31A-22-1201. Assumption agreement.
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Effective 5/10/2016
31A-22-1201. Assumption agreement.
(1)Subject to Subsection
(2), a credit for reinsurance ceded under Section 31A-17-404 or 31A-17-404.1 is not allowed unless, in addition to meeting the requirements of Section 31A-17-404 or 31A-17-404.1 , the reinsurance agreement provides in substance that if the ceding insurer is insolvent, the reinsurance is payable by the assuming insurer:
(a)on the basis of the liability of the ceding insurer under the contract or contracts reinsured;
(b)without diminution because of the insolvency of the ceding insurer; and
(c)directly to the ceding insurer or to its domiciliary liquidator or receiver.
(2)Subsection
(1)applies except if:
(a)a contract specifically provides another payee of the insurance in the event of the insolvency of the ceding insurer; or
(b)the assuming insurer, with the consent of the one or more direct insureds, assumes the policy obligations of the ceding insurer:
(i)as direct obligations of the assuming insurer to the payees under the policies; and
(ii)in substitution for the obligations of the ceding insurer to the payees.
Amended by Chapter 138 , 2016 General Session