Source: http://dccode.elaws.us/code?no=31-501
Timestamp: 2020-01-26 05:56:14
Document Index: 560388380

Matched Legal Cases: ['§ 31', '§ 31', '§ 31', '§ 2', '§ 11', '§ 6', '§ 42', '§ 10', '§ 3', '§ 35', '§ 6', '§ 7', '§ 6', '§ 35']

§ 31-501. Credit allowed a domestic ceding insurer.
(a) Credit for reinsurance shall be allowed a domestic ceding insurer as either an asset or a deduction from liability on account of reinsurance ceded only when the reinsurer meets the requirements of paragraph (1), (2), (3), (4), or (5) of this subsection. If meeting the requirements of paragraph (3) or (4) of this subsection, the requirements of paragraph (6) of this subsection must also be met.
(1) Credit shall be allowed when the reinsurance is ceded to an assuming insurer which is licensed to transact insurance or reinsurance in the District of Columbia.
(2) Credit shall be allowed when the reinsurance is ceded to an assuming insurer which is accredited as a reinsurer in the District of Columbia. An accredited reinsurer is one which:
(A) Files evidence of its submission to the District of Columbia jurisdiction with the Commissioner;
(B) Submits to the District of Columbia authority to examine its books and records;
(C) Is licensed to transact insurance or reinsurance in at least one state, or, in the case of a United States branch of an alien assuming insurer, is entered through and licensed to transact insurance or reinsurance in the District or at least one state; and
(D) Files annually with the 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:
(i) Maintains a surplus as regards policyholders in an amount which is not less than $20,000,000 and whose accreditation has not been denied by the Commissioner within 90 days of its submission; or
(ii) Maintains a surplus as regards policyholders in an amount less than $20,000,000 and whose accreditation has been approved by the Commissioner.
(3)(A) Credit shall be allowed when the reinsurance is ceded to an assuming insurer which is domiciled and licensed in, or, in the case of a United States branch of an alien assuming insurer, is entered through, a state which employs standards regarding credit for reinsurance substantially similar to those applicable under this statute, and the assuming insurer or United States branch of an alien assuming insurer:
(i) Maintains a surplus as regards policyholders in an amount not less than $20,000,000;
(ii) Submits to the authority of the District of Columbia to examine its books and records; and
(iii) Complies with the requirements of paragraph (6) of this subsection.
(B) The requirement of subparagraph (A) of this paragraph does not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system.
(4)(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 § 31-503(b), for the payment of the valid claims of its United States policyholders and ceding insurers, their assignees and successors in interest. 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 to enable the Commissioner to determine the sufficiency of the trust fund. In the case of a single assuming insurer, the trust shall consist of a trusteed account representing the assuming insurer's liabilities attributable to business written in the United States, and, in addition, the assuming insurer shall maintain a trusteed surplus of not less than $20,000,000. In the case of a group of underwriters, which includes individuals, the trust shall consist of a trusteed account representing the group's liabilities attributable to business written in the United States and, in addition, the group shall maintain a trusteed surplus of which $100,000,000 shall be held jointly for the benefit of United States ceding insurers of any member of the group. The group shall make available to the Commissioner an annual certification of the solvency of each underwriter by the group's domiciliary regulator and its independent public accountants.
(B) In the case of a group of incorporated insurers under common administration which complies with the filing requirements contained in subparagraph (A) of this paragraph, has continuously transacted an insurance business outside the United States for at least 3 years immediately prior to making application for accreditation, submits to the District of Columbia authority to examine its books and records and bears the expense of the examination, and has aggregate policyholders' surplus of $10,000,000,000, the trust shall be in an amount equal to the group's several liabilities attributable to business ceded by United States ceding insurers to any member of the group pursuant to reinsurance contracts issued in the name of the group. The group shall maintain a joint trusteed surplus of which $100,000,000 shall be held jointly and exclusively for the benefit of United States ceding insurers of any member of the group as additional security for any liabilities, and each member of the group shall make available to the Commissioner an annual certification of the member's solvency by the member's domiciliary regulator and its independent public accountant.
(C) The trust shall be established in a form approved by the Commissioner of Insurance. 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 the trustees of the trust for its United States policyholders and ceding insurers, their assignees, and successors in interest. The trust and the assuming insurer shall be subject to examination as determined by the Commissioner. This trust shall remain in effect for as long as the assuming insurer has outstanding obligations due under the reinsurance agreements subject to the trust.
(D) No later than February 28th of each year the trustees of the trust shall report to the Commissioner in writing setting forth 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 shall not expire prior to the next following December 31st.
(E) Credit shall not be allowed under this paragraph unless the assuming insurer complies with the requirements of paragraph (6) of this subsection.
(5) Credit shall be allowed when the reinsurance is ceded to an assuming insurer not meeting the requirements of paragraph (1), (2), (3), or (4) of this subsection but only with respect to the insurance of risks located in jurisdictions where the reinsurance is required by applicable law or regulation in that jurisdiction.
(6) If the assuming insurer is not licensed or accredited to transact insurance or reinsurance of the District of Columbia, the credit permitted by paragraphs (3) and (4) of this subsection shall not be allowed unless the assuming insurer agrees in the reinsurance agreements:
(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, shall comply with all requirements necessary to give the court jurisdiction, and shall abide by the final decision of such court or of any appellate court in the event of an appeal; and
(B) To comply with the service of process provisions of § 31-202 in any action, suit, or proceeding instituted by or on behalf of the ceding company.
(b) No credit shall be allowed to a domestic ceding insurer if the assuming insurer's accreditation has been revoked by the Commissioner after notice and hearing.
(b-1)(1) No credit shall be allowed under this section, as an admitted asset or deduction from liability, to a domestic ceding insurer for reinsurance, unless the reinsurance agreements include a proper insolvency clause as set forth in paragraph (2) of this subsection.
(2) A proper insolvency clause, in substance, provides that in the event of the insolvency of the ceding insurer, the reinsurance shall be payable under contracts reinsured by the assuming insurer on the basis of reported claims allowed by the Superior Court of the District of Columbia, without diminution because of the insolvency of the ceding insurer. The payments shall be made directly to the ceding insurer or to its domiciliary liquidator, except where:
(A) The contracts or other written agreements specifically provide another payee of the reinsurance in the event of the insolvency of the ceding insurer; or
(B) The assuming insurer, with the consent of the direct insureds, has assumed the policy obligations of the ceding insurer as direct obligations of the assuming insurer to the payees under such policies and in substitution for the obligations of the ceding insurer to such payees. The reinsurance contracts may provide that the domiciliary liquidator of an insolvent ceding insurer shall give written notice to the assuming insurer of the pendency of a claim against the ceding insurer on the contracts reinsured within a reasonable time after the claim is filed in the liquidation proceeding. During the pendency of the claim, an assuming insurer may investigate the claim and interpose, at its own expense, in the proceeding where the claim is to be adjudicated any defenses which it deems available to the ceding insurer or its liquidator. The expense may be filed as a claim against the insolvent ceding insurer to the extent of a proportionate share of the benefit which may accrue to the ceding insurer solely as a result of the defense undertaken by the assuming insurer. If 2 or more assuming insurers are involved in the same claim and a majority in interest elect to interpose a defense to the claim, the expense shall be apportioned in accordance with the terms of the reinsurance agreements as though the expense had been incurred by the ceding insurer.
(c) This provision is not intended to conflict with or override the obligation of the parties to a reinsurance agreement to arbitrate their disputes, if such an obligation is created in the agreement.
(Oct. 15, 1993, D.C. Law 10-36, § 2, 40 DCR 5812; Mar. 21, 1995, D.C. Law 10-233, § 11, 42 DCR 24; Feb. 27, 1996, D.C. Law 11-90, § 6, 42 DCR 7155; Apr. 9, 1997, D.C. Law 11-255, § 42, 44 DCR 1271; May 21, 1997, D.C. Law 11-268, § 10(cc), 44 DCR 1730; Oct. 21, 2000, D.C. Law 13-185, § 3, 47 DCR 7068.)
1981 Ed., § 35-3301.
For temporary (225 day) amendment of section, see § 6 of Insurance Omnibus Temporary Amendment Act of 1995 (D.C. Law 11-36, September 8, 1995, law notification 42 DCR 5305).
For temporary amendment of section, see § 7 of the Insurance Omnibus Emergency Amendment Act of 1995 (D.C. Act 11-48, May 15, 1995, 42 DCR 2544) and § 6 of the Insurance Omnibus Congressional Recess Emergency Amendment Act of 1995 (D.C. Act 11-97, July 19, 1995, 42 DCR 3844).
Law 10-36, the "Law on Credit for Reinsurance Act of 1993," was introduced in Council and assigned Bill No. 10-128, which was referred to the Committee on Consumer and Regulatory Affairs. The Bill was adopted on first and second readings on June 29, 1993, and July 13, 1993, respectively. Signed by the Mayor on July 29, 1993, it was assigned Act No. 10-69 and transmitted to both Houses of Congress for its review. D.C. Law 10-36 became effective on October 15, 1993.
Delegation of authority pursuant to D.C. Law 10-36, the Law on Credit for Reinsurance Act of 1993, see Mayor's Order 94-54, March 7, 1994 (41 DCR 1433).
Application of Law 10-36: Section 7 of D.C. Law 10-36 provided that §§ 35-3301 through 35-3303 and Section 5 of this act shall apply to all cession after the effective date of this act under reinsurance agreements which have had an inception, anniversary, or renewal date not less than 6 months after the effective date of this act.