Rhode Island Code of Regulations › Title 230 - Department of Business Regulation › Chapter 20 - Insurance › Subchapter 45 - Financial Standards and Corporate Operations › Part 3 - Credit for Reinsurance › Section 230-RICR-20-45-3.8 - Credit for Reinsurance - Certified Reinsurers

Current through June 14, 2024
A.
				  Pursuant to R.I. Gen. Laws §
										27-1.1-1(f), the
				  Superintendent 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 §
										3.8   of this Part. 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 Superintendent. The security
				  shall be in a form consistent with the provisions of R.I. Gen. Laws §
										27-1.1-1(f) and
				  §§
										3.12,  3.13  or  3.14   of this Part. 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 Superintendent 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 (1st) instance of a liability
				  reserve entry by the ceding company as a result of a loss from a catastrophic
				  occurrence as recognized by the Superintendent. 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 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 §
											3.8   of this Part 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 §
											3.8   of this
				  Part with respect to losses incurred and reserves reported from and after the
				  effective date of the amendment or new contract.
6. Nothing in §
											3.8   of this Part 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 §
											3.8   of this
				  Part.