§ 27-8-8-5.2 — Association election to succeed to rights and duties of impaired or insolvent insurer; reinsurance

Indiana § 27-8-8-5.2

• Jurisdiction: Indiana
• Title 27: INSURANCE
• Art. 8: LIFE, ACCIDENT, AND HEALTH
• Ch. 8: Indiana Life and Health Insurance Guaranty Association

Text

2. (a) At any time within one (1) year after the
coverage date for an impaired insurer or insolvent insurer, the
association may elect, subject to subdivisions (1) through (4), to
succeed to the rights and obligations of the impaired insurer or
insolvent insurer that accrue on or after the coverage date and that
relate to covered policies under one (1) or more indemnity reinsurance
agreements entered into by the impaired insurer or insolvent insurer as
a ceding insurer. However, the association may not exercise an election
with respect to a reinsurance agreement if the receiver, rehabilitator, or
liquidator of the impaired insurer or insolvent insurer has previously
and expressly disaffirmed the reinsurance agreement. The election by
the association must be effected by a notice to the receiver,
rehabilitator, or liquidator and to the affected reinsurers specifying the
reinsurance agreement concerning which the association has made the
foregoing election. If the association makes an election, the following
apply with respect to the agreements selected by the association:
(1) The association is responsible for:
(A) all unpaid premiums due under the agreements for periods
before and after the coverage date; and
(B) the performance of all other obligations of the impaired
insurer or insolvent insurer to be performed after the coverage
date;
that relate to covered policies. The association may charge
covered policies that are only partially covered by the association,
through reasonable allocation methods, the costs for reinsurance
in excess of the obligations of the association.
(2) The association is entitled to any amount payable by the
reinsurer under the selected agreements:
(A) with respect to losses or events that occur during periods
after the coverage date; and
(B) that relate to covered policies.
Of the amount received from the reinsurer, the association is
obliged to pay to the beneficiary under the covered policy on
account of which the amount was paid a portion of the amount
equal to the excess of the amount received by the association over
benefits paid by the association on account of the covered policy
less the retention of the impaired insurer or insolvent insurer
applicable to the loss or event.
(3) Within thirty (30) days after the association's election, the
association and each indemnity reinsurer shall calculate the net
balance due to or from the association under each reinsurance
agreement as of the date of the association's election, giving full
credit to all items paid by the:
(A) impaired insurer or insolvent insurer, or the impaired
insurer's or insolvent insurer's receiver, rehabilitator, or
liquidator; or
(B) indemnity reinsurer;
during the period between the coverage date and the date of the
association's election. Either the association or indemnity
reinsurer shall pay the net balance due the other not more than
five (5) days after the completion of the calculation. If the
receiver, rehabilitator, or liquidator has received any amount due
the association under subdivision (2), the receiver, rehabilitator,
or liquidator shall remit the amount to the association as promptly
as practicable.
(4) If the association, within sixty (60) days of the election, pays
the premiums due for periods before and after the coverage date
that relate to covered policies, the reinsurer is not entitled to:
(A) terminate the reinsurance agreements insofar as the
agreements relate to covered policies; or
(B) set off any unpaid premium due for periods before the
coverage date against amounts due the association.
(b) If the association transfers any of the association's obligations to
another insurer, and if the association and the other insurer agree, the
other insurer succeeds to the rights and obligations of the association
under subsection (a) with respect to the transferred obligations
effective as of the date agreed upon by the association and the other
insurer and regardless of whether the association has made the election
referred to in subsection (a), except that the:
(1) indemnity reinsurance agreements automatically terminate for
new reinsurance unless the indemnity reinsurer and the other
insurer agree to the contrary; and
(2) obligations of the association described in subsection (a)(2) no
longer apply on and after the date the indemnity reinsurance
agreement is transferred to the third party insurer.
This subsection does not apply if the association has previously notified
the receiver, rehabilitator, or liquidator and the affected reinsurer in
writing that the association will not exercise the election referred to in
subsection (a).
(c) Subsections (a) and (b) supersede any other law or affected
reinsurance agreement that provides for or requires payment of
reinsurance proceeds, on account of losses or events that occur after the
coverage date, to the receiver, liquidator, or rehabilitator of the
impaired insurer or insolvent insurer. The receiver, rehabilitator, or
liquidator remains entitled to amounts payable by the reinsurer under
the reinsurance agreement with respect to losses or events that occur
before the coverage date, subject to applicable setoff provisions.
(d) Except as provided in subsections (a), (b), and (c), this chapter
does not alter or modify the terms and conditions of indemnity
reinsurance agreements of the insolvent insurer.
(e) This chapter does not:
(1) abrogate or limit the rights of a reinsurer to claim that the
reinsurer is entitled to rescind a reinsurance agreement; or
(2) give a policy owner, insured, or beneficiary an independent
cause of action against an indemnity reinsurer that is not
otherwise set forth in the indemnity reinsurance agreement.

Legislative History

As added by P.L.193-2006, SEC.15. Amended by P.L.208-2018, SEC.18.