Text: SSB02142                          Text: SSB02144
Text: SSB02100 - SSB02199               Text: SSB Index
Bills and Amendments: General Index     Bill History: General Index

Senate Study Bill 2143

Bill Text

PAG LIN
  1  1    Section 1.  Section 507C.32, Code 1997, is amended to read
  1  2 as follows:
  1  3    507C.32  REINSURER'S LIABILITY.
  1  4    1.  Notwithstanding a provision in the reinsurance contract
  1  5 or other agreement, the amount recoverable by the liquidator
  1  6 from reinsurers shall not be reduced as a result of
  1  7 delinquency proceedings.  Payment made directly to an insured
  1  8 or other creditor shall not diminish the reinsurer's
  1  9 obligation to the insurer's estate except when the reinsurance
  1 10 contract provided for direct coverage of a named insured and
  1 11 the payment was made in discharge of that obligation either of
  1 12 the following applies:
  1 13    a.  The contract or other written agreement specifically
  1 14 provides for another payee of the reinsurance in the event of
  1 15 the insolvency of the ceding insurer.
  1 16    b.  The assuming insurer, with the consent of the direct
  1 17 insured, has assumed the policy obligations of the ceding
  1 18 insurer as direct obligations of the assuming insurer to the
  1 19 payees under the policies and in substitution for the
  1 20 obligations of the ceding insurer to the payees.
  1 21    2.  The domiciliary liquidator of an insolvent ceding
  1 22 insurer shall give written notice to the assuming insurer of
  1 23 the pendency of a claim against the ceding insurer on the
  1 24 contract reinsured within a reasonable time after the claim is
  1 25 filed in the liquidation proceeding.  During the pendency of
  1 26 the claim, any assuming insurer may investigate the claim and
  1 27 interpose, at its own expense, in the proceeding where the
  1 28 claim is to be adjudicated, any defenses that the assuming
  1 29 insurer deems available to the ceding insurer or its
  1 30 liquidator.  The expense may be filed as a claim against the
  1 31 insolvent ceding insurer as part of the expense of
  1 32 liquidation.  The expense shall be allowed to the extent of
  1 33 any proportionate share of the benefit of the defense accruing
  1 34 to the ceding insurer solely as a result of the defense
  1 35 undertaken by the assuming insurer.  If two or more assuming
  2  1 insurers are involved in the same claim and a majority in
  2  2 interest elect to interpose any defense to the claim, the
  2  3 expense shall be apportioned in accordance with the terms of
  2  4 the reinsurance agreement as though the expense had been
  2  5 incurred by the ceding insurer.  
  2  6                           EXPLANATION 
  2  7    The bill provides that the reinsurer's obligation to the
  2  8 insurer's estate is not reduced as a result of delinquency
  2  9 proceedings except when the agreement provides for another
  2 10 payee of the reinsurance to make payment or when an assuming
  2 11 insurer has assumed the policy obligations of the ceding
  2 12 insurer.
  2 13    The bill also provides that the domiciliary liquidator of
  2 14 an insolvent ceding insurer shall give written notice to the
  2 15 assuming insurer of any claim against the ceding insurer and
  2 16 that any assuming insurer may interpose, at its own expense,
  2 17 any defenses to the claim.  If the ceding insurer receives a
  2 18 benefit as a result of the assuming insurer's defense, then
  2 19 the ceding insurer is subject to a claim for a portion of the
  2 20 expense incurred by the assuming insurer in presenting the
  2 21 defense.  
  2 22 LSB 4229SC 77
  2 23 mg/cf/24
     

Text: SSB02142                          Text: SSB02144
Text: SSB02100 - SSB02199               Text: SSB Index
Bills and Amendments: General Index     Bill History: General Index

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