HB70 Alabama 2020 Session

Summary

Primary Sponsor

Kerry Rich

Republican

Session

Regular Session 2020

Title

Insurance, reinsurance, regulation and credit against reserves, adoption of similar to Credit for Reinsurance Model Law by Nat. Assoc. of Insurance Commissioners, Secs. 27-5B-8.1, 27-5B-20 added; Secs. 27-5B-3, 27-5B-9, 27-5B-11, 27-5B-14, 27-5B-19 am'd.

Summary

HB70 updates Alabama's reinsurance rules to closely follow the NAIC Credit for Reinsurance Model Law, adding new collateral requirements and reciprocal-jurisdiction rules for reinsurers.

What This Bill Does

It aligns Alabama's credit for reinsurance with the NAIC model, affecting when insurers can count reinsurance against reserves. It creates rules for collateral and security backing credits (such as cash, securities, or letters of credit) and explains when those credits can be reduced or eliminated. It sets criteria for reinsurers to qualify for credit, including minimum capital, solvency ratios, and being domiciled/licensed in a reciprocal jurisdiction, with the Insurance Commissioner maintaining lists of reciprocal jurisdictions and eligible reinsurers. It applies to new reinsurance agreements and requires a waiting period before the changes take effect.

Who It Affects

• Domestic Alabama insurers that cede risk: they may be able to take credit for reinsurance only if the reinsurer meets the new standards and may need to post security; credit could be reduced if requirements are not met.
• Reinsurers/assuming insurers (including foreign and reciprocal-jurisdiction companies): they must meet capital, solvency, and jurisdiction requirements, agree to service-of-process and judgments, post security, and remain eligible to have credit recognized.

Key Provisions

• Adds Sections 27-5B-8.1 and 27-5B-20 and amendments to 27-5B-3, -9, -11, -14, -19 to implement the NAIC model.
• Credit for reinsurance is allowed only if the reinsurer meets specified sections; the commissioner may set rules on asset valuation, reserve credits, and security for reinsurance arrangements.
• Introduces a list of reciprocal jurisdictions and requires reinsurers to meet minimum capital, solvency, and ongoing notice/consent obligations; the commissioner can remove jurisdictions that no longer meet criteria.
• Requires security for credit in reinsurance agreements (cash, NAIC-listed securities, letters of credit, or other acceptable forms) and allows the commissioner to require security equal to 100% of liabilities and to transfer assets if needed.
• Allows limited credit for reinsurers not meeting all requirements only for risks located in jurisdictions where such credit is required by law; applies to new reinsurance contracts entered on or after the act’s effective date (with a six-month transition).

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Insurance