HB199 Alabama 2013 Session

Updated Feb 27, 2026

Notable

Summary

Primary Sponsor: Mike Hill
Republican
Session: Regular Session 2013
Title: Insurance Department, reinsurance, regulation of, model law adopted, Chapter 5B, Title 27 added, Secs. 27-5B-1 to 27-5B-19, inclusive, added; Sec. 27-5-12 repealed
Summary: HB199 creates a comprehensive Alabama framework to regulate reinsurance, requiring security, licensing/approval, and risk controls to protect insureds, claimants, and the industry.
What This Bill Does
It adds Chapter 5B to Title 27 to regulate reinsurance, ensure that assets backing U.S. obligations stay in the United States, and give the state insurance commissioner regulatory oversight. It establishes credit rules for reinsurance based on the reinsurer’s status (licensed, accredited, certified, or other) and requires financial safeguards such as capital, annual statements, and, for many, trust funds. It includes concentration-risk and diversification requirements for ceding insurers and sets insolvency protections, guaranty-association provisions, and notice procedures, with various penalties or credit reductions for noncompliance. It repeals the old Section 27-5-12 and becomes effective January 1 after passage.

Who It Affects
Domestic insurers that cede reinsurance?they would need to meet credit requirements, monitor exposure to any single reinsurer or group, and may have to use trust funds or other security to back obligations.
Reinsurers (domestic, foreign, licensed, accredited, or certified) that want to transact reinsurance in Alabama?they must meet specific licensing/accreditation/certification standards, or risk limited or no credit for the reinsurance, and must use security arrangements such as trusts or letters of credit.

Key Provisions
Section 27-5B-1: Establishes Chapter 5B Reinsurance to protect insureds, claimants, ceding insurers, and the public; requires U.S.-backed security for certain reinsurers and commissioner oversight.
Sections 27-5B-2 to 27-5B-6: Create standards for reinsurance credits and for reinsurers that are licensed or accredited, including filing, examination, financial strength, and solvency requirements.
Section 27-5B-7: Requires reinsurers to maintain a trust fund in a qualified U.S. financial institution to back U.S. ceding insurers' claims, with annual reporting and accountability.
Section 27-5B-8: Establishes certified reinsurer requirements, including domicile/licensing, capital, ratings, jurisdiction acceptance, service of process, and ongoing information filing; ratings are published by the commissioner.
Section 27-5B-9 to 27-5B-11: Extend or tailor credit rules for non-licensed, non-accredited, or non-certified reinsurers and set additional requirements when credits are used.
Section 27-5B-12 to 27-5B-13: Provide for suspension/revocation of accreditation/certification, and impose concentration/diversification reporting for ceding insurers (e.g., 50% surplus recoverables, 20% of gross premium limits).
Section 27-5B-14: Allows asset reduction or deduction for reinsurance ceded to a non-compliant reinsurer, subject to security and trust rules.
Section 27-5B-15 to 27-5B-18: Define qualified U.S. financial institutions, insolvency-related payment rules, and notice/defense procedures in claims involving insolvent cedents; outline guaranty-association interactions and claims handling.
Section 27-5B-19: Gives the commissioner authority to adopt implementing rules.
Section 2: Repeals Section 27-5-12.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.
Subjects: Insurance