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S.F. No. 3241 - NAIC Credit for Reinsurance Model Act
 
Author: Senator Gary H. Dahms
 
Prepared By: Christopher B. Stang, Senate Counsel (651/296-0539)
 
Date: March 12, 2018



 

Section 1 [Reinsurer filings] classifies data provided pursuant to certification of a reinsurer as nonpublic.

Section 2 [Reinsurance credit allowed a domestic ceding insurer] provides, in order to be eligible for accreditation, a reinsurer must demonstrate to the satisfaction of the commissioner that it has adequate capacity to meet its reinsurance obligations. Trust fund requirements specified. Provides requirements for certification of an assuming insurer as a reinsurer. Allows an association to be a certified reinsurer. Provides a process for publishing a list of qualified jurisdictions under which an assuming insurer licensed in the jurisdiction is eligible to be considered by the commissioner a certified reinsurer. Commissioner required to assign a financial strength rating to each certified reinsurer. Certified reinsurer must secure obligations assumed from ceding insurers at a level consistent with its rating. Ceding insurer required to take steps to manage its reinsurance recoverables and diversify its reinsurance program. Provides for suspension or revocation of reinsurer’s accreditation of certification if a reinsurer fails to meet requirements.

Section 3 [Credit for reinsurance; certified reinsurers] allows credit for reinsurance from a domestic ceding insurer to an assuming insurer that has been certified as a reinsurer. Credit allowed based upon security held on behalf of ceding insurer in accordance with rating assigned. Form and amount of security specified. Posting requirements set forth. Requirements for an assuming insurer to be eligible for certification are specified. Certified reinsurers are rated on a legal entity basis with factors to be considered listed. Certified reinsurer filing requirements set forth. Commissioner required to assign a new rating to certified reinsurer in case of downgrade by rating agency. Process for recognition as a qualified jurisdiction established. Commissioner allowed to defer to another jurisdiction's certification and rating. Commissioner required to comply with all reporting and notice requirements established by the NAIC.

Sections 4 and 5 make technical conforming changes and update cross references.

Section 6 modifies requirements for trust accounts and agreements.

Section 7 establishes an effective date of Jan 1, 2019, and applies to reinsurance contracts entered into or renewed on or after that date.

 

 
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