410-141-5050 FINANCIAL SOLVENCY REGULATION: Requirements for Reinsurance (1) Except with the prior written approval of the Authority, as outlined in the terms of the CCO Contract, a CCO may not reinsure risks written or insured by other CCOs or other insurers. (2) A CCO may cede and reinsure risks, on an indemnity reinsurance basis, to another CCO authorized to transact such business in this state or with a health insurer authorized to reinsure such risks provided that such other CCO or such other health insurer has been approved or accepted by the Authority to act as a reinsurer of the CCO and the reinsurance qualifies for financial statement credit to the cedent CCO under this section. The Authority shall not approve or accept any such reinsurance by the cedent CCO in an unauthorized CCO or unauthorized health insurer, or which the Authority finds for good cause would otherwise be contrary to the interests of the Members of the cedent CCO. (3) Credit shall not be allowed, as an asset or as a deduction from liability, to any cedent CCO for reinsurance unless the reinsurance contract provides, in substance, that in the event of the insolvency of the cedent CCO, the reinsurance shall be payable on the basis of reported claims allowed by the court hearing the liquidation proceeding, without diminution because of the insolvency of the cedent CCO. Such payments shall be made directly to the cedent CCO or to its domiciliary liquidator except when the reinsurer, with the consent of the Authority, has assumed the policy obligations of the cedent CCO as direct obligations of the reinsurer and in substitution for the obligations of the cedent CCO. (4) For the purposes of subsection (3) of this section, the reinsurance agreement may provide that the domiciliary liquidator of the insolvent cedent CCO shall, within a reasonable time after the claim is filed in the liquidation proceeding, give written notice to the reinsurer of the pendency of a claim against the cedent CCO on the risk reinsured. During the pendency of the claim, the reinsurer may investigate the claim and interpose, at its own expense, in the proceeding in which the claim is to be adjudicated any defenses that the reinsurer determines to be available to the cedent CCO or its liquidator. The reinsurer’s expense in doing so may be filed as a claim against the insolvent cedent CCO to the extent of a proportionate share of the benefit that may accrue to the cedent CCO solely as a result of the defense undertaken by the reinsurer. When two or more reinsurers are involved in the same claim and a majority in interest elect to interpose one or more defenses to the claim, the expense shall be apportioned in accordance with the terms of the reinsurance agreement as though the expense had been incurred by the cedent CCO. (5) The Authority may disallow financial statement credit for reinsurance that would otherwise be allowed if the Authority determines that allowing credit would be contrary to accurate financial reporting or proper financial management or may be hazardous to Members of the CCO or the public generally. (6) A cedent CCO promptly shall inform the Authority in writing of the cancellation of, or any other material change to, any of its reinsurance agreements or arrangements. Statutory/Other Authority: ORS 413.042, 414.572, 414.591 & 414.605 Statutes/Other Implemented: ORS 414.570-414.686 & 415.001-415.430 History: DMAP 143-2024, amend filed 12/29/2024, effective 01/01/2025 DMAP 58-2019, adopt filed 12/18/2019, effective 01/01/2020