator, make
available to the insurance commissioner an annual
certification of each underwriter member's solvency by the
member's domiciliary regulator and financial statements of
each underwriter member of the group prepared by its
independent public accountant.
E. Credit shall be allowed when the reinsurance is ceded to an
assuming insurer that has been certified by the insurance
commissioner as a reinsurer in Indiana and secures its obligations
in accordance with the requirements of this subsection.
(1) In order to be eligible for certification, the assuming insurer
shall meet all of the following requirements:
(a) The assuming insurer must be domiciled and licensed to
transact insurance or reinsurance in a qualified jurisdiction, as
determined by the insurance commissioner pursuant to
Paragraph (3) of this subsection.
(b) The assuming insurer must maintain minimum capital and
surplus, or its equivalent, in an amount to be determined by the
insurance commissioner pursuant to regulation.
(c) The assuming insurer must maintain financial strength
ratings from two (2) or more rating agencies deemed acceptable
by the insurance commissioner pursuant to regulation.
(d) The assuming insurer must agree to submit to the
jurisdiction of Indiana, appoint the insurance commissioner as
its agent for service of process in Indiana, and agree to provide
security for one hundred percent (100%) of the assuming
insurer's liabilities attributable to reinsurance ceded by U.S.
ceding insurers if it resists enforcement of a final U.S.
judgment.
(e) The assuming insurer must agree to meet applicable
information filing requirements as determined by the insurance
commissioner, both with respect to an initial application for
certification and on an ongoing basis.
(f) The assuming insurer must satisfy any other requirements
for certification deemed relevant by the insurance
commissioner.
(2) An association including incorporated and individual
unincorporated underwriters may be a certified reinsurer. In order
to be eligible for certification, in addition to satisfying
requirements of Paragraph (1) of this subsection:
(a) the association shall satisfy its minimum capital and surplus
requirements through the capital and surplus equivalents (net
of liabilities) of the association and its members, which shall
include a joint central fund that may be applied to any
unsatisfied obligation of the association or any of its members,
in an amount determined by the insurance commissioner to
provide adequate protection;
(b) the incorporated members of the association shall not be
engaged in any business other than underwriting as a member
of the association and shall be subject to the same level of
regulation and solvency control by the association's domiciliary
regulator as are the unincorporated members; and
(c) within ninety (90) days after its financial statements are due
to be filed with the association's domiciliary regulator, the
association shall provide to the insurance commissioner an
annual certification by the association's domiciliary regulator of
the solvency of each underwriter member; or if a certification
is unavailable, financial statements, prepared by independent
public accountants, of each underwriter member of the
association.
(3) The insurance commissioner shall create and publish a list of
qualified jurisdictions, under which an assuming insurer licensed
and domiciled in such jurisdiction is eligible to be considered for
certification by the insurance commissioner as a certified
reinsurer.
(a) In order to determine whether the domiciliary jurisdiction of
a non-U.S. assuming insurer is eligible to be recognized as a
qualified jurisdiction, the insurance commissioner shall
evaluate the appropriateness and effectiveness of the
reinsurance supervisory system of the jurisdiction, both initially
and on an ongoing basis, and consider the rights, benefits and
the extent of reciprocal recognition afforded by the non-U.S.
jurisdiction to reinsurers licensed and domiciled in the U.S. A
qualified jurisdiction must agree to share information and
cooperate with the insurance commissioner with respect to all
certified reinsurers domiciled within that jurisdiction. A
jurisdiction may not be recognized as a qualified jurisdiction if
the insurance commissioner has determined that the jurisdiction
does not adequately and promptly enforce final U.S. judgments
and arbitration awards. Additional factors may be considered in
the discretion of the insurance commissioner.
(b) A list of qualified jurisdictions shall be published through
the NAIC Committee Process. The insurance commissioner
shall consider this list in determining qualified jurisdictions. If
the insurance commissioner approves a jurisdiction as qualified
that does not appear on the list of qualified jurisdictions, the
commissioner shall provide thoroughly documented
justification in accordance with criteria to be developed under
regulations.
(c) U.S. jurisdictions that meet the requirement for
accreditation under the NAIC financial standards and
accreditation program shall be recognized as qualified
jurisdictions.
(d) If a certified reinsurer's domiciliary jurisdiction ceases to be
a qualified jurisdiction, the insurance commissioner has the
discretion to suspend the reinsurer's certification indefinitely,
in lieu of revocation.
(4) The insurance commissioner shall assign a rating to each
certified reinsurer, giving due consideration to the financial
strength ratings that have been assigned by rating agencies
deemed acceptable to the insurance commissioner pursuant to
regulation. The insurance commissioner shall publish a list of all
certified reinsurers and their ratings.
(5) A certified reinsurer shall secure obligations assumed from
U.S. ceding insurers under this subsection at a level consistent
with its rating, as specified in regulations promulgated by the
insurance commissioner.
(a) In order for a domestic ceding insurer to qualify for full
financial statement credit for reinsurance ceded to a certified
reinsurer, the certified reinsurer shall maintain security in a
form acceptable to the insurance commissioner and consistent
with the provisions of Section 3 of this chapter, or in a
multibeneficiary trust in accordance with Subsection D, except
as otherwise provided in this subsection.
(b) If a certified reinsurer maintains a trust to fully secure its
obligations subject to Subsection D, and chooses to secure its
obligations incurred as a certified reinsurer in the form of a
multibeneficiary trust, the certified reinsurer shall maintain
separate trust accounts for its obligations incurred under
reinsurance agreements issued or renewed as a certified
reinsurer with reduced security as permitted by this subsection
or comparable laws of other U.S. jurisdictions and for its
obligations subject to Subsection D. It shall be a condition to
the grant of certification under this subsection that the certified
reinsurer shall have bound itself, by the language of the trust
and agreement with the insurance commissioner with principal
regulatory oversight of each such trust account, to fund, upon
termination of any such trust account, out of the remaining
surplus of such trust any deficiency of any other such trust
account.
(c) The minimum trusteed surplus requirements provided in
Subsection D are not applicable with respect to a
multibeneficiary trust maintained by a certified reinsurer for the
purpose of securing obligations incurred under this subsection,
except that such trust shall maintain a minimum trusteed
surplus of ten million dollars ($10,000,000).
(d) With respect to obligations incurred by a certified reinsurer
under this subsection, if the security is insufficient, the
insurance commissioner shall reduce the allowable credit by an
amount proportionate to the deficiency, and has the discretion
to impose further reductions in allowable credit upon finding
that there is a material risk that the certified reinsurer's
obligations will not be paid in full when due.
(e) For purposes of this subsection, a certified reinsurer whose
certification has been terminated for any reason shall be treated
as a certified reinsurer required to secure one hundred percent
(100%) of its obligations.
(i) As used in this subsection, the term "terminated" refers to
revocation, suspension, voluntary surrender, and inactive
status.
(ii) If the insurance commissioner continues to assign a
higher rating as permitted by other provisions of this section,
this requirement does not apply to a certified reinsurer in
inactive status or to a reinsurer whose certification has been
suspended.
(6) If an applicant for certification has been certified as a
reinsurer in an NAIC accredited jurisdiction, the insurance
commissioner has the discretion to defer to that jurisdiction's
certification, and has the discretion to defer to the rating assigned
by that jurisdiction, and such assuming insurer shall be
considered to be a certified reinsurer in Indiana.
(7) A certified reinsurer that ceases to assume new business in
Indiana may request to maintain its certification in inactive status
in order to continue to qualify for a reduction in security for its in
force business. An inactive certified reinsurer shall continue to
comply with all applicable requirements of this subsection, and
the insurance commissioner shall assign a rating that takes into
account, if relevant, the reasons why the reinsurer is not assuming
new business.
F. (1) Credit shall be allowed when the reinsurance is ceded to an
assuming insurer meeting each of the conditions set forth below.
(a) The assuming insurer must have its head office or be
domiciled in, as applicable, and be licensed in a Reciprocal
Jurisdiction. A "Reciprocal Jurisdiction" is a jurisdiction that
meets one (1) of the following:
(i) A non-U.S. jurisdiction that is subject to an in force
covered agreement with the United States, each within its
legal authority, or, in the case of a covered agreement
between the United States and European Union, is a member
state of the European Union. For purposes of this subsection,
a "covered agreement" is an agreement entered into pursuant
to Dodd-Frank Wall Street Reform and Consumer Protection
Act, 31 U.S.C. 313 and 31 U.S.C 314, that is currently in
effect or in a period of provisional application and addresses
the elimination, under specified conditions, of collateral
requirements as a condition for entering into any reinsurance
agreement with a ceding insurer domiciled in Indiana or for
allowing the ceding insurer to recognize credit for
reinsurance.
(ii) A U.S. jurisdiction that meets the requirements for
accreditation under the NAIC financial standards and
accreditation program.
(iii) A qualified jurisdiction, as determined by the insurance
commissioner pursuant to Subsection E(3), which is not
otherwise described in Subparagraphs (a)(i) or (a)(ii) and
which meets certain additional requirements, consistent with
the terms and conditions of in force covered agreements, as
specified by the insurance commissioner in regulation.
(b) The assuming insurer must have and maintain, on an
ongoing basis, minimum capital and surplus, or its equivalent,
calculated according to the methodology of its domiciliary
jurisdiction, in an amount to be set forth in regulation. If the
assuming insurer is an association, including incorporated and
individual unincorporated underwriters, it must have and
maintain, on an ongoing basis, minimum capital and surplus
equivalents (net of liabilities), calculated according to the
methodology applicable in its domiciliary jurisdiction, and a
central fund containing a balance in amounts to be set forth in
regulation.
(c) The assuming insurer must have and maintain, on an
ongoing basis, a minimum solvency or capital ratio, as
applicable, which will be set forth in regulation. If the assuming
insurer is an association, including incorporated and individual
unincorporated underwriters, it must have and maintain, on an
ongoing basis, a minimum solvency or capital ratio in the
Reciprocal Jurisdiction where the assuming insurer has its head
office or is domiciled, as applicable, and is also licensed.
(d) The assuming insurer must agree and provide adequate
assurance to the insurance commissioner, in a form specified by
the insurance commissioner pursuant to regulation, as follows:
(i) The assuming insurer must provide prompt written notice
and explanation to the insurance commissioner if it falls
below the minimum requirements set forth in Subparagraph
(b) or (c) of this section, or if any regulatory action is taken
against it for serious noncompliance with applicable law.
(ii) The assuming insurer must consent in writing to the
jurisdiction of the courts of Indiana and to the appointment of
the insurance commissioner as agent for service of process.
The insurance commissioner may require that consent for
service of process be provided to the insurance commissioner
and included in each reinsurance agreement. Nothing in this
provision shall limit, or in any way alter, the capacity of
parties to a reinsurance agreement to agree to alternative
dispute resolution mechanisms, except to the extent such
agreements are unenforceable under applicable insolvency or
delinquency laws.
(iii) The assuming insurer must consent in writing to pay all
final judgments, wherever enforcement is sought, obtained by
a ceding insurer or its legal successor, that have been
declared enforceable in the jurisdiction where the judgment
was obtained.
(iv) Each reinsurance agreement must include a provision
requiring the assuming insurer to provide security in an
amount equal to one hundred percent (100%) of the assuming
insurer's liabilities attributable to reinsurance ceded pursuant
to that agreement if the assuming insurer resists enforcement
of a final judgment that is enforceable under the law of the
jurisdiction in which it was obtained or a properly
enforceable arbitration award, whether obtained by the
ceding insurer or by its legal successor on behalf of its
resolution estate.
(v) The assuming insurer must confirm that it is not presently
participating in any solvent scheme of arrangement which
involves Indiana's ceding insurers, and agree to notify the
ceding insurer and the insurance commissioner and to
provide security in an amount equal to one hundred percent
(100%) of the assuming insurer's liabilities to the ceding
insurer, should the assuming insurer enter into such a solvent
scheme of arrangement. Such security shall be in a form
consistent with the provisions of Subsection E and Section 3
of this chapter and as specified by the insurance
commissioner in regulation.
(e) The assuming insurer or its legal successor must provide, if
requested by the insurance commissioner, on behalf of itself
and any legal predecessors, certain documentation to the
insurance commissioner, as specified by the insurance
commissioner in regulation.
(f) The assuming insurer must maintain a practice of prompt
payment of claims under reinsurance agreements, pursuant to
criteria set forth in regulation.
(g) The assuming insurer's supervisory authority must confirm
to the insurance commissioner on an annual basis, as of the
preceding December 31 or at the annual date otherwise
statutorily reported to the Reciprocal Jurisdiction, that the
assuming insurer complies with the requirements set forth in
Subparagraphs (b) and (c) of this section.
(h) Nothing in this provision precludes an assuming insurer
from providing the insurance commissioner with information
on a voluntary basis.
(2) The insurance commissioner shall timely create and publish
a list of Reciprocal Jurisdictions.
(a) A list of Reciprocal Jurisdictions is published through the
NAIC Committee Process. The insurance commissioner's list
shall include any Reciprocal Jurisdiction as defined under
Subsection F(1)(a)(i) and F(1)(a)(ii), and shall consider any
other Reciprocal Jurisdiction included on the NAIC list. The
insurance commissioner may approve a jurisdiction that does
not appear on the NAIC list of Reciprocal Jurisdictions in
accordance with criteria to be developed under regulations
issued by the insurance commissioner.
(b) The insurance commissioner may remove a jurisdiction
from the list of Reciprocal Jurisdictions upon a determination
that the jurisdiction no longer meets the requirements of a
Reciprocal Jurisdiction, in accordance with a process set forth
in regulations issued by the insurance commissioner, except
that the insurance commissioner shall not remove from the list
a Reciprocal Jurisdiction as defined under Subsection F(1)(a)(i)
and F(1)(a)(ii). Upon removal of a Reciprocal Jurisdiction from
this list credit for reinsurance ceded to an assuming insurer
which has its home office or is domiciled in that jurisdiction
shall be allowed, if otherwise allowed pursuant to Indiana law.
(3) The insurance commissioner shall timely create and publish
a list of assuming insurers that have satisfied the conditions set
forth in this subsection and to which cessions shall be granted
credit in accordance with this subsection. The insurance
commissioner may add an assuming insurer to such list if an
NAIC accredited jurisdiction has added such assuming insurer to
a list of such assuming insurers or if, upon initial eligibility, the
assuming insurer submits the information to the insurance
commissioner as required under Paragraph (1)(d) of this
subsection and complies with any additional requirements that the
insurance commissioner may impose by regulation, except to the
extent that they conflict with an applicable covered agreement.
(4) If the insurance commissioner determines that an assuming
insurer no longer meets one (1) or more of the requirements under
this subsection, the insurance commissioner may revoke or
suspend the eligibility of the assuming insurer for recognition
under this subsection in accordance with procedures set forth in
regulation.
(a) While an assuming insurer's eligibility is suspended, no
reinsurance agreement issued, amended, or renewed after the
effective date of the suspension qualifies for credit except to the
extent that the assuming insurer's obligations under the contract
are secured in accordance with Section 3 of this chapter.
(b) If an assuming insurer's eligibility is revoked, no credit for
reinsurance may be granted after the effective date of the
revocation with respect to any reinsurance agreements entered
into by the assuming insurer, including reinsurance agreements
entered into prior to the date of revocation, except to the extent
that the assuming insurer's obligations under the contract are
secured in a form acceptable to the insurance commissioner and
consistent with the provisions of Section 3 of this chapter.
(5) If subject to a legal process of rehabilitation, liquidation, or
conservation, as applicable, the ceding insurer, or its
representative, may seek and, if determined appropriate by the
court in which the proceedings are pending, may obtain an order
requiring that the assuming insurer post security for all
outstanding ceded liabilities.
(6) Nothing in this subsection shall limit or in any way alter the
capacity of parties to a reinsurance agreement to agree on
requirements for security or other terms in that reinsurance
agreement, except as expressly prohibited by this chapter or other
applicable law or regulation.
(7) Credit may be taken under this subsection only for reinsurance
agreements entered into, amended, or renewed on or after the
effective date of the statute adding this subsection, and only with
respect to losses incurred and reserves reported on or after the
later of: (i) the date on which the assuming insurer has met all
eligibility requirements pursuant to Subsection F(1) herein; and
(ii) the effective date of the new reinsurance agreement,
amendment, or renewal.
(a) This paragraph does not alter or impair a ceding insurer's
right to take credit for reinsurance, to the extent that credit is
not available under this subsection, as long as the reinsurance
qualifies for credit under any other applicable provision of this
chapter.
(b) Nothing in this subsection shall authorize an assuming
insurer to withdraw or reduce the security provided under any
reinsurance agreement except as permitted by the terms of the
agreement.
(c) Nothing in this subsection shall limit, or in any way alter,
the capacity of parties to any reinsurance agreement to
renegotiate the agreement.
G. Credit shall be allowed when the reinsurance is ceded to an
assuming insurer not meeting the requirements of Subsection A,
B, C, D, E, or F, but only as to the insurance of risks located in
jurisdictions where the reinsurance is required by applicable law
or regulation of that jurisdiction.
H. If the assuming insurer is not licensed, accredited or certified
to transact insurance or reinsurance in Indiana, the credit
permitted by Subsections C and D shall not be allowed unless the
assuming insurer agrees in the reinsurance agreements:
(1) (a) That in the event of the failure of the assuming insurer to
perform its obligations under the terms of the reinsurance
agreement, the assuming insurer, at the request of the ceding
insurer, shall submit to the jurisdiction of any court of competent
jurisdiction in any state of the United States, will comply with all
requirements necessary to give the court jurisdiction, and will
abide by the final decision of the court or of any appellate court
in the event of an appeal; and
(b) To designate the insurance commissioner or a designated
attorney as its true and lawful attorney upon whom may be
served any lawful process in any action, suit, or proceeding
instituted by or on behalf of the ceding insurer.
(2) This subsection is not intended to conflict with or override the
obligation of the parties to a reinsurance agreement to arbitrate
their disputes, if this obligation is created in the agreement.
I. If the assuming insurer does not meet the requirements of
Subsection A, B, C, or F, the credit permitted by Subsection D or
E shall not be allowed unless the assuming insurer agrees in the
trust agreements to all of the following conditions:
(1) Notwithstanding any other provisions in the trust instrument,
if the trust fund is inadequate because it contains an amount less
than the amount required by Subsection D(3), or if the grantor of
the trust has been declared insolvent or placed into receivership,
rehabilitation, liquidation, or similar proceedings under the laws
of its state or country of domicile, the trustee shall comply with an
order of the insurance commissioner with regulatory oversight
over the trust or with an order of a court of competent jurisdiction
directing the trustee to transfer to the insurance commissioner
with regulatory oversight all of the assets of the trust fund.
(2) The assets shall be distributed by and claims shall be filed
with and valued by the insurance commissioner with regulatory
oversight in accordance with the laws of the state in which the
trust is domiciled that are applicable to the liquidation of
domestic insurance companies.
(3) If the insurance commissioner with regulatory oversight
determines that the assets of the trust fund or any part thereof are
not necessary to satisfy the claims of the U.S. ceding insurers of
the grantor of the trust, the assets or part thereof shall be returned
by the insurance commissioner with regulatory oversight to the
trustee for distribution in accordance with the trust agreement.
(4) The grantor shall waive any right otherwise available to it
under U.S. law that is inconsistent with this provision.
J. If an accredited or certified reinsurer ceases to meet the
requirements for accreditation or certification, the insurance
commissioner may suspend or revoke the reinsurer's accreditation
or certification.
(1) The insurance commissioner must give the reinsurer notice
and opportunity for hearing. The suspension or revocation may
not take effect until after the insurance commissioner's order on
hearing, unless:
(a) the reinsurer waives its right to hearing;
(b) the insurance commissioner's order is based on regulatory
action by the reinsurer's domiciliary jurisdiction or the
voluntary surrender or termination of the reinsurer's eligibility
to transact insurance or reinsurance business in its domiciliary
jurisdiction or in the primary certifying state of the reinsurer
under Subsection E(6); or
(c) the insurance commissioner finds that an emergency
requires immediate action and a court of competent jurisdiction
has not stayed the insurance commissioner's action.
(2) While a reinsurer's accreditation or certification is suspended,
no reinsurance contract issued or renewed after the effective date
of the suspension qualifies for credit except to the extent that the
reinsurer's obligations under the contract are secured in
accordance with Section 3 of this chapter. If a reinsurer's
accreditation or certification is revoked, no credit for reinsurance
may be granted after the effective date of the revocation except to
the extent that the reinsurer's obligations under the contract are
secured in accordance with Subsection E(5) or Section 3 of this
chapter.
K. Concentration Risk.
(1) A ceding insurer shall take steps to manage its reinsurance
recoverables proportionate to its own book of business. A
domestic ceding insurer shall notify the insurance commissioner
within thirty (30) days after reinsurance recoverables from any
single assuming insurer, or group of affiliated assuming insurers,
exceeds fifty percent (50%) of the domestic ceding insurer's last
reported surplus to policyholders, or after it is determined that
reinsurance recoverables from any single assuming insurer, or
group of affiliated assuming insurers, is likely to exceed this limit.
The notification shall demonstrate that the exposure is safely
managed by the domestic ceding insurer.
(2) A ceding insurer shall take steps to diversify its reinsurance
program. A domestic ceding insurer shall notify the insurance
commissioner within thirty (30) days after ceding to any single
assuming insurer, or group of affiliated assuming insurers, more
than twenty percent (20%) of the ceding insurer's gross written
premium in the prior calendar year, or after it has determined that
the reinsurance ceded to any single assuming insurer, or group of
affiliated assuming insurers, is likely to exceed this limit. The
notification shall demonstrate that the exposure is safely managed
by the domestic ceding insurer.

Legislative History

As added by P.L.130-2020, SEC.12.