Indiana Administrative Code › Title 760 - DEPARTMENT OF INSURANCE › Article 1 - GENERAL PROVISIONS › Rule 56 - Credit for Reinsurance › Section 56-7.5 - Credit for reinsurance; certified reinsurers

Current through July 10, 2024
Authority: IC
				  27-1-3-7;
				  IC 27-6-10.1-5
Affected: IC
				  5-14-3-4;
				  IC 27-6-10.1
Sec. 7.5.
(a) Under
				IC 27-6-10.1-2, 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 IC 27-6-10.1-2 and IC
				27-6-10.1-3 and section 10, 11, or 12 of this rule. 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
0%
Secure - 2
10%
Secure - 3
20%
Secure - 4
50%
Secure - 5
75%
Vulnerable - 6
100%
(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 percent (100%), for the benefit of the
				ceding insurer or its estate, security 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 (1) 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 (1) 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 (NAIC) 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.
(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. 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, or a new reinsurance contract, 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.
(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.