SENATE BILL NO. 216
AS AMENDED BY HOUSE AMENDMENT NO. 1
AN ACT TO AMEND CHAPTER 9, TITLE 18, DELAWARE CODE, RELATING TO REINSURANCE.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:
Section I. Amend Chapter 9, Title 18, Delaware Code by striking in its entirety S9I0 thereof, and substituting in lieu thereof the following:
(a) Any authorized insurer may reinsure all or any part of an individual risk or of a particular class of risks in any other insurer, or accept such reinsurance from any other insurer, and, with the Commissioner's consent, may reinsure all of its risks In any other authorized insurer or reinsure all of the risks of any other insurer.
(b) Credit for reinsurance than be allowed a domestic ceding Insurer as either an asset or a deduction from liability on account of reinsurance ceded only when:
(I) The reinsurance is ceded to an assuming Insurer which is licensed to transact insurance or reinsurance or otherwise accredited u a reinsurer In this State or licensed in at least one State which employs standards regarding credit for reinsurance substantially similar to those applicable under this subsection and which insurer conforms to the same standards of solvency which would be required of such insurer if it were licensed in this State, or
(2) The reinsurance is ceded to an assuming Insurer which maintains a trust fund in a bank duly authorized to do business in this State or a United States bank or trust company which is a member of the Federal Reserve System exclusively for the payment of the valid claims of its United States policyholders and ceding insurers, their asslipu and successors in interest. The assuming insurer shall report annually to the Commissioner information substantially the same as that required to be reported on the NAIC Annual Statement form by licensed Insurers to enable the Commissioner to determine the sufficiency of the trust fund. In the case of a single assuming insurer, the trust shall consist of a trusteed account representing the assuming insurer's liabilities attributable to business written in the United States and, in addition, include a trusteed surplus of not less than ;20,000,000. In the cue of a group of Individual unincorporated underwriters, the trust shall consist of a trusteed account representing the group's liabilities attributable to business written in the United States and, in addition, include a trusteed surplus of not less than $100,000,000; and the group shall make available to the Commissioner an annual certification by the group's domiciliary regulator and its Independent public accountants of the solvency of each underwriter. Such trust shall be established in a bank duly authorized to do business in this State or a United States bank or trust company which is a member of the Federal Reserve System in a form approved by the Insurance Commissioner. The trust Instrument shall provide that contested claims shall be valid and enforceable upon the final order of any court of competent jurisdiction in the United States. The trust shall vest legal title to its assets in the trustees of the trust for its United States policyholders and ceding insurers, their assigns and successors in interest. The trust and the assuming insurer shall be subject to examination as determined by the Commissioner. The trust described herein must remain in effect for as long as the assuming huurershall have outstanding obligations due under the reinsurance agreements subject to the trust.
No later than February 28 of each year the trustees of the trust shall report to the Commissioner in writing setting forth the balance of the trust and listing the trust's investments at the preceding year end and shall certify the date of termination of the trust, if so planned, or certify that the trust shall not expire prior to the next following December 31, or
(3) The reinsurance is ceded to an usuming insurer not meeting the requirements of subsections i or 2, but only with respect to the huurance of risks located In jurisdictions other than the United States where such reinsurance is required by applicable law or regulation of that jurisdiction.
(4) If the usurping insurer is not licensed or accredited to transact insurance or reinsurance in this State, the credit permitted by the above subsections I and 2 shall not be allowed unless the assuming Insurer agrees in the reinsurance agreements:
(5) (I) that in the event of the failure of the assuming Insurer to perform its obligations under the terms of the reinsurance agreement, the assuming insurer, at the request of the ceding insurer, shall submit to the jurisdiction of any court of competent jurisdiction In any State of the United States, will comply with all requirements necessary to give such court jurisdiction, and will abide by the final decision of such court or of any Appellate Court In the event of an appeal; and
(II) to designate the Commissioner or a designated attorney as Its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the ceding company. This provision Is not intended to conflict with or override the obligation of the parties to a reinsurance agreement to arbitrate their disputes, if such an obligation is created in the agreement.
(c) A reduction from liability for the reinsurance ceded to an assuming Insurer not meeting the requirements of subsection (b), shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer and such reduction shall be In the amount of funds held by or on behalf of the ceding insurer, including funds held In trust for the ceding insurer, under a reinsurance contract with such assuming insurer as security for the payment of obligations thereunder, if such security Is held In the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer, or, in the case of a trust, held in a bank duly authorized to do business In this State or a United States bank or trust company which Is a member of the Federal Reserve System. This security may be In the form of:
(2) Securities listed by the Security Valuation Office of the National Association of Insurance Commissioners and qualifying as admitted assets,
(3) Clean, irrevocable, unconditional letters of credit, Issued or confirmed by a bank duly authorized to do business in this State or a United States bank or trust company that is a member of the Federal Reserve System, or
(4) Any other form of security acceptable to the Commissioner.
(d) Notwithstanding any other provision of this section, no credit shall be allowed unless the reinsurance agreement provides that in the event of Insolvency of the ceding insurer, reinsurance proceeds will be paid to the ceding Insurer or the liquidator on the basis of the amount of claim allowed In the insolvency proceeding without diminution by reason of the inability of the ceding insurer to pay all or any part of the claim.
(e) Upon request of the Commissioner an insurer shall promptly Inform the Commissioner in writing of the cancellation or any other material change of any of Its reinsurance treaties or arrangements.
(I) This section shall not apply to wet marine and transportation insurance.
(g) The Commissioner may adopt rules and regulations implementing the provisions of this law."
Approved July 3, 1985.