Hawaii Administrative Rules › Title 16 - DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS › Chapter 168 - CREDIT FOR REINSURANCE › Section 16-168-7 - Credit for reinsurance; certified reinsurers

Current through June, 2024
(a) Pursuant
			 to section
			 431:4A-101(e),
			 HRS, the commissioner shall allow credit for reinsurance ceded by a domestic
			 insurer to an assuming insurer that has been certified as a reinsurer in this
			 State at all times for which statutory financial statement credit for
			 reinsurance is claimed under this section. The credit allowed shall be based
			 upon the security held by or on behalf of the ceding insurer in accordance with
			 a rating assigned to the certified reinsurer by the commissioner. The security
			 shall be in a form consistent with the provisions of sections
			 431:4A-101(e)
			 and
			 431:4A-102,
			 HRS, and sections 16168-10,
			 16-168-11,
			 or
			 16-168-12, of this
			 chapter. The amount of security required in order for full credit to be allowed
			 shall correspond with the following requirements:
(1)
Ratings
Security Required
Secure - 1
Zero per cent
Secure - 2
Ten per cent
Secure - 3
Twenty per cent
Secure - 4
Fifty per cent
Secure - 5
Seventy-five per cent
Vulnerable - 6
One hundred per cent;
(2) Affiliated
			 reinsurance transactions shall receive the same opportunity for reduced
			 security requirements as all other reinsurance transactions;
(3) The commissioner shall require the
			 certified reinsurer to post one hundred per cent security for the benefit of
			 the ceding insurer or its estate upon the entry of an order of rehabilitation,
			 liquidation, or conservation against the ceding insurer;
(4) In order to facilitate the prompt payment
			 of claims, a certified reinsurer shall not be required to post security for
			 catastrophe recoverables for a period of one year from the date of the first
			 instance of a liability reserve entry by the ceding company as a result of a
			 loss from a catastrophic occurrence as recognized by the commissioner. The one
			 year deferral period is contingent upon the certified reinsurer continuing to
			 pay claims in a timely manner. Reinsurance recoverables for only the following
			 lines of business as reported on the National Association of Insurance
			 Commissioners annual financial statement related specifically to the
			 catastrophic occurrence will be included in the deferral:
(A) Line 1: Fire;
(B) Line 2: Allied lines;
(C) Line 3: Farmowners multiple
			 peril;
(D) Line 4: Homeowners
			 multiple peril;
(E) Line 5:
			 Commercial multiple peril;
(F) Line
			 9: Inland marine;
(G) Line 12:
			 Earthquake; or
(H) Line 21: Auto
			 physical damage;
(5)
			 Credit for reinsurance under this section shall apply only to reinsurance
			 contracts entered into or renewed on or after the effective date of the
			 certification of the assuming insurer. A new reinsurance contract or any
			 reinsurance contract entered into prior to the effective date of the
			 certification of the assuming insurer that is subsequently amended after the
			 effective date of the certification of the assuming insurer covering any risk
			 for which collateral was provided previously shall only be subject to this
			 section with respect to losses incurred and reserves reported from and after
			 the effective date of the amendment or new contract; and
(6) Nothing in this section shall prohibit
			 the parties to a reinsurance agreement from agreeing to provisions establishing
			 security requirements that exceed the minimum security requirements established
			 for certified reinsurers under this section.