Washington Administrative Code › Title 284 - Insurance Commissioner, Office of the › Chapter 284-13 - Assets-Liabilities-Investments and reinsurance › CREDIT FOR REINSURANCE › Section 284-13-539 - Credit for reinsurance-Certified reinsurers

Current through Register Vol. 24-14, July 15, 2024
(1) Under
				RCW
				 48.12.430, 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 must 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 must be in a form
				consistent with
				RCW
				 48.12.430 and
				48.12.460,
				and WAC
				284-13-550,
				284-13-560
				or
				284-13-570. The
				amount of security required in order for full credit to be allowed must
				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 must 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 is not required to post security for a
				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 catastrophe 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 NAIC annual financial statement related
				specifically to the catastrophe occurrence will be included in the deferral:
(i) Line 1: Fire.
(ii) Line 2: Allied lines.
(iii) Line 3: Farmowners multiple
				peril.
(iv) Line 4: Homeowners
				multiple peril.
(v) Line 5:
				Commercial multiple peril.
(vi)
				Line 9: Inland marine.
(vii) Line
				12: Earthquake.
(viii) Line 21:
				Auto physical damage.
(e) Credit for reinsurance under this section
				applies 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, is only 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 prohibits 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.