SB347 Alabama 2013 Session

Sponsors

Session

Regular Session 2013

Title

Insurance, Title 27, certain sections, repealed

Description

<p class="bill_description"> To repeal portions of Title 27 of the Code of Alabama 1975</p><p class="bill_entitled_an_act"> Relating to the Alabama Insurance Code, to repeal the following: 27-5-12 (a) An insurer authorized under this title may accept reinsurance only of such risks and retain risk thereon within such limits as it is otherwise authorized to insure. (b) An insurer authorized under this title may reinsure all, or any part, of any particular risk with any solvent insurer. (c) 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 subdivision (1), (2), (3), or (4). Credit shall be allowed under subdivision (2) or (3) only if the applicable requirements of subdivision (5) have been satisfied. (1) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is licensed to transact insurance or reinsurance in this state. (2)a. 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 does both of the following: 1. Maintains a surplus as regards policyholders in an amount not less than twenty million dollars ($20,000,000). 2. Submits to the authority of this state to examine its books and records. b. The requirement of subparagraph 1. of paragraph a. does not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system. (3)a. Credit shall be allowed when the reinsurance is ceded to an assuming insurer which maintains a trust fund in a qualified United States financial institution, as defined in subdivision (2) of subsection (e), for the payment of the valid claims of its United States ceding insurers, their assigns and successors in interest. To enable the commissioner to determine the sufficiency of the trust fund, the assuming insurer shall report annually to the 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 commissioner and bear the expense of examination. b. 1. Credit for reinsurance shall not be granted under this subdivision unless the form of the trust and any amendments to the trust have been approved by one of the following: (i) The commissioner of insurance of the state where the trust is domiciled. (ii) The commissioner of insurance of another state who, pursuant to the terms of the trust instrument, has accepted principal regulatory oversight of the trust. 2. The form of the trust and any trust amendments also shall be filed with the commissioner of insurance 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 United States ceding insurers, their assigns, and successors in interest. The trust and the assuming insurer shall be subject to examination as determined by the commissioner. 3. 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 trustees of the trust shall report to the commissioner in writing the balance of the trust and listing the trust's investments at the preceding year-end and shall 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. c. The following requirements apply to the following categories of assuming insurer: 1. 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 United States ceding insurers, and, in addition, the assuming insurer shall maintain a trusteed surplus of not less than twenty million dollars ($20,000,000). 2. (i) In the case of a group including incorporated and individual unincorporated underwriters: A. For reinsurance ceded under reinsurance agreements with an inception, amendment, or renewal date on or after August 1, 1995, the trust shall consist of a trusteed account in an amount not less than the group's several liabilities attributable to business ceded by Unites States domiciled ceding insurers to any member of the group. B. For reinsurance ceded under reinsurance agreements with an inception date on or before July 31, 1995, and not amended or renewed after that date, notwithstanding the other provisions of this section, the trust shall consist of a trustee account in an amount not less than the group's several insurance and reinsurance liabilities attributable to business written in the United States. C. 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 United States domiciled ceding insurers of any member of the group for all years of account. (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. (iii) Within 90 days after its financial statements are due to be filed with the group's domiciliary regulator, the group shall provide to the 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. (4) Credit shall be allowed when the reinsurance is ceded to an assuming insurer not meeting the requirements of subdivision (1), (2), or (3), but only as to the insurance of risks located in jurisdictions where the reinsurance is required by applicable law or regulation of that jurisdiction. (5)a. If the assuming insurer is not licensed to transact insurance or reinsurance in this state, the credit permitted by subdivisions (2) and (3) shall not be allowed unless the assuming insurer agrees in the reinsurance agreements to both of the following: 1. 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. </p>

Subjects

Insurance