Connecticut 2021 Regular Session

Connecticut House Bill HB06392 Compare Versions

Version 1 (Old)

Version 2 (New)

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7		-	General Assembly Substitute Bill No. 6392
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	7	+	General Assembly Raised Bill No. 6392
8	8		January Session, 2021
	9	+	LCO No. 2761
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	11	+
	12	+	Referred to Committee on INSURANCE AND REAL ESTATE
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	14	+
	15	+	Introduced by:
	16	+	(INS)
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12	21		AN ACT CONCERNING TH E INSURANCE DEPARTME NT'S
13	22		RECOMMENDATIONS REGA RDING CREDIT FOR REINSURANCE.
14	23		Be it enacted by the Senate and House of Representatives in General
15	24		Assembly convened:
16	25
17	26		Section 1. Section 38a-85 of the general statutes is repealed and the 1
18	27		following is substituted in lieu thereof (Effective October 1, 2021): 2
19	28		(a) (1) Credit for reinsurance shall be allowed a domestic ceding 3
20	29		insurer as either an asset or a deduction from liability on account of 4
21	30		reinsurance ceded only when the reinsurer meets the requirements of: 5
22	31		[(1)] (A) Subsection (b) of this section; 6
23	32		[(2)] (B) Subsection (c) of this section; 7
24	33		[(3)] (C) Subsections (d) and (h) of this section; 8
25	34		[(4)] (D) Subsections (e), (h) and (i) of this section; 9
26	35		[(5)] (E) Subsections (f) and (i) of this section; 10
27		-	[(6)] (F) Subsection (g) of this section; [or] 11
	36	+	[(6)] (F) Subsection (g) of this section; [or] 11 Raised Bill No. 6392
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28	42		(G) Subsection (h) of this section; or 12
29	43		[(7)] (H) Any regulation adopted pursuant to subsection (b) of section 13
30		-	38a-88, as amended by this act. 14 Substitute Bill No. 6392
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	44	+	38a-88, as amended by this act. 14
37	45		(2) Credit shall be allowed under subsection (b), (c) or (d) of this 15
38	46		section only as respects cessions of those kinds or classes of business 16
39	47		which the assuming insurer is licensed or otherwise permitted to write 17
40	48		or assume in its state of domicile, or, in the case of a United States branch 18
41	49		of an alien assuming insurer, in the state through which it is entered and 19
42	50		licensed to transact insurance or reinsurance. Credit shall be allowed 20
43	51		under subsection (d) or (e) of this section only if the applicable 21
44	52		requirements of subsection (i) of this section have been satisfied. 22
45	53		(b) Credit shall be allowed when the reinsurance is ceded to an 23
46	54		assuming insurer that is licensed to transact insurance or reinsurance in 24
47	55		this state. 25
48	56		(c) (1) Credit shall be allowed when the reinsurance is ceded to an 26
49	57		assuming insurer that is accredited by the commissioner as a reinsurer 27
50	58		in this state. To be eligible for accreditation, an insurer shall (A) file with 28
51	59		the commissioner evidence of its submission to this state's jurisdiction, 29
52	60		(B) submit to this state's authority to examine its books and records, (C) 30
53	61		be licensed to transact insurance or reinsurance in at least one state, or 31
54	62		in the case of a United States branch of an alien assuming insurer is 32
55	63		entered through and licensed to transact insurance or reinsurance in at 33
56	64		least one state, (D) file annually with the commissioner a copy of its 34
57	65		annual statement filed with the insurance department of its state of 35
58	66		domicile and a copy of its most recent audited financial statement, and 36
59	67		(E) demonstrate to the satisfaction of the commissioner that it has 37
60	68		adequate financial capacity to meet its reinsurance obligations and is 38
61	69		otherwise qualified to assume reinsurance from a domestic insurer. An 39
62	70		assuming insurer shall be deemed to meet the requirements of this 40
63	71		subparagraph if it maintains a surplus with regard to policyholders of 41
64	72		not less than twenty million dollars at the time of accreditation and its 42
65		-	accreditation has not been denied by the commissioner within ninety 43
	73	+	accreditation has not been denied by the commissioner within ninety 43 Raised Bill No. 6392
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66	79		days after the date the insurer submitted its application. 44
67	80		(2) Each accredited reinsurer doing business in this state shall, 45
68	81		annually, on or before the first day of March, submit to the 46
69		-	commissioner, by electronically filing with the National Association of 47 Substitute Bill No. 6392
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	82	+	commissioner, by electronically filing with the National Association of 47
76	83		Insurance Commissioners, a true and complete report, signed and 48
77	84		sworn to by its president or a vice president, and secretary or an 49
78	85		assistant secretary, of its financial condition on the thirty-first day of 50
79	86		December next preceding, prepared in accordance with the National 51
80	87		Association of Insurance Commissioners annual statement instructions 52
81	88		handbook and following those accounting procedures and practices 53
82	89		prescribed by the National Association of Insurance Commissioners 54
83	90		accounting practices and procedures manual, subject to any deviations 55
84	91		in form and detail as may be prescribed by the commissioner. An 56
85	92		electronically filed report in accordance with section 38a-53a that is 57
86	93		timely submitted to the National Association of Insurance 58
87	94		Commissioners shall be deemed to have been submitted to the 59
88	95		commissioner in accordance with this subdivision. 60
89	96		(d) Credit shall be allowed when the reinsurance is ceded to an 61
90	97		assuming insurer that is domiciled and licensed in, or in the case of a 62
91	98		United States branch of an alien assuming insurer is entered through, a 63
92	99		state that employs standards regarding credit for reinsurance 64
93	100		substantially similar to those applicable in this state and the assuming 65
94	101		insurer or United States branch of an alien assuming insurer (1) 66
95	102		maintains a surplus with regard to policyholders in an amount not less 67
96	103		than twenty million dollars, and (2) submits to the authority of this state 68
97	104		to examine its books and records. The requirement of subdivision (1) of 69
98	105		this subsection shall not apply to reinsurance ceded and assumed 70
99	106		pursuant to pooling arrangements among insurers in the same holding 71
100	107		company system. 72
101	108		(e) (1) Credit shall be allowed when the reinsurance is ceded to an 73
102	109		assuming insurer that maintains a trust that complies with the 74
103	110		requirements of subdivisions (2) and (3) of this subsection in a qualified 75
104		-	United States financial institution, as defined in section 38a-87, for the 76
	111	+	United States financial institution, as defined in section 38a-87, for the 76 Raised Bill No. 6392
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105	117		payment of the valid claims of its United States policyholders and 77
106	118		ceding insurers, and their assigns and successors in interest. The 78
107	119		assuming insurer shall (A) report annually to the commissioner 79
108		-	information substantially the same as that required to be reported in the 80 Substitute Bill No. 6392
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	120	+	information substantially the same as that required to be reported in the 80
115	121		National Association of Insurance Commissioners' Annual Statement 81
116	122		form by licensed insurers, to enable the commissioner to determine the 82
117	123		sufficiency of the trust fund, and (B) submit to, and pay the expenses of, 83
118	124		examination of its books and records by the commissioner. 84
119	125		(2) (A) No credit for reinsurance shall be allowed under subdivision 85
120	126		(1) of this subsection unless: 86
121	127		(i) The form of the trust and any amendments to the trust have been 87
122	128		approved by (I) the insurance regulatory official of the state of domicile 88
123	129		of the trust, or (II) the insurance regulatory official of another state who 89
124	130		has, pursuant to the terms of the trust instrument, accepted principal 90
125	131		regulatory oversight of the trust; 91
126	132		(ii) The form of the trust and any amendments to the trust have been 92
127	133		filed with the insurance regulatory officials of each state in which ceding 93
128	134		insurer beneficiaries of the trust are domiciled; and 94
129	135		(iii) The trust instrument (I) provides that a contested claim shall be 95
130	136		valid and enforceable upon the entry of a final order of a court of 96
131	137		competent jurisdiction in the United States, and (II) vests legal title to its 97
132	138		assets in its trustees for the benefit of the assuming insurer's domestic 98
133	139		and foreign policyholders and ceding insurers, and their assigns and 99
134	140		successors in interest. 100
135	141		(B) (i) The trust shall be subject to examination by the commissioner 101
136	142		and shall remain in effect for as long as the assuming insurer has 102
137	143		outstanding obligations due under the reinsurance agreements subject 103
138	144		to the trust. 104
139	145		(ii) Not later than March first, annually, the trustee of the trust shall 105
140	146		(I) report to the commissioner, in writing, the balance and a list of the 106
141		-	investments of the trust at the end of the preceding calendar year, and 107
	147	+	investments of the trust at the end of the preceding calendar year, and 107 Raised Bill No. 6392
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142	153		(II) certify to the commissioner the date of termination of the trust, if so 108
143	154		planned, or that the trust will not expire prior to the following December 109
144		-	thirty-first. 110 Substitute Bill No. 6392
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	155	+	thirty-first. 110
151	156		(3) (A) (i) In the case of a single assuming insurer, the trust shall 111
152	157		consist of a trusteed account with funds in an amount not less than the 112
153	158		assuming insurer's liabilities attributable to reinsurance ceded by 113
154	159		domestic and foreign ceding insurers and, unless otherwise provided in 114
155	160		subparagraph (A)(ii) of this subdivision, the assuming insurer shall 115
156	161		maintain a trusteed surplus of not less than twenty million dollars. 116
157	162		(ii) (I) The insurance regulatory official with principal oversight of the 117
158	163		trust may authorize a reduction in the required trusteed surplus. 118
159	164		(II) For a trust over which the commissioner has principal regulatory 119
160	165		oversight, at any time after the assuming insurer has permanently 120
161	166		discontinued for at least three full years underwriting new business 121
162	167		secured by the trust, the commissioner may authorize a reduction in the 122
163	168		required trusteed surplus. Such reduction shall be made only after the 123
164	169		commissioner finds, based on a risk assessment, that the reduced 124
165	170		surplus level is adequate to protect domestic and foreign policyholders 125
166	171		and ceding insurers and claimants in light of reasonably foreseeable 126
167	172		adverse loss development. The risk assessment may involve an actuarial 127
168	173		review, including an independent analysis of reserves and cash flows, 128
169	174		and shall consider all material risk factors, including, when applicable, 129
170	175		the lines of business involved, the stability of the incurred loss estimates 130
171	176		and the effect of the surplus requirements on the assuming insurer's 131
172	177		liquidity or solvency. The minimum required surplus shall not be 132
173	178		reduced to an amount less than thirty per cent of the assuming insurer's 133
174	179		liabilities attributable to reinsurance ceded by domestic and foreign 134
175	180		ceding insurers covered by the trust. 135
176	181		(B) In the case of an assuming insurer that is a group including 136
177	182		incorporated and individual unincorporated underwriters: 137
178	183		(i) (I) For reinsurance ceded under a reinsurance agreement with an 138
179		-	inception date prior to January 1, 1993, and not amended or renewed 139
	184	+	inception date prior to January 1, 1993, and not amended or renewed 139 Raised Bill No. 6392
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180	190		after said date, the trust shall consist of a trusteed account with funds in 140
181	191		an amount not less than such underwriters' several insurance and 141
182		-	reinsurance liabilities attributable to business written in the United 142 Substitute Bill No. 6392
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	192	+	reinsurance liabilities attributable to business written in the United 142
189	193		States; or 143
190	194		(II) For reinsurance ceded under a reinsurance agreement with an 144
191	195		inception date on or after January 1, 1993, the trust shall consist of a 145
192	196		trusteed account with funds in an amount not less than such 146
193	197		underwriters' several liabilities attributable to business ceded by 147
194	198		domestic and foreign ceding insurers to any underwriter who is a 148
195		-	member of the group; [and] 149
	199	+	member of the group; and 149
196	200		(ii) In addition to a trust specified in subparagraph (B)(i)(I) or (B)(i)(II) 150
197	201		of this subdivision, the group shall maintain, for all years of account, a 151
198	202		trusteed surplus of which one hundred million dollars shall be held 152
199	203		jointly for the benefit of domestic and foreign ceding insurers of any 153
200		-	member of the group; [and] 154
	204	+	member of the group; and 154
201	205		(iii) The incorporated members of the group shall not be engaged in 155
202	206		any business other than underwriting as a member of the group and 156
203	207		shall be subject to the same level of solvency regulation and solvency 157
204	208		control by the group's domiciliary insurance regulatory official as are 158
205	209		the unincorporated members; and 159
206	210		(iv) Not later than ninety days after its financial statements are due to 160
207	211		be filed with the group's domiciliary insurance regulatory official, the 161
208	212		group shall provide to the commissioner an annual certification by the 162
209	213		group's domiciliary insurance regulatory official of the solvency of each 163
210	214		underwriter who is a member of the group or, if such certification is not 164
211	215		provided by the group's domiciliary insurance regulatory official, 165
212	216		financial statements prepared by independent public accountants of 166
213	217		each such underwriter. 167
214	218		(C) In the case of a group of incorporated underwriters under 168
215	219		common administration: 169
216		-	(i) The group shall be accredited and have continuously transacted 170
217		-	an insurance business outside the United States for at least three years 171
218		-	immediately prior to applying for accreditation; 172 Substitute Bill No. 6392
	220	+	(i) The group shall be accredited and have continuously transacted 170 Raised Bill No. 6392
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	226	+	an insurance business outside the United States for at least three years 171
	227	+	immediately prior to applying for accreditation; 172
225	228		(ii) The trust shall consist of a trusteed account with funds in an 173
226	229		amount not less than such underwriters' several liabilities attributable 174
227	230		to business ceded by domestic and foreign ceding insurers pursuant to 175
228	231		a reinsurance contract issued in the name of the group to any 176
229	232		underwriter who is a member of the group; 177
230	233		(iii) In addition to such trust, the group shall maintain (I) an aggregate 178
231	234		policyholders' surplus of not less than ten billion dollars, and (II) a joint 179
232	235		trusteed surplus of which one hundred million dollars shall be held 180
233	236		jointly for the benefit of domestic and foreign ceding insurers of any 181
234	237		member of the group as additional security for these liabilities; and 182
235	238		(iv) Not later than ninety days after its financial statements are due to 183
236	239		be filed with the group's domiciliary insurance regulatory official, the 184
237	240		group shall make available to the commissioner an annual certification 185
238	241		by the group's domiciliary insurance regulatory official of the solvency 186
239	242		of each underwriter who is a member of the group and financial 187
240	243		statements prepared by independent public accountants of each such 188
241	244		underwriter. 189
242	245		(f) (1) Credit shall be allowed when the reinsurance is ceded to an 190
243	246		assuming insurer that is certified in accordance with section 38a-85a by 191
244	247		the commissioner as a reinsurer in this state and such certified reinsurer 192
245	248		maintains security in a form and amounts set forth in subdivision (3) of 193
246	249		subsection (e) of this section or, for a multibeneficiary trust set forth in 194
247	250		subdivision (2) of subsection (e) of section 38a-85a, in accordance with 195
248	251		the provisions of subdivision (2) of subsection (e) of section 38a-85a. 196
249	252		(2) If the security is not sufficient with respect to obligations incurred 197
250	253		by a certified reinsurer, the commissioner shall reduce the credit 198
251	254		allowed by an amount proportionate to the deficiency and may impose 199
252	255		further reductions in the credit allowed if the commissioner finds there 200
253		-	is a material risk that such obligations will not be paid in full when due. 201
254		-	(g) (1) Credit shall be allowed when the reinsurance is ceded to an 202
255		-	assuming insurer meeting each of the conditions set forth below: 203 Substitute Bill No. 6392
	256	+	is a material risk that such obligations will not be paid in full when due. 201 Raised Bill No. 6392
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262		-	(A) The assuming insurer shall have its head office or be domiciled 204
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	262	+	(g) (1) Credit shall be allowed when the reinsurance is ceded to an 202
	263	+	assuming insurer meeting each of the conditions set forth below: 203
	264	+	(A) The assuming insurer must have its head office or be domiciled 204
263	265		in, as applicable, and be licensed in a reciprocal jurisdiction. A 205
264	266		"reciprocal jurisdiction" is a jurisdiction that meets one of the following: 206
265	267		(i) A non-United States jurisdiction that is subject to an in-force 207
266	268		covered agreement with the United States, each within its legal 208
267	269		authority, or, in the case of a covered agreement between the United 209
268	270		States and the European Union, is a member state of the European 210
269	271		Union. For purposes of this subsection, a "covered agreement" is an 211
270		-	agreement entered into pursuant to ~~the~~ Dodd-Frank Wall Street Reform 212
271		-	~~and~~ Consumer Protection Act, 31 USC Sections 313 and 314, that is 213
272		-	~~currently~~ in effect or in a period of provisional application and 214
273		-	~~addresses the~~ elimination, under specified conditions, of collateral 215
274		-	~~requirements as a~~ condition for entering into any reinsurance agreement 216
275		-	~~with a ceding~~ insurer domiciled in this state or for allowing the ceding 217
276		-	~~insurer to~~ recognize credit for reinsurance; 218
	272	+	agreement entered into pursuant to Dodd-Frank Wall Street Reform and 212
	273	+	Consumer Protection Act, 31 USC Sections 313 and 314, that is currently 213
	274	+	in effect or in a period of provisional application and addresses the 214
	275	+	elimination, under specified conditions, of collateral requirements as a 215
	276	+	condition for entering into any reinsurance agreement with a ceding 216
	277	+	insurer domiciled in this state or for allowing the ceding insurer to 217
	278	+	recognize credit for reinsurance; 218
277	279		(ii) A United States jurisdiction that meets the requirements for 219
278	280		accreditation under the National Association of Insurance 220
279	281		Commissioners' financial standards and accreditation program; or 221
280	282		(iii) A qualified jurisdiction, as determined by the commissioner 222
281	283		pursuant to subsection (c) of section 38a-85a, which is not otherwise 223
282	284		described in subparagraph (A)(i) or (A)(ii) of this subdivision and which 224
283	285		meets certain additional requirements, consistent with the terms and 225
284	286		conditions of in-force covered agreements, as specified by the 226
285	287		commissioner in regulations adopted in accordance with the provisions 227
286	288		of chapter 54. 228
287		-	(B) The assuming insurer ~~shall~~ have and maintain, on an ongoing 229
	289	+	(B) The assuming insurer must have and maintain, on an ongoing 229
288	290		basis, minimum capital and surplus, or its equivalent, calculated 230
289	291		according to the methodology of its domiciliary jurisdiction, in an 231
290	292		amount to be set forth in regulation. If the assuming insurer is an 232
291		-	association, including incorporated and individual unincorporated 233
292		-	underwriters, it shall have and maintain, on an ongoing basis, minimum 234
293		-	capital and surplus equivalents, net of liabilities, calculated according to 235 Substitute Bill No. 6392
	293	+	association, including incorporated and individual unincorporated 233 Raised Bill No. 6392
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300		-	the methodology applicable in its domiciliary jurisdiction, and a central 236
301		-	fund containing a balance in amounts to be set forth in regulation. 237
302		-	(C) The assuming insurer shall have and maintain, on an ongoing 238
303		-	basis, a minimum solvency or capital ratio, as applicable, which will be 239
304		-	set forth in regulation. If the assuming insurer is an association, 240
305		-	including incorporated and individual unincorporated underwriters, it 241
306		-	shall have and maintain, on an ongoing basis, a minimum solvency or 242
307		-	capital ratio in the reciprocal jurisdiction where the assuming insurer 243
308		-	has its head office or is domiciled, as applicable, and is also licensed. 244
309		-	(D) The assuming insurer shall agree and provide adequate 245
310		-	assurance to the commissioner, in a form specified by the commissioner 246
311		-	pursuant to regulation, as follows: 247
312		-	(i) The assuming insurer shall provide prompt written notice and 248
313		-	explanation to the commissioner if it falls below the minimum 249
314		-	requirements set forth in subparagraph (B) or (C) of this subdivision, or 250
315		-	if any regulatory action is taken against it for serious noncompliance 251
316		-	with applicable law; 252
317		-	(ii) The assuming insurer shall consent in writing to the jurisdiction 253
318		-	of the courts of this state and to the appointment of the commissioner as 254
319		-	agent for service of process. The commissioner may require that consent 255
320		-	for service of process be provided to the commissioner and included in 256
321		-	each reinsurance agreement. Nothing in this provision shall limit, or in 257
322		-	any way alter, the capacity of parties to a reinsurance agreement to agree 258
323		-	to alternative dispute resolution mechanisms, except to the extent such 259
324		-	agreements are unenforceable under applicable insolvency or 260
325		-	delinquency laws; 261
326		-	(iii) The assuming insurer shall consent in writing to pay all final 262
327		-	judgments, wherever enforcement is sought, obtained by a ceding 263
328		-	insurer or its legal successor, that have been declared enforceable in the 264
329		-	jurisdiction where the judgment was obtained; 265
330		-	(iv) Each reinsurance agreement shall include a provision requiring 266 Substitute Bill No. 6392
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	298	+
	299	+	underwriters, it must have and maintain, on an ongoing basis, 234
	300	+	minimum capital and surplus equivalents, net of liabilities, calculated 235
	301	+	according to the methodology applicable in its domiciliary jurisdiction, 236
	302	+	and a central fund containing a balance in amounts to be set forth in 237
	303	+	regulation. 238
	304	+	(C) The assuming insurer must have and maintain, on an ongoing 239
	305	+	basis, a minimum solvency or capital ratio, as applicable, which will be 240
	306	+	set forth in regulation. If the assuming insurer is an association, 241
	307	+	including incorporated and individual unincorporated underwriters, it 242
	308	+	must have and maintain, on an ongoing basis, a minimum solvency or 243
	309	+	capital ratio in the reciprocal jurisdiction where the assuming insurer 244
	310	+	has its head office or is domiciled, as applicable, and is also licensed. 245
	311	+	(D) The assuming insurer must agree and provide adequate 246
	312	+	assurance to the commissioner, in a form specified by the commissioner 247
	313	+	pursuant to regulation, as follows: 248
	314	+	(i) The assuming insurer must provide prompt written notice and 249
	315	+	explanation to the commissioner if it falls below the minimum 250
	316	+	requirements set forth in subparagraph (B) or (C) of this subdivision, or 251
	317	+	if any regulatory action is taken against it for serious noncompliance 252
	318	+	with applicable law; 253
	319	+	(ii) The assuming insurer must consent in writing to the jurisdiction 254
	320	+	of the courts of this state and to the appointment of the commissioner as 255
	321	+	agent for service of process. The commissioner may require that consent 256
	322	+	for service of process be provided to the commissioner and included in 257
	323	+	each reinsurance agreement. Nothing in this provision shall limit, or in 258
	324	+	any way alter, the capacity of parties to a reinsurance agreement to agree 259
	325	+	to alternative dispute resolution mechanisms, except to the extent such 260
	326	+	agreements are unenforceable under applicable insolvency or 261
	327	+	delinquency laws; 262
	328	+	(iii) The assuming insurer must consent in writing to pay all final 263
	329	+	judgments, wherever enforcement is sought, obtained by a ceding 264
	330	+	insurer or its legal successor, that have been declared enforceable in the 265 Raised Bill No. 6392
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336	333
337		-	the assuming insurer to provide security in an amount equal to one 267
338		-	hundred per cent of the assuming insurer's liabilities attributable to 268
339		-	reinsurance ceded pursuant to that agreement if the assuming insurer 269
340		-	resists enforcement of a final judgment that is enforceable under the law 270
341		-	of the jurisdiction in which it was obtained or a properly enforceable 271
342		-	arbitration award, whether obtained by the ceding insurer or by its legal 272
343		-	successor on behalf of its resolution estate; and 273
344		-	(v) The assuming insurer shall confirm that it is not presently 274
345		-	participating in any solvent scheme of arrangement that involves this 275
346		-	state's ceding insurers, and agree to notify the ceding insurer and the 276
347		-	commissioner and to provide security in an amount equal to one 277
348		-	hundred per cent of the assuming insurer's liabilities to the ceding 278
349		-	insurer, should the assuming insurer enter into such a solvent scheme 279
350		-	of arrangement. Such security shall be in a form consistent with the 280
351		-	provisions of subsection (f) of this section and sections 38a-85a and 38a-281
352		-	86 and as specified in regulations adopted by the commissioner in 282
353		-	accordance with the provisions of chapter 54. 283
354		-	(E) The assuming insurer or its legal successor shall provide, if 284
355		-	requested by the commissioner, on behalf of itself and any legal 285
356		-	predecessors, certain documentation to the commissioner, as specified 286
357		-	by the commissioner in regulation. 287
358		-	(F) The assuming insurer shall maintain a practice of prompt 288
359		-	payment of claims under reinsurance agreements, pursuant to criteria 289
360		-	set forth in regulation. 290
361		-	(G) The assuming insurer's supervisory authority shall confirm to the 291
362		-	commissioner on an annual basis, as of the preceding December thirty-292
363		-	first or at the annual date otherwise statutorily reported to the reciprocal 293
364		-	jurisdiction, that the assuming insurer complies with the requirements 294
365		-	set forth in subparagraphs (B) and (C) of this subdivision. 295
366		-	(H) Nothing in this provision precludes an assuming insurer from 296
367		-	providing the commissioner with information on a voluntary basis. 297 Substitute Bill No. 6392
	334	+	LCO No. 2761 10 of 19
	335	+
	336	+	jurisdiction where the judgment was obtained; 266
	337	+	(iv) Each reinsurance agreement must include a provision requiring 267
	338	+	the assuming insurer to provide security in an amount equal to one 268
	339	+	hundred per cent of the assuming insurer's liabilities attributable to 269
	340	+	reinsurance ceded pursuant to that agreement if the assuming insurer 270
	341	+	resists enforcement of a final judgment that is enforceable under the law 271
	342	+	of the jurisdiction in which it was obtained or a properly enforceable 272
	343	+	arbitration award, whether obtained by the ceding insurer or by its legal 273
	344	+	successor on behalf of its resolution estate; and 274
	345	+	(v) The assuming insurer must confirm that it is not presently 275
	346	+	participating in any solvent scheme of arrangement that involves this 276
	347	+	state's ceding insurers, and agree to notify the ceding insurer and the 277
	348	+	commissioner and to provide security in an amount equal to one 278
	349	+	hundred per cent of the assuming insurer's liabilities to the ceding 279
	350	+	insurer, should the assuming insurer enter into such a solvent scheme 280
	351	+	of arrangement. Such security shall be in a form consistent with the 281
	352	+	provisions of subsection (f) of this section and sections 38a-85a and 38a-282
	353	+	86 and as specified in regulations adopted by the commissioner in 283
	354	+	accordance with the provisions of chapter 54. 284
	355	+	(E) The assuming insurer or its legal successor must provide, if 285
	356	+	requested by the commissioner, on behalf of itself and any legal 286
	357	+	predecessors, certain documentation to the commissioner, as specified 287
	358	+	by the commissioner in regulation. 288
	359	+	(F) The assuming insurer must maintain a practice of prompt 289
	360	+	payment of claims under reinsurance agreements, pursuant to criteria 290
	361	+	set forth in regulation. 291
	362	+	(G) The assuming insurer's supervisory authority must confirm to the 292
	363	+	commissioner on an annual basis, as of the preceding December thirty-293
	364	+	first or at the annual date otherwise statutorily reported to the reciprocal 294
	365	+	jurisdiction, that the assuming insurer complies with the requirements 295
	366	+	set forth in subparagraphs (B) and (C) of this subdivision. 296 Raised Bill No. 6392
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374		-	(2) The commissioner shall timely create and publish a list of 298
375		-	reciprocal jurisdictions. 299
376		-	(A) A list of reciprocal jurisdictions is published through the National 300
377		-	Association of Insurance Commissioners' committee process. The 301
378		-	commissioner's list shall include any reciprocal jurisdiction as defined 302
379		-	under subparagraphs (A)(i) and (A)(ii) of subdivision (1) of this 303
380		-	subsection, and shall consider any other reciprocal jurisdiction included 304
381		-	on the National Association of Insurance Commissioners' list. The 305
382		-	commissioner may approve a jurisdiction that does not appear on the 306
383		-	National Association of Insurance Commissioners' list of reciprocal 307
384		-	jurisdictions in accordance with criteria to be developed under 308
385		-	regulations adopted by the commissioner in accordance with the 309
386		-	provisions of chapter 54. 310
387		-	(B) The commissioner may remove a jurisdiction from the list of 311
388		-	reciprocal jurisdictions upon a determination that the jurisdiction no 312
389		-	longer meets the requirements of a reciprocal jurisdiction, in accordance 313
390		-	with a process set forth in regulations adopted by the commissioner 314
391		-	pursuant to chapter 54, except that the commissioner shall not remove 315
392		-	from the list a reciprocal jurisdiction as defined under subparagraphs 316
393		-	(A)(i) and (A)(ii) of subdivision (1) of this subsection. Upon removal of 317
394		-	a reciprocal jurisdiction from this list, credit for reinsurance ceded to an 318
395		-	assuming insurer which has its home office or is domiciled in that 319
396		-	jurisdiction shall be allowed, if otherwise allowed pursuant to this 320
397		-	section and sections 38a-85a to 38a-88, inclusive, as amended by this act. 321
398		-	(3) The commissioner shall timely create and publish a list of 322
399		-	assuming insurers that have satisfied the conditions set forth in this 323
400		-	subsection and to which cessions shall be granted credit in accordance 324
401		-	with this subsection. The commissioner may add an assuming insurer 325
402		-	to such list if a National Association of Insurance Commissioners 326
403		-	accredited jurisdiction has added such assuming insurer to a list of such 327
404		-	assuming insurers or if, upon initial eligibility, the assuming insurer 328
405		-	submits the information to the commissioner as required under 329
406		-	subparagraph (D) of subdivision (1) of this subsection and complies 330 Substitute Bill No. 6392
	370	+	LCO No. 2761 11 of 19
	371	+
	372	+	(H) Nothing in this provision precludes an assuming insurer from 297
	373	+	providing the commissioner with information on a voluntary basis. 298
	374	+	(2) The commissioner shall timely create and publish a list of 299
	375	+	reciprocal jurisdictions. 300
	376	+	(A) A list of reciprocal jurisdictions is published through the National 301
	377	+	Association of Insurance Commissioners' committee process. The 302
	378	+	commissioner's list shall include any reciprocal jurisdiction as defined 303
	379	+	under subparagraphs (A)(i) and (A)(ii) of subdivision (1) of this 304
	380	+	subsection, and shall consider any other reciprocal jurisdiction included 305
	381	+	on the National Association of Insurance Commissioners' list. The 306
	382	+	commissioner may approve a jurisdiction that does not appear on the 307
	383	+	National Association of Insurance Commissioners' list of reciprocal 308
	384	+	jurisdictions in accordance with criteria to be developed under 309
	385	+	regulations adopted by the commissioner in accordance with the 310
	386	+	provisions of chapter 54. 311
	387	+	(B) The commissioner may remove a jurisdiction from the list of 312
	388	+	reciprocal jurisdictions upon a determination that the jurisdiction no 313
	389	+	longer meets the requirements of a reciprocal jurisdiction, in accordance 314
	390	+	with a process set forth in regulations adopted by the commissioner 315
	391	+	pursuant to chapter 54, except that the commissioner shall not remove 316
	392	+	from the list a reciprocal jurisdiction as defined under subparagraphs 317
	393	+	(A)(i) and (A)(ii) of subdivision (1) of this subsection. Upon removal of 318
	394	+	a reciprocal jurisdiction from this list, credit for reinsurance ceded to an 319
	395	+	assuming insurer which has its home office or is domiciled in that 320
	396	+	jurisdiction shall be allowed, if otherwise allowed pursuant to sections 321
	397	+	38a-85 to 38a-88, inclusive, as amended by this act. 322
	398	+	(3) The commissioner shall timely create and publish a list of 323
	399	+	assuming insurers that have satisfied the conditions set forth in this 324
	400	+	subsection and to which cessions shall be granted credit in accordance 325
	401	+	with this subsection. The commissioner may add an assuming insurer 326
	402	+	to such list if a National Association of Insurance Commissioners 327
	403	+	accredited jurisdiction has added such assuming insurer to a list of such 328 Raised Bill No. 6392
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413		-	with any additional requirements that the commissioner may impose by 331
414		-	regulation, except to the extent that they conflict with an applicable 332
415		-	covered agreement. 333
416		-	(4) If the commissioner determines that an assuming insurer no 334
417		-	longer meets one or more of the requirements under this subsection, the 335
418		-	commissioner may revoke or suspend the eligibility of the assuming 336
419		-	insurer for recognition under this subsection in accordance with 337
420		-	procedures set forth in regulation. 338
421		-	(A) While an assuming insurer's eligibility is suspended, no 339
422		-	reinsurance agreement issued, amended or renewed after the effective 340
423		-	date of the suspension qualifies for credit except to the extent that the 341
424		-	assuming insurer's obligations under the contract are secured in 342
425		-	accordance with section 38a-86. 343
426		-	(B) If an assuming insurer's eligibility is revoked, no credit for 344
427		-	reinsurance may be granted after the effective date of the revocation 345
428		-	with respect to any reinsurance agreements entered into by the 346
429		-	assuming insurer, including reinsurance agreements entered into prior 347
430		-	to the date of revocation, except to the extent that the assuming insurer's 348
431		-	obligations under the contract are secured in a form acceptable to the 349
432		-	commissioner and consistent with the provisions of section 38a-86. 350
433		-	(5) If subject to a legal process of rehabilitation, liquidation or 351
434		-	conservation, as applicable, the ceding insurer, or its representative, 352
435		-	may seek and, if determined appropriate by the court in which the 353
436		-	proceedings are pending, may obtain an order requiring that the 354
437		-	assuming insurer post security for all outstanding ceded liabilities. 355
438		-	(6) Nothing in this subsection shall limit or in any way alter the 356
439		-	capacity of parties to a reinsurance agreement to agree on requirements 357
440		-	for security or other terms in that reinsurance agreement, except as 358
441		-	expressly prohibited by this section and sections 38a-85a to 38a-88, 359
442		-	inclusive, as amended by this act, or other applicable law or regulation. 360
443		-	(7) Credit may be taken under this subsection only for reinsurance 361 Substitute Bill No. 6392
	407	+	LCO No. 2761 12 of 19
	408	+
	409	+	assuming insurers or if, upon initial eligibility, the assuming insurer 329
	410	+	submits the information to the commissioner as required under 330
	411	+	subparagraph (D) of subdivision (1) of this subsection and complies 331
	412	+	with any additional requirements that the commissioner may impose by 332
	413	+	regulation, except to the extent that they conflict with an applicable 333
	414	+	covered agreement. 334
	415	+	(4) If the commissioner determines that an assuming insurer no 335
	416	+	longer meets one or more of the requirements under this subsection, the 336
	417	+	commissioner may revoke or suspend the eligibility of the assuming 337
	418	+	insurer for recognition under this subsection in accordance with 338
	419	+	procedures set forth in regulation. 339
	420	+	(A) While an assuming insurer's eligibility is suspended, no 340
	421	+	reinsurance agreement issued, amended or renewed after the effective 341
	422	+	date of the suspension qualifies for credit except to the extent that the 342
	423	+	assuming insurer's obligations under the contract are secured in 343
	424	+	accordance with section 38a-86. 344
	425	+	(B) If an assuming insurer's eligibility is revoked, no credit for 345
	426	+	reinsurance may be granted after the effective date of the revocation 346
	427	+	with respect to any reinsurance agreements entered into by the 347
	428	+	assuming insurer, including reinsurance agreements entered into prior 348
	429	+	to the date of revocation, except to the extent that the assuming insurer's 349
	430	+	obligations under the contract are secured in a form acceptable to the 350
	431	+	commissioner and consistent with the provisions of section 38a-86. 351
	432	+	(5) If subject to a legal process of rehabilitation, liquidation or 352
	433	+	conservation, as applicable, the ceding insurer, or its representative, 353
	434	+	may seek and, if determined appropriate by the court in which the 354
	435	+	proceedings are pending, may obtain an order requiring that the 355
	436	+	assuming insurer post security for all outstanding ceded liabilities. 356
	437	+	(6) Nothing in this subsection shall limit or in any way alter the 357
	438	+	capacity of parties to a reinsurance agreement to agree on requirements 358
	439	+	for security or other terms in that reinsurance agreement, except as 359
	440	+	expressly prohibited by sections 38a-85 to 38a-88, inclusive, as amended 360 Raised Bill No. 6392
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449	443
450		-	agreements entered into, amended or renewed on or after October 1, 362
451		-	2021, and only with respect to losses incurred and reserves reported on 363
452		-	or after the later of the date on which the assuming insurer has met all 364
453		-	eligibility requirements pursuant to subdivision (1) of this subsection, 365
454		-	and the effective date of the new reinsurance agreement, amendment or 366
455		-	renewal. 367
456		-	(A) This subsection does not alter or impair a ceding insurer's right 368
457		-	to take credit for reinsurance, to the extent that credit is not available 369
458		-	under this subsection, as long as the reinsurance qualifies for credit 370
459		-	under any other applicable provision of this section or sections 38a-85a 371
460		-	to 38a-88, inclusive, as amended by this act. 372
461		-	(B) Nothing in this subsection shall authorize an assuming insurer to 373
462		-	withdraw or reduce the security provided under any reinsurance 374
463		-	agreement except as permitted by the terms of the agreement. 375
464		-	(C) Nothing in this subsection shall limit, or in any way alter, the 376
465		-	capacity of parties to any reinsurance agreement to renegotiate the 377
466		-	agreement. 378
467		-	[(g)] (h) Credit shall be allowed when the reinsurance is ceded to an 379
468		-	assuming insurer not meeting the requirements of subsection (b), (c), 380
469		-	(d), (e), [or] (f) or (g) of this section but only with respect to the insurance 381
470		-	of risks located in jurisdictions where such reinsurance is required by 382
471		-	applicable law or regulation of that jurisdiction. 383
472		-	[(h)] (i) If the assuming insurer is not licensed, accredited or certified 384
473		-	to transact insurance or reinsurance in this state, the credit permitted by 385
474		-	subsection (d) or (e) of this section shall not be allowed unless the 386
475		-	assuming insurer agrees (1) that in the event of the failure of the 387
476		-	assuming insurer to perform its obligations under the terms of the 388
477		-	reinsurance agreement, the assuming insurer, at the request of the 389
478		-	ceding insurer, shall (A) submit to the jurisdiction of any court of 390
479		-	competent jurisdiction in any state of the United States, (B) comply with 391
480		-	all requirements necessary to give such court jurisdiction, and (C) abide 392 Substitute Bill No. 6392
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	445	+
	446	+	by this act, or other applicable law or regulation. 361
	447	+	(7) Credit may be taken under this subsection only for reinsurance 362
	448	+	agreements entered into, amended or renewed on or after October 1, 363
	449	+	2021, and only with respect to losses incurred and reserves reported on 364
	450	+	or after the later of the date on which the assuming insurer has met all 365
	451	+	eligibility requirements pursuant to subdivision (1) of this subsection, 366
	452	+	and the effective date of the new reinsurance agreement, amendment or 367
	453	+	renewal. 368
	454	+	(A) This subsection does not alter or impair a ceding insurer's right 369
	455	+	to take credit for reinsurance, to the extent that credit is not available 370
	456	+	under this subsection, as long as the reinsurance qualifies for credit 371
	457	+	under any other applicable provision of sections 38a-85 to 38a-88, 372
	458	+	inclusive, as amended by this act. 373
	459	+	(B) Nothing in this subsection shall authorize an assuming insurer to 374
	460	+	withdraw or reduce the security provided under any reinsurance 375
	461	+	agreement except as permitted by the terms of the agreement. 376
	462	+	(C) Nothing in this subsection shall limit, or in any way alter, the 377
	463	+	capacity of parties to any reinsurance agreement to renegotiate the 378
	464	+	agreement. 379
	465	+	[(g)] (h) Credit shall be allowed when the reinsurance is ceded to an 380
	466	+	assuming insurer not meeting the requirements of subsection (b), (c), 381
	467	+	(d), (e), [or] (f) or (g) of this section but only with respect to the insurance 382
	468	+	of risks located in jurisdictions where such reinsurance is required by 383
	469	+	applicable law or regulation of that jurisdiction. 384
	470	+	[(h)] (i) If the assuming insurer is not licensed, accredited or certified 385
	471	+	to transact insurance or reinsurance in this state, the credit permitted by 386
	472	+	subsection (d) or (e) of this section shall not be allowed unless the 387
	473	+	assuming insurer agrees (1) that in the event of the failure of the 388
	474	+	assuming insurer to perform its obligations under the terms of the 389
	475	+	reinsurance agreement, the assuming insurer, at the request of the 390
	476	+	ceding insurer, shall (A) submit to the jurisdiction of any court of 391 Raised Bill No. 6392
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487		-	by the final decision of such court or any appellate court in the event of 393
488		-	an appeal, and (2) to designate the commissioner or a designated 394
489		-	attorney as its true and lawful attorney upon whom may be served any 395
490		-	lawful process in any action, suit or proceeding instituted by or on 396
491		-	behalf of the ceding company. This provision is not intended to conflict 397
492		-	with or override the obligation of the parties to a reinsurance agreement 398
493		-	to arbitrate their disputes, if such an obligation is created in the 399
494		-	agreement. 400
495		-	[(i)] (j) If the assuming insurer does not meet the requirements of 401
496		-	subsection (b), (c), [or] (d) or (g) of this section, the credit permitted by 402
497		-	subsection (e) or (f) of this section shall not be allowed unless the 403
498		-	assuming insurer agrees to the following conditions in the trust 404
499		-	instrument: 405
500		-	(1) Notwithstanding any provision of the trust instrument, if the trust 406
501		-	contains an amount less than the amount required under subdivision (3) 407
502		-	of subsection (e) of this section or if the grantor of the trust has been 408
503		-	declared insolvent or placed in receivership, rehabilitation, liquidation 409
504		-	or a similar proceeding under the laws of its state or country of domicile, 410
505		-	the trustee shall comply with an order of the insurance regulatory 411
506		-	official with principal regulatory oversight of the trust or with an order 412
507		-	of a court of competent jurisdiction that directs the trustee to transfer all 413
508		-	trust assets to the insurance regulatory official with principal regulatory 414
509		-	oversight of the trust; 415
510		-	(2) The trust assets shall be distributed by and claims filed with and 416
511		-	valued by the insurance regulatory official with principal regulatory 417
512		-	oversight of the trust in accordance with the laws of the trust's state of 418
513		-	domicile that are applicable to the liquidation of domestic insurance 419
514		-	companies; 420
515		-	(3) The trustee shall distribute any trust assets or part thereof that are 421
516		-	returned by the insurance regulatory official with principal regulatory 422
517		-	oversight of the trust, based on such regulatory official's determination 423
518		-	that such assets or part thereof are not necessary to satisfy the claims of 424 Substitute Bill No. 6392
	480	+	LCO No. 2761 14 of 19
	481	+
	482	+	competent jurisdiction in any state of the United States, (B) comply with 392
	483	+	all requirements necessary to give such court jurisdiction, and (C) abide 393
	484	+	by the final decision of such court or any appellate court in the event of 394
	485	+	an appeal, and (2) to designate the commissioner or a designated 395
	486	+	attorney as its true and lawful attorney upon whom may be served any 396
	487	+	lawful process in any action, suit or proceeding instituted by or on 397
	488	+	behalf of the ceding company. This provision is not intended to conflict 398
	489	+	with or override the obligation of the parties to a reinsurance agreement 399
	490	+	to arbitrate their disputes, if such an obligation is created in the 400
	491	+	agreement. 401
	492	+	[(i)] (j) If the assuming insurer does not meet the requirements of 402
	493	+	subsection (b), (c), [or] (d) or (g) of this section, the credit permitted by 403
	494	+	subsection (e) or (f) of this section shall not be allowed unless the 404
	495	+	assuming insurer agrees to the following conditions in the trust 405
	496	+	instrument: 406
	497	+	(1) Notwithstanding any provision of the trust instrument, if the trust 407
	498	+	contains an amount less than the amount required under subdivision (3) 408
	499	+	of subsection (e) of this section or if the grantor of the trust has been 409
	500	+	declared insolvent or placed in receivership, rehabilitation, liquidation 410
	501	+	or a similar proceeding under the laws of its state or country of domicile, 411
	502	+	the trustee shall comply with an order of the insurance regulatory 412
	503	+	official with principal regulatory oversight of the trust or with an order 413
	504	+	of a court of competent jurisdiction that directs the trustee to transfer all 414
	505	+	trust assets to the insurance regulatory official with principal regulatory 415
	506	+	oversight of the trust; 416
	507	+	(2) The trust assets shall be distributed by and claims filed with and 417
	508	+	valued by the insurance regulatory official with principal regulatory 418
	509	+	oversight of the trust in accordance with the laws of the trust's state of 419
	510	+	domicile that are applicable to the liquidation of domestic insurance 420
	511	+	companies; 421
	512	+	(3) The trustee shall distribute any trust assets or part thereof that are 422
	513	+	returned by the insurance regulatory official with principal regulatory 423 Raised Bill No. 6392
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525		-	domestic and foreign ceding insurers of the grantor of the trust, in 425
526		-	accordance with the trust instrument; and 426
527		-	(4) The grantor of the trust waives any right otherwise available to 427
528		-	the grantor under law that is inconsistent with subdivisions (1) to (3), 428
529		-	inclusive, of this subsection. 429
530		-	[(j)] (k) (1) (A) The commissioner may suspend or revoke a reinsurer's 430
531		-	accreditation or certification if, after notice and hearing, the 431
532		-	commissioner finds such reinsurer no longer meets the requirements for 432
533		-	accreditation or certification. 433
534		-	(B) If a certified reinsurer's domiciliary jurisdiction ceases to be a 434
535		-	qualified jurisdiction, as set forth in section 38a-85a, the commissioner 435
536		-	may suspend the reinsurer's certification indefinitely, in lieu of 436
537		-	revocation. 437
538		-	(2) The commissioner may suspend or revoke a reinsurer's 438
539		-	accreditation or certification without notice and a hearing if: 439
540		-	(A) The reinsurer waives its right to a hearing; 440
541		-	(B) The commissioner's action is based on (i) regulatory action taken 441
542		-	by a regulatory official of the reinsurer's state of domicile, or (ii) the 442
543		-	voluntary surrender or termination of the reinsurer's eligibility to 443
544		-	transact the business of insurance or reinsurance in its state of domicile 444
545		-	or its primary certifying jurisdiction as described in subdivision (2) of 445
546		-	subsection (a) of section 38a-85a; or 446
547		-	(C) The commissioner finds that immediate action is required to 447
548		-	protect the public and a court of competent jurisdiction has not stayed 448
549		-	the commissioner's action. 449
550		-	(3) (A) While a reinsurer's accreditation or certification is suspended, 450
551		-	no credit shall be allowed under this section for a reinsurance contract 451
552		-	issued or renewed by the reinsurer on or after the effective date of such 452
553		-	suspension, except to the extent that such reinsurer's obligations under 453 Substitute Bill No. 6392
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	518	+
	519	+	oversight of the trust, based on such regulatory official's determination 424
	520	+	that such assets or part thereof are not necessary to satisfy the claims of 425
	521	+	domestic and foreign ceding insurers of the grantor of the trust, in 426
	522	+	accordance with the trust instrument; and 427
	523	+	(4) The grantor of the trust waives any right otherwise available to 428
	524	+	the grantor under law that is inconsistent with subdivisions (1) to (3), 429
	525	+	inclusive, of this subsection. 430
	526	+	[(j)] (k) (1) (A) The commissioner may suspend or revoke a reinsurer's 431
	527	+	accreditation or certification if, after notice and hearing, the 432
	528	+	commissioner finds such reinsurer no longer meets the requirements for 433
	529	+	accreditation or certification. 434
	530	+	(B) If a certified reinsurer's domiciliary jurisdiction ceases to be a 435
	531	+	qualified jurisdiction, as set forth in section 38a-85a, the commissioner 436
	532	+	may suspend the reinsurer's certification indefinitely, in lieu of 437
	533	+	revocation. 438
	534	+	(2) The commissioner may suspend or revoke a reinsurer's 439
	535	+	accreditation or certification without notice and a hearing if: 440
	536	+	(A) The reinsurer waives its right to a hearing; 441
	537	+	(B) The commissioner's action is based on (i) regulatory action taken 442
	538	+	by a regulatory official of the reinsurer's state of domicile, or (ii) the 443
	539	+	voluntary surrender or termination of the reinsurer's eligibility to 444
	540	+	transact the business of insurance or reinsurance in its state of domicile 445
	541	+	or its primary certifying jurisdiction as described in subdivision (2) of 446
	542	+	subsection (a) of section 38a-85a; or 447
	543	+	(C) The commissioner finds that immediate action is required to 448
	544	+	protect the public and a court of competent jurisdiction has not stayed 449
	545	+	the commissioner's action. 450
	546	+	(3) (A) While a reinsurer's accreditation or certification is suspended, 451
	547	+	no credit shall be allowed under this section for a reinsurance contract 452
	548	+	issued or renewed by the reinsurer on or after the effective date of such 453 Raised Bill No. 6392
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559	551
560		-	such contract are secured in accordance with the provisions of section 454
561		-	38a-86. 455
562		-	(B) If a reinsurer's accreditation or certification is revoked, no credit 456
563		-	shall be allowed under this section on and after the effective date of such 457
564		-	revocation, except to the extent that such reinsurer's obligations under 458
565		-	such contract are secured in accordance with the provisions of 459
566		-	subsection (e) of section 38a-85a or section 38a-86. 460
567		-	(4) A reinsurer whose certification has been suspended, revoked or 461
568		-	voluntarily surrendered or is inactive shall be treated as a certified 462
569		-	reinsurer required to secure one hundred per cent of its obligations, 463
570		-	except that this requirement shall not apply to a reinsurer whose 464
571		-	certification has been suspended or is inactive if the commissioner 465
572		-	continues to assign a high rating to such reinsurer pursuant to section 466
573		-	38a-85a. 467
574		-	(5) Any person aggrieved by the action of the commissioner in 468
575		-	revoking or suspending an accreditation or a certification may appeal 469
576		-	therefrom in accordance with the provisions of section 38a-19. 470
577		-	[(k)] (l) (1) A domestic ceding insurer shall manage its reinsurance 471
578		-	recoverables in proportion to its own book of business. Such insurer 472
579		-	shall notify the commissioner not later than thirty days after (A) 473
580		-	reinsurance recoverables from any single assuming insurer or group of 474
581		-	affiliated assuming insurers exceed fifty per cent of the domestic ceding 475
582		-	insurer's last reported surplus to policyholders, or (B) the domestic 476
583		-	ceding insurer determines that reinsurance recoverables from any single 477
584		-	assuming insurer or group of affiliated assuming insurers are likely to 478
585		-	exceed such limit. Any such notice shall demonstrate that the exposure 479
586		-	is safely managed by the domestic ceding insurer. 480
587		-	(2) A ceding insurer shall manage its reinsurance program to ensure 481
588		-	diversification. A domestic ceding insurer shall notify the commissioner 482
589		-	not later than thirty days after (A) it has ceded to any single assuming 483
590		-	insurer or group of affiliated assuming insurers more than twenty per 484 Substitute Bill No. 6392
	552	+	LCO No. 2761 16 of 19
	553	+
	554	+	suspension, except to the extent that such reinsurer's obligations under 454
	555	+	such contract are secured in accordance with the provisions of section 455
	556	+	38a-86. 456
	557	+	(B) If a reinsurer's accreditation or certification is revoked, no credit 457
	558	+	shall be allowed under this section on and after the effective date of such 458
	559	+	revocation, except to the extent that such reinsurer's obligations under 459
	560	+	such contract are secured in accordance with the provisions of 460
	561	+	subsection (e) of section 38a-85a or section 38a-86. 461
	562	+	(4) A reinsurer whose certification has been suspended, revoked or 462
	563	+	voluntarily surrendered or is inactive shall be treated as a certified 463
	564	+	reinsurer required to secure one hundred per cent of its obligations, 464
	565	+	except that this requirement shall not apply to a reinsurer whose 465
	566	+	certification has been suspended or is inactive if the commissioner 466
	567	+	continues to assign a high rating to such reinsurer pursuant to section 467
	568	+	38a-85a. 468
	569	+	(5) Any person aggrieved by the action of the commissioner in 469
	570	+	revoking or suspending an accreditation or a certification may appeal 470
	571	+	therefrom in accordance with the provisions of section 38a-19. 471
	572	+	[(k)] (l) (1) A domestic ceding insurer shall manage its reinsurance 472
	573	+	recoverables in proportion to its own book of business. Such insurer 473
	574	+	shall notify the commissioner not later than thirty days after (A) 474
	575	+	reinsurance recoverables from any single assuming insurer or group of 475
	576	+	affiliated assuming insurers exceed fifty per cent of the domestic ceding 476
	577	+	insurer's last reported surplus to policyholders, or (B) the domestic 477
	578	+	ceding insurer determines that reinsurance recoverables from any single 478
	579	+	assuming insurer or group of affiliated assuming insurers are likely to 479
	580	+	exceed such limit. Any such notice shall demonstrate that the exposure 480
	581	+	is safely managed by the domestic ceding insurer. 481
	582	+	(2) A ceding insurer shall manage its reinsurance program to ensure 482
	583	+	diversification. A domestic ceding insurer shall notify the commissioner 483
	584	+	not later than thirty days after (A) it has ceded to any single assuming 484
	585	+	insurer or group of affiliated assuming insurers more than twenty per 485 Raised Bill No. 6392
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596	588
597		-	cent of the domestic ceding insurer's gross written premiums in the 485
598		-	prior calendar year, or (B) the domestic ceding insurer determines that 486
599		-	the reinsurance ceded to any single assuming insurer or group of 487
600		-	affiliated assuming insurers is likely to exceed such limit. Any such 488
601		-	notice shall demonstrate that the exposure is safely managed by the 489
602		-	domestic ceding insurer. 490
603		-	Sec. 2. Subdivision (9) of subsection (a) of section 38a-25 of the general 491
604		-	statutes is repealed and the following is substituted in lieu thereof 492
605		-	(Effective October 1, 2021): 493
606		-	(9) Insurance companies designating the Insurance Commissioner as 494
607		-	agent for receipt of service of process pursuant to subsection [(h)] (i) of 495
608		-	section 38a-85, as amended by this act. 496
609		-	Sec. 3. Subparagraph (C) of subdivision (2) of subsection (a) of section 497
610		-	38a-92m of the general statutes is repealed and the following is 498
611		-	substituted in lieu thereof (Effective October 1, 2021): 499
612		-	(C) An insurer not licensed in this state but that is licensed in, or in 500
613		-	the case of a United States branch of an alien insurer, is entered through, 501
614		-	a state that employs standards regarding credit for reinsurance 502
615		-	applicable to financial guaranty insurance corporations that are 503
616		-	substantially similar to those in this state and the assuming insurer or 504
617		-	United States branch of the alien insurer: (i) Otherwise complies with 505
618		-	the provisions of subparagraphs (B)(i) and (B)(ii) of this subdivision; (ii) 506
619		-	submits to the authority of this state to examine its books and records; 507
620		-	and (iii) meets the requirements of subsection [(h)] (i) of section 38a-85, 508
621		-	as amended by this act; 509
622		-	Sec. 4. Subsection (b) of section 38a-88 of the general statutes is 510
623		-	repealed and the following is substituted in lieu thereof (Effective October 511
624		-	1, 2021): 512
625		-	(b) (1) The commissioner may adopt regulations in accordance with 513
626		-	the provisions of chapter 54 to establish, in addition to the requirements 514
627		-	of sections 38a-85, as amended by this act, and 38a-86, requirements 515 Substitute Bill No. 6392
	589	+	LCO No. 2761 17 of 19
	590	+
	591	+	cent of the domestic ceding insurer's gross written premiums in the 486
	592	+	prior calendar year, or (B) the domestic ceding insurer determines that 487
	593	+	the reinsurance ceded to any single assuming insurer or group of 488
	594	+	affiliated assuming insurers is likely to exceed such limit. Any such 489
	595	+	notice shall demonstrate that the exposure is safely managed by the 490
	596	+	domestic ceding insurer. 491
	597	+	Sec. 2. Subdivision (9) of subsection (a) of section 38a-25 of the general 492
	598	+	statutes is repealed and the following is substituted in lieu thereof 493
	599	+	(Effective October 1, 2021): 494
	600	+	(9) Insurance companies designating the Insurance Commissioner as 495
	601	+	agent for receipt of service of process pursuant to subsection [(h)] (i) of 496
	602	+	section 38a-85, as amended by this act. 497
	603	+	Sec. 3. Subparagraph (C) of subdivision (2) of subsection (a) of section 498
	604	+	38a-92m of the general statutes is repealed and the following is 499
	605	+	substituted in lieu thereof (Effective October 1, 2021): 500
	606	+	(C) An insurer not licensed in this state but that is licensed in, or in 501
	607	+	the case of a United States branch of an alien insurer, is entered through, 502
	608	+	a state that employs standards regarding credit for reinsurance 503
	609	+	applicable to financial guaranty insurance corporations that are 504
	610	+	substantially similar to those in this state and the assuming insurer or 505
	611	+	United States branch of the alien insurer: (i) Otherwise complies with 506
	612	+	the provisions of subparagraphs (B)(i) and (B)(ii) of this subdivision; (ii) 507
	613	+	submits to the authority of this state to examine its books and records; 508
	614	+	and (iii) meets the requirements of subsection [(h)] (i) of section 38a-85, 509
	615	+	as amended by this act; 510
	616	+	Sec. 4. Subsection (b) of section 38a-88 of the general statutes is 511
	617	+	repealed and the following is substituted in lieu thereof (Effective October 512
	618	+	1, 2021): 513
	619	+	(b) (1) The commissioner may adopt regulations in accordance with 514
	620	+	the provisions of chapter 54 to establish, in addition to the requirements 515
	621	+	of sections 38a-85, as amended by this act, and 38a-86, requirements 516 Raised Bill No. 6392
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633	624
634		-	relating to or setting forth (A) the valuation of assets or reserve credits, 516
635		-	(B) the circumstances under which credit will be reduced or eliminated, 517
636		-	and (C) the amounts and forms of security supporting reinsurance 518
637		-	agreements relating to (i) life insurance policies with guaranteed 519
638		-	nonlevel gross premiums or guaranteed nonlevel benefits, (ii) universal 520
639		-	life insurance policies with provisions that permit a policyholder to keep 521
640		-	such policy in force over a secondary guarantee period, (iii) variable 522
641		-	annuities with guaranteed death or living benefits, (iv) long-term care 523
642		-	insurance policies, or (v) any other life insurance, health insurance or 524
643		-	annuity products for which the National Association of Insurance 525
644		-	Commissioners adopts model regulatory credit for reinsurance 526
645		-	requirements. 527
646		-	(2) Any regulation adopted pursuant to subdivision (1) of this 528
647		-	subsection that relates to policies described in subparagraph (C)(i) or 529
648		-	(C)(ii) of subdivision (1) of this subsection may apply to reinsurance 530
649		-	agreements that include such policies issued on or after January 1, 2015, 531
650		-	and such policies issued prior to January 1, 2015, if risk pertaining to 532
651		-	such policies is ceded, in whole or in part, in connection with such 533
652		-	agreement on or after January 1, 2015. 534
653		-	(3) Any regulations adopted pursuant to subdivision (1) of this 535
654		-	subsection [: (A) May] may require the ceding insurer, in calculating the 536
655		-	amounts or forms of security supporting reinsurance agreements, to use 537
656		-	the Valuation Manual, as defined in section 38a-78, in effect on the date 538
657		-	such calculation is made, to the extent applicable. [; and] 539
658		-	[(B)] (4) [Shall] Any regulation adopted pursuant to this subsection 540
659		-	shall not apply to cessions to an assuming insurer [(i)] that (A) meets the 541
660		-	conditions set forth in subsection (g) of section 38a-85, as amended by 542
661		-	this act, (B) is certified as a reinsurer in accordance with the provisions 543
662		-	of section 38a-85a, or [(ii) (I) that] (C) maintains at least two hundred 544
663		-	fifty million dollars in capital and surplus, determined in accordance 545
664		-	with the National Association of Insurance Commissioners Accounting 546
665		-	Practices and Procedures Manual, including all amendments adopted 547
666		-	by the National Association of Insurance Commissioners and excluding 548 Substitute Bill No. 6392
	625	+	LCO No. 2761 18 of 19
	626	+
	627	+	relating to or setting forth (A) the valuation of assets or reserve credits, 517
	628	+	(B) the circumstances under which credit will be reduced or eliminated, 518
	629	+	and (C) the amounts and forms of security supporting reinsurance 519
	630	+	agreements relating to (i) life insurance policies with guaranteed 520
	631	+	nonlevel gross premiums or guaranteed nonlevel benefits, (ii) universal 521
	632	+	life insurance policies with provisions that permit a policyholder to keep 522
	633	+	such policy in force over a secondary guarantee period, (iii) variable 523
	634	+	annuities with guaranteed death or living benefits, (iv) long-term care 524
	635	+	insurance policies, or (v) any other life insurance, health insurance or 525
	636	+	annuity products for which the National Association of Insurance 526
	637	+	Commissioners adopts model regulatory credit for reinsurance 527
	638	+	requirements. 528
	639	+	(2) Any regulation adopted pursuant to subdivision (1) of this 529
	640	+	subsection that relates to policies described in subparagraph (C)(i) or 530
	641	+	(C)(ii) of subdivision (1) of this subsection may apply to reinsurance 531
	642	+	agreements that include such policies issued on or after January 1, 2015, 532
	643	+	and such policies issued prior to January 1, 2015, if risk pertaining to 533
	644	+	such policies is ceded, in whole or in part, in connection with such 534
	645	+	agreement on or after January 1, 2015. 535
	646	+	(3) Any regulations adopted pursuant to subdivision (1) of this 536
	647	+	subsection [: (A) May] may require the ceding insurer, in calculating the 537
	648	+	amounts or forms of security supporting reinsurance agreements, to use 538
	649	+	the Valuation Manual, as defined in section 38a-78, in effect on the date 539
	650	+	such calculation is made, to the extent applicable. [; and] 540
	651	+	[(B)] (4) [Shall] Any regulation adopted pursuant to this subsection 541
	652	+	shall not apply to cessions to an assuming insurer [(i)] that (A) meets the 542
	653	+	conditions set forth in subsection (g) of section 38a-85, as amended by 543
	654	+	this act, (B) is certified as a reinsurer in accordance with the provisions 544
	655	+	of section 38a-85a, or [(ii) (I) that] (C) maintains at least two hundred 545
	656	+	fifty million dollars in capital and surplus, determined in accordance 546
	657	+	with the National Association of Insurance Commissioners Accounting 547
	658	+	Practices and Procedures Manual, including all amendments adopted 548
	659	+	by the National Association of Insurance Commissioners and excluding 549 Raised Bill No. 6392
667	660
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672	662
673		-	the impact of any permitted or prescribed practices, and [(II)] (i) is 549
674		-	licensed in at least twenty-six states, or (ii) is licensed in at least ten states 550
675		-	and licensed or accredited in a total of at least thirty-five states. 551
676		-	(5) The authority to adopt regulations pursuant to this subsection 552
677		-	does not limit the commissioner's general authority to adopt regulations 553
678		-	pursuant to subsection (a) of this section. 554
	663	+	LCO No. 2761 19 of 19
	664	+
	665	+	the impact of any permitted or prescribed practices, and [(II)] (i) is 550
	666	+	licensed in at least twenty-six states, or (ii) is licensed in at least ten states 551
	667	+	and licensed or accredited in a total of at least thirty-five states. 552
	668	+	(5) The authority to adopt regulations pursuant to this subsection 553
	669	+	does not limit the commissioner's general authority to adopt regulations 554
	670	+	pursuant to subsection (a) of this section. 555
679	671		This act shall take effect as follows and shall amend the following
680	672		sections:
681	673
682	674		Section 1 October 1, 2021 38a-85
683	675		Sec. 2 October 1, 2021 38a-25(a)(9)
684	676		Sec. 3 October 1, 2021 38a-92m(a)(2)(C)
685	677		Sec. 4 October 1, 2021 38a-88(b)
686	678
687		-	Statement of Legislative Commissioners:
688		-	In Sections 1(e)(3)(B)(i)(II) and 1(e)(3)(B)(ii), "and" was bracketed for
689		-	consistency; in Section 1(g)(1)(A)(i), "the" was added for proper form; in
690		-	Sections 1(g)(1)(A), 1(g)(1)(B), 1(g)(1)(C), 1(g)(1)(D), 1(g)(1)(D)(i),
691		-	1(g)(1)(D)(ii), 1(g)(1)(D)(iii), 1(g)(1)(D)(iv), 1(g)(1)(D)(v), 1(g)(1)(E),
692		-	1(g)(1)(F) and 1(g)(1)(G), "shall" was substituted for "must" for
693		-	consistency and proper form; in Sections 1(g)(2)(B) and 1(g)(6), "this
694		-	section and sections 38a-85a" was substituted for "sections 38a-85" for
695		-	proper form; and in Section 1(g)(7)(A), "this section or sections 38a-85a"
696		-	was substituted for "sections 38a-85" for proper form.
697		-
698		-	INS Joint Favorable Subst. -LCO
699		-
	679	+	Statement of Purpose:
	680	+	To adopt the Insurance Department's recommendations regarding
	681	+	credit for reinsurance.
	682	+	[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
	683	+	that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
	684	+	underlined.]