North Dakota Administrative Code › Title 45 - Insurance, Commissioner of › Article 45-03 - Regulation of Insurance Companies › Chapter 45-03-07.1 - Credit for Reinsurance Model Regulation › Section 45-03-07.1-04.1 - Credit for reinsurance - Certified reinsurers

Current through Supplement No. 393, July, 2024
1. Pursuant to
				subsection 6 of North Dakota Century Code Section 26.1-31.2-01, 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 subsection 6 of North Dakota Century Code
				section 26.1-31.2-01 and section 26.1-31.2-02 and North Dakota Administrative
				Code section 45-03-07.1-07, 45-03-07.1-08, or 45-03-07.1-09. The amount of
				security required in order for full credit to be allowed shall correspond with
				the following requirements:
a. Ratings
Security Required
Secure - 1
0%
Secure - 2
10%
Secure - 3
20%
Secure - 4
50%
Secure - 5
75%
Vulnerable - 6
100%
b. Affiliated
				reinsurance transactions shall receive the same opportunity for reduced
				security requirements as all other reinsurance transactions.
c. The commissioner shall require the
				certified reinsurer to post one hundred percent, 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.
d. 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:
(1) Line 1: Fire.
(2) Line 2: Allied lines.
(3) Line 3: Farmowners multiple
				peril.
(4) Line 4: Homeowners
				multiple peril.
(5) Line 5:
				Commercial multiple peril.
(6) Line
				9: Inland marine.
(7) Line 12:
				Earthquake.
(8) Line 21: Auto
				physical damage.
e.
				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.
f. 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.