AUTHOR'S / SPONSOR'S STATEMENT OF INTENT
Reinsurance—sometimes referred to as “insurance for insurers”—helps insurers manage the financial consequences of potentially catastrophic losses from the coverage they write by spreading the risk to one or more reinsurers. Capital support from reinsurance allows insurers, particularly small domestic ones, to write more business.
Under current law, reinsurers not licensed in the United States (U.S.), unlike their licensed counterparts, must provide collateral in the amount of their liabilities for the reinsurance they write for U.S. insurers. This requirement ties up capital that could be used to write more reinsurance and adds costs to the transactions of U.S. insurers.
S.B. 1622 creates a mechanism for the Texas Department of Insurance (TDI) to grant the reinsurer the opportunity to conduct its U.S. business with less collateral for its cedents based on TDI's analysis and approval of the specific reinsurer.
As proposed, S.B. 1622 amends current law relating to credit to certain ceding insurers for reinsurance ceded to certain certified assuming insurers.
RULEMAKING AUTHORITY
Rulemaking authority is expressly granted to the commissioner of insurance in SECTION 2 (Section 492.1033, Insurance Code) and SECTION 8 (Section 493.1033, Insurance Code) of this bill.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 492.102(a), Insurance Code, to allow a ceding insurer to be allowed for reinsurance ceded, as an asset or as a deduction from liability, only if the reinsurance is ceded to an assuming insurer that is determined by the commissioner of insurance (commissioner) to meet the requirements of Sections 492.1033-492.1038, as applicable.
SECTION 2. Amends Subchapter C, Chapter 492, Insurance Code, by adding Sections 492.1033, 492.1034, 492.1035, 492.1036, 492.1037, 492.1038, and 492.1039, as follows:
Sec. 492.1033. CREDIT ALLOWED FOR CERTAIN CERTIFIED REINSURERS. (a) Requires credit to be allowed when the reinsurance is ceded to an assuming insurer that:
(1) is certified by the commissioner as a reinsurer in this state; and
(2) secures its obligations in accordance with the requirements of this section and Sections 492.1034-492.1038.
(b) Requires the assuming insurer, to be eligible for certification, to:
(1) be domiciled and licensed to transact insurance or reinsurance in a jurisdiction listed as qualified on the list published by the commissioner under Section 492.1035;
(2) maintain minimum capital and surplus in an amount required by the commissioner by rule;
(3) maintain a financial strength rating from not fewer than two rating agencies determined to be acceptable in accordance with rules adopted by the commissioner;
(4) agree to submit to the jurisdiction of any court of competent jurisdiction in any state of the United States;
(5) appoint the commissioner as its agent for service of process in this state;
(6) provide security for 100 percent of the assuming insurer's liabilities for reinsurance ceded by United States ceding insurers if the assuming insurer resists enforcement of a final judgment of a court of the United States;
(7) meet application information filing requirements as established by the commissioner by rule, for the initial application for certification and on an ongoing basis; and
(8) satisfy any other requirements for certification required by rule adopted by the commissioner.
Sec. 492.1034. CERTAIN ASSOCIATIONS MAY BE CERTIFIED REINSURERS. (a) Authorizes an association that includes incorporated and individual unincorporated underwriters (association) to be a certified reinsurer under Section 492.1033. Requires the association, to be eligible for certification, to satisfy the requirements of Section 492.1033 and this section.
(b) Requires the association to satisfy minimum capital and surplus requirements through the capital and surplus equivalents, net of liabilities, of the association and its members, that is required to include a joint central fund, in an amount determined by the commissioner to provide adequate protection, that is authorized to be applied to any unsatisfied obligation of the association or any of its members.
(c) Prohibits the incorporated members of the association acting as members of the association from being engaged in any business other than underwriting and provides that the incorporated members are subject to the same level of regulation and solvency control by the association's domiciliary regulator as are the unincorporated members.
(d) Requires the association, not later than the 90th day after the date the association's financial statements are due to be filed with the association's domiciliary regulator, to provide to the commissioner:
(1) an annual certification by the association's domiciliary regulator of the solvency of each underwriter member; or
(2) if a certification described by Subdivision (1) is unavailable, financial statements, prepared by independent public accountants, of each underwriter member of the association.
Sec. 492.1035. QUALIFIED JURISDICTIONS. (a) Requires the commissioner to develop and publish a list of qualified jurisdictions in which an assuming insurer may be licensed and domiciled in order to be considered for certification by the commissioner under Section 492.1033 as a certified reinsurer. Requires the commissioner, in developing the list, to consider the list of qualified jurisdictions published through the National Association of Insurance Commissioners committee process.
(b) Requires the commissioner, in order to determine whether a jurisdiction of an assuming insurer located outside of the United States is eligible to be recognized as a qualified jurisdiction under Subsection (a), to evaluate the appropriateness and effectiveness of the reinsurance supervisory system of the jurisdiction, both initially and on an ongoing basis, and consider the rights, benefits, and extent of reciprocal recognition afforded by the jurisdiction to reinsurers licensed and domiciled in the United States.
(c) Requires a jurisdiction, in order to be qualified, to agree to share information and cooperate with the commissioner with respect to all certified reinsurers doing business in the jurisdiction.
(d) Prohibits a jurisdiction from being recognized as a qualified jurisdiction if the commissioner has determined that the jurisdiction does not adequately and promptly enforce final United States judgments and arbitration awards. Authorizes additional factors to be considered in the discretion of the commissioner.
(e) Requires the commissioner, if the commissioner approves under this section a jurisdiction as qualified that does not appear on the list of qualified jurisdictions published through the National Association of Insurance Commissioners committee process, to provide documentation in accordance with rules adopted by the commissioner. Requires the rules to include a requirement for a thoroughly documented justification of the approval.
(f) Requires the commissioner to include as a qualified jurisdiction under this section a United States jurisdiction that meets the requirement for accreditation under the National Association of Insurance Commissioners financial standards and accreditation program.
(g) Authorizes the commissioner, if a certified reinsurer's domiciliary jurisdiction ceases to be a qualified jurisdiction, to suspend the reinsurer's certification indefinitely, instead of revoking the certification.
Sec. 492.1036. FINANCIAL REQUIREMENTS FOR CERTIFIED REINSURER. (a) Requires the commissioner to assign a financial strength rating to each certified reinsurer after considering the financial strength ratings that have been assigned by rating agencies recognized by the commissioner.
(b) Requires the commissioner to publish a list of the ratings assigned under this section for all certified reinsurers.
(c) Requires a certified reinsurer to secure obligations assumed from ceding insurers domiciled in the United States in accordance with the rating assigned by the commissioner under Subsection (a) and in accordance with this section.
(d) Requires the certified reinsurer, for a domestic ceding insurer to qualify for full financial statement credit for reinsurance ceded to a certified reinsurer, to maintain security in a form acceptable to the commissioner and consistent with the insurance laws of this state or in a multibeneficiary trust in accordance with Subchapter D (Requirements for Trust Credit Allowance), except as otherwise provided.
(e) Requires the certified reinsurer, if a certified reinsurer maintains a trust under Subchapter D to secure its obligations, and chooses to secure its obligations incurred as a certified reinsurer with a multibeneficiary trust, to maintain separate trust accounts for the obligations incurred under reinsurance agreements the certified reinsurer issued or renewed with reduced security as permitted by this section or comparable laws of other United States jurisdictions and for its obligations subject to Subchapter D. Provides that it is a condition to the grant of certification under this section that the certified reinsurer has bound itself, by the language of the trust agreement and agreement with the commissioner with principal regulatory oversight of each trust account, to fund, on termination of the trust account, out the remaining surplus of the trust any deficiency of any other trust account described by this subsection.
(f) Provides that the minimum trusteed surplus requirements provided in Subchapter D do not apply to a multibeneficiary trust described by this section, except that the trust is required to maintain a minimum trusteed surplus of $10,000,000.
(g) Provides that, with respect to obligations incurred by a certified reinsurer under this section, if the security is insufficient, the commissioner is required to reduce the allowable credit by an amount proportionate to the deficiency and is authorized to impose further reductions in allowable credit on finding that there is a material risk that the certified reinsurer's obligations will not be paid in full when due.
(h) Requires a reinsurer whose certification has been revoked, suspended, or voluntarily surrendered or whose certification status has become inactive for any reason, for purposes of this section, to be treated as a reinsurer required to secure 100 percent of its obligations, except that if the commissioner continues to assign to the reinsurer a higher financial strength rating as permitted by this section, the security requirement does not apply to a reinsurer whose certification has been suspended or whose certification status has become inactive.
Sec. 492.1037. CERTIFICATION BY NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS. Provides that, if an applicant for certification has been certified as a reinsurer in a National Association of Insurance Commissioners accredited jurisdiction, the commissioner is authorized to defer to the accredited jurisdiction's certification and the financial strength rating assigned by that jurisdiction and the applicant is required to be considered to be a certified reinsurer in this state.
Sec. 492.1038. SUSPENSION OR REVOCATION OF CERTIFICATION; INACTIVE STATUS. (a) Authorizes a certified reinsurer that ceases to assume new business in this state to request to maintain its certification in inactive status to continue to qualify for a reduction in security for in-force business. Requires that an inactive certified reinsurer continue to comply with all applicable requirements of this section, and the commissioner is required to assign a financial strength rating that takes into account, if relevant, the reasons the reinsurer is not assuming new business.
(b) Authorizes the commissioner, if an accredited or certified reinsurer ceases to meet the requirements for accreditation or certification, to, after notice and opportunity for hearing, suspend or revoke the reinsurer's accreditation or certification. Prohibits a suspension or revocation from taking effect until after the date of the commissioner's order on the hearing, unless:
(1) the reinsurer waives its right to hearing;
(2) the commissioner's order is based on regulatory action by the reinsurer's domiciliary jurisdiction or the voluntary surrender or termination of the reinsurer's eligibility to transact insurance or reinsurance business in its domiciliary jurisdiction or in the primary certifying state of the reinsurer under this section; or
(3) the commissioner finds that an emergency requires immediate action and a court of competent jurisdiction has not stayed the commissioner's action.
(c) Provides that, while a reinsurer's accreditation or certification is suspended, a reinsurance contract issued or renewed after the effective date of the suspension does not qualify for credit except to the extent that the reinsurer's obligations under the contract are secured in accordance with Subchapter D.
(d) Prohibits credit for reinsurance, if a reinsurer's accreditation or certification is revoked, from being granted after the effective date of the revocation except to the extent that the reinsurer's obligations under the contract are secured in accordance with Section 492.1036 or Subchapter D.
Sec. 492.1039. CONCENTRATION RISK. (a) Requires a ceding insurer to manage its reinsurance recoverable proportionate to its book of business. Requires a domestic ceding insurer to notify the commissioner not later than the 30th day after the date reinsurance recoverable from any single assuming insurer, or group of affiliated assuming insurers, exceeds or is likely to exceed 50 percent of the domestic ceding insurer's last reported surplus to policyholders. Requires the notification to demonstrate that the exposure is safely managed by the domestic ceding insurer.
(b) Requires a ceding insurer to diversify its reinsurance program. Requires a domestic ceding insurer to notify the commissioner not later than the 30th day after the date the insurer cedes to any single assuming insurer, or group of affiliated assuming insurers, an amount that exceeds or is likely to exceed 20 percent of the ceding insurer's gross written premium in the prior calendar year. Requires the notification to demonstrate that the exposure is safely managed by the domestic ceding insurer.
SECTION 3. Amends Section 492.151, Insurance Code, to provide that this subchapter applies to a trust that is used to qualify for a reinsurance credit under Section 492.102(a)(3) (relating to a trust fund paying valid claims of certain criteria) and as described by Sections 492.1036(e) and (f).
SECTION 4. Amends Section 492.152, Insurance Code, by amending Subsection (a) and adding Subsection (a-1), as follows:
(a) Requires the trust, if the assuming insurer is a single insurer, to:
(1) Makes no changes to this subdivision; and
(2) include a trusteed surplus of at least $20 million, except after the assuming insurer has permanently discontinued underwriting new business secured by the trust for not less than three calendar years, the commissioner with principal regulatory oversight of the trust is authorized to authorize a reduction in the required trusteed surplus, but only after a finding, based on an assessment of the risk, that the new required surplus level is adequate for the protection of United States ceding insurers, policyholders, and claimants in light of reasonably foreseeable adverse loss development.
(a-1) Authorizes the risk assessment described by Subsection (a)(2) to involve an actuarial review, including an independent analysis of reserves and cash flows, and is requires the risk assessment to consider all material risk factors, including when applicable, the lines of business involved, the stability of the incurred loss estimates, and the effect of the surplus requirements on the assuming insurer's liquidity or solvency. Prohibits the minimum required trusteed surplus from being reduced to an amount less than 30 percent of the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers.
SECTION 5. Amends Section 492.155(b), Insurance Code, to require the assuming insurer, to enable the commissioner to determine the sufficiency of the trust fund under Section 492.102(a)(3) and for purposes of Sections 492.1036(e) and (f), to report to the Texas Department of Insurance (TDI) not later than March 1 of each year information substantially the same as the information required to be reported by an authorized insurer on the National Association of Insurance Commissioners' Annual Statement form.
SECTION 6. Amends Section 492.156(a), Insurance Code, to prohibit a ceding insurer from being allowed credit under Section 492.102(a)(3) for reinsurance ceded to an assuming insurer that is not authorized, accredited, or certified to engage in the business of insurance or reinsurance in this state unless the assuming insurer agrees in the reinsurance contract to certain criteria.
SECTION 7. Amends Section 493.102(a), Insurance Code, to authorize a ceding insurer to be allowed credit for reinsurance ceded, as an asset or as a deduction from liability, only if the reinsurance is ceded to an assuming insurer that is determined by the commissioner to meet the requirements of Sections 493.1033-493.1038, as applicable.
SECTION 8. Amends Subchapter C, Chapter 493, Insurance Code, by adding Sections 493.1033, 493.1034, 493.1035, 493.1036, 493.1037, 493.1038, and 493.1039, as follows:
Sec. 493.1033. CREDIT ALLOWED FOR CERTAIN CERTIFIED REINSURERS. (a) Requires that credit be allowed when the reinsurance is ceded to an assuming insurer that:
(1) is certified by the commissioner as a reinsurer in this state; and
(2) secures its obligations in accordance with the requirements of this section and Sections 493.1034-493.1038.
(b) Requires the assuming insurer, to be eligible for certification, to:
(1) be domiciled and licensed to transact insurance or reinsurance in a jurisdiction listed as qualified on the list published by the commissioner under Section 493.1035;
(2) maintain minimum capital and surplus in an amount required by the commissioner by rule;
(3) maintain a financial strength rating from not fewer than two rating agencies determined to be acceptable in accordance with rules adopted by the commissioner;
(4) agree to submit to the jurisdiction of any court of competent jurisdiction in any state of the United States;
(5) appoint the commissioner as its agent for service of process in this state;
(6) provide security for 100 percent of the assuming insurer's liabilities for reinsurance ceded by United States ceding insurers if the assuming insurer resists enforcement of a final judgment of a court of the United States;
(7) meet application information filing requirements as established by the commissioner by rule, for the initial application for certification and on an ongoing basis; and
(8) satisfy any other requirements for certification required by rule adopted by the commissioner.
Sec. 493.1034. CERTAIN ASSOCIATIONS MAY BE CERTIFIED REINSURERS. (a) Authorizes an association that includes incorporated and individual unincorporated underwriters to be a certified reinsurer under Section 493.1034. Requires the association, to be eligible for certification to satisfy the requirements of Section 493.1033 and this section.
(b) Requires the association to satisfy minimum capital and surplus requirements through the capital and surplus equivalents, net of liabilities, of the association and its members, that is required to include a joint central fund, in an amount determined by the commissioner to provide adequate protection, that is authorized to be applied to any unsatisfied obligation of the association or any of its members.
(c) Prohibits the incorporated members of the association acting as members of the association from being engaged in any business other than underwriting and are subject to the same level of regulation and solvency control by the association's domiciliary regulator as are the unincorporated members.
(d) Requires the association, not later than the 90th day after the date the association's financial statements are due to be filed with the association's domiciliary regulator, to provide to the commissioner:
(1) an annual certification by the association's domiciliary regulator of the solvency of each underwriter member; or
(2) if a certification described by Subdivision (1) is unavailable, financial statements, prepared by independent public accountants, of each underwriter member of the association.
Sec. 493.1035. QUALIFIED JURISDICTIONS. (a) Requires the commissioner to develop and publish a list of qualified jurisdictions in which an assuming insurer is authorized to be licensed and domiciled in order to be considered for certification by the commissioner under Section 493.1033 as a certified reinsurer. Requires the commissioner, in developing the list, to consider the list of qualified jurisdictions published through the National Association of Insurance Commissioners committee process.
(b) Requires the commissioner, in order to determine whether a jurisdiction of an assuming insurer located outside of the United States is eligible to be recognized as a qualified jurisdiction under Subsection (a), to evaluate the appropriateness and effectiveness of the reinsurance supervisory system of the jurisdiction, both initially and on an ongoing basis, and consider the rights, benefits, and extent of reciprocal recognition afforded by the jurisdiction to reinsurers licensed and domiciled in the United States.
(c) Requires a jurisdiction, in order to be qualified, to agree to share information and cooperate with the commissioner with respect to all certified reinsurers doing business in the jurisdiction.
(d) Prohibits a jurisdiction from being recognized as a qualified jurisdiction if the commissioner has determined that the jurisdiction does not adequately and promptly enforce final United States judgments and arbitration awards. Authorizes additional factors to be considered in the discretion of the commissioner.
(e) Requires the commissioner, if the commissioner approves under this section a jurisdiction as qualified that does not appear on the list of qualified jurisdictions published through the National Association of Insurance Commissioners committee process, to provide documentation in accordance with rules adopted by the commissioner. Requires that the rules include a requirement for a thoroughly documented justification of the approval.
(f) Requires the commissioner to include as a qualified jurisdiction under this section a United States jurisdiction that meets the requirement for accreditation under the National Association of Insurance Commissioners financial standards and accreditation program.
(g) Authorizes the commissioner, if a certified reinsurer's domiciliary jurisdiction ceases to be a qualified jurisdiction, to suspend the reinsurer's certification indefinitely, instead of revoking the certification.
Sec. 493.1036. FINANCIAL REQUIREMENTS FOR CERTIFIED REINSURER. (a) Requires the commissioner to assign a financial strength rating to each certified reinsurer after considering the financial strength ratings that have been assigned by rating agencies recognized by the commissioner.
(b) Requires the commissioner to publish a list of the ratings assigned under this section for all certified reinsurers.
(c) Requires a certified reinsurer to secure obligations assumed from ceding insurers domiciled in the United States in accordance with the rating assigned by the commissioner under Subsection (a) and in accordance with this section.
(d) Requires the certified reinsurer, for a domestic ceding insurer to qualify for full financial statement credit for reinsurance ceded to a certified reinsurer, to maintain security in a form acceptable to the commissioner and consistent with the insurance laws of this state or in a multibeneficiary trust in accordance with Subchapter D (Requirements for Trust Credit Allowance), except as otherwise provided.
(e) Requires the certified insurer, if a certified reinsurer maintains a trust under Subchapter D to secure its obligations, and chooses to secure its obligations incurred as a certified reinsurer with a multibeneficiary trust, to maintain separate trust accounts for the obligations incurred under reinsurance agreements the certified reinsurer issued or renewed with reduced security as permitted by this section or comparable laws of other United States jurisdictions and for its obligations subject to Subchapter D. Provides that it is a condition to the grant of certification under this section that the certified reinsurer has bound itself, by the language of the trust agreement and agreement with the commissioner with principal regulatory oversight of each trust account, to fund, on termination of the trust account, out the remaining surplus of the trust any deficiency of any other trust account described by this subsection.
(f) Provides that the minimum trusteed surplus requirements provided in Subchapter D do not apply to a multibeneficiary trust described by this section, except that the trust is required to maintain a minimum trusteed surplus of $10,000,000.
(g) Provides that, with respect to obligations incurred by a certified reinsurer under this section, if the security is insufficient, the commissioner is required to reduce the allowable credit by an amount proportionate to the deficiency and is authorized to impose further reductions in allowable credit on finding that there is a material risk that the certified reinsurer's obligations will not be paid in full when due.
(h) Requires a reinsurer whose certification has been revoked, suspended, or voluntarily surrendered or whose certification status has become inactive for any reason, for purposes of this section, to be treated as a reinsurer required to secure 100 percent of its obligations, except that if the commissioner continues to assign to the reinsurer a higher financial strength rating as permitted by this section, the security requirement does not apply to a reinsurer whose certification has been suspended or whose certification status has become inactive.
Sec. 493.1037. CERTIFICATION BY NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS. Provides that, if an applicant for certification has been certified as a reinsurer in a National Association of Insurance Commissioners accredited jurisdiction, the commissioner is authorized to defer to the accredited jurisdiction's certification and the financial strength rating assigned by that jurisdiction and the applicant is required to be considered to be a certified reinsurer in this state.
Sec. 493.1038. SUSPENSION OR REVOCATION OF CERTIFICATION; INACTIVE STATUS. (a) Authorizes a certified reinsurer that ceases to assume new business in this state to request to maintain its certification in inactive status to continue to qualify for a reduction in security for in-force business. Requires an inactive certified reinsurer to continue to comply with all applicable requirements of this section, and the commissioner is required to assign a financial strength rating that takes into account, if relevant, the reasons the reinsurer is not assuming new business.
(b) Authorizes the commissioner, if an accredited or certified reinsurer ceases to meet the requirements for accreditation or certification, to, after notice and opportunity for hearing, suspend or revoke the reinsurer's accreditation or certification. Prohibits a suspension or revocation from taking effect until after the date of the commissioner's order on the hearing, unless the reinsurer waives its right to hearing; the commissioner's order is based on regulatory action by the reinsurer's domiciliary jurisdiction or the voluntary surrender or termination of the reinsurer's eligibility to transact insurance or reinsurance business in its domiciliary jurisdiction or in the primary certifying state of the reinsurer under this section; or the commissioner finds that an emergency requires immediate action and a court of competent jurisdiction has not stayed the commissioner's action.
(c) Provides that, while a reinsurer's accreditation or certification is suspended, a reinsurance contract issued or renewed after the effective date of the suspension does not qualify for credit except to the extent that the reinsurer's obligations under the contract are secured in accordance with Subchapter D.
(d) Prohibits credit for reinsurance, if a reinsurer's accreditation or certification is revoked, from being granted after the effective date of the revocation except to the extent that the reinsurer's obligations under the contract are secured in accordance with Section 493.1036 or Subchapter D.
Sec. 493.1039. CONCENTRATION RISK. (a) Requires a ceding insurer to manage its reinsurance recoverable proportionate to its book of business. Requires a domestic ceding insurer to notify the commissioner not later than the 30th day after the date reinsurance recoverable from any single assuming insurer, or group of affiliated assuming insurers, exceeds or is likely to exceed 50 percent of the domestic ceding insurer's last reported surplus to policyholders. Requires the notification to demonstrate that the exposure is safely managed by the domestic ceding insurer.
(b) Requires a ceding insurer to diversify its reinsurance program. Requires a domestic ceding insurer to notify the commissioner not later than the 30th day after the date the insurer cedes to any single assuming insurer, or group of affiliated assuming insurers, an amount that exceeds or is likely to exceed 20 percent of the ceding insurer's gross written premium in the prior calendar year. Requires the notification to demonstrate that the exposure is safely managed by the domestic ceding insurer.
SECTION 9. Amends Section 493.151, Insurance Code, to provide that this subchapter applies to a trust that is used to qualify for a reinsurance credit under Section 493.102(a)(3) (relating to a trust fund paying valid claims of certain criteria) and as described by Sections 493.1036(e) and (f).
SECTION 10. Amends Section 493.152, Insurance Code, by amending Subsection (a) and adding Subsection (a-1), as follows:
(a) Requires the trust, if the assuming insurer is a single insurer, to:
(1) Makes no change to this subdivision; and
(2) include a trusteed surplus of at least $20 million, except after the assuming insurer has permanently discontinued underwriting new business secured by the trust for not less than three calendar years, the commissioner with principal regulatory oversight of the trust is authorized to authorize a reduction in the required trusteed surplus, but only after a finding, based on an assessment of the risk, that the new required surplus level is adequate for the protection of United States ceding insurers, policyholders, and claimants in light of reasonably foreseeable adverse loss development.
(a-1) Authorizes the risk assessment described by Subsection (a)(2) to involve an actuarial review, including an independent analysis of reserves and cash flows, and is required to consider all material risk factors, including when applicable, the lines of business involved, the stability of the incurred loss estimates, and the effect of the surplus requirements on the assuming insurer's liquidity or solvency. Prohibits the minimum required trusteed surplus from being reduced to an amount less than 30 percent of the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers.
SECTION 11. Amends Section 493.155(b), Insurance Code, to require the assuming insurer, to enable the commissioner to determine the sufficiency of the trust fund under Section 493.102(a)(3) and for purposes of Sections 493.1036(e) and (f), to report to TDI not later than March 1 of each year information substantially the same as the information required to be reported by an authorized insurer on the National Association of Insurance Commissioners' Annual Statement form.
SECTION 12. Amends Section 493.156(a), Insurance Code, to prohibit a ceding insurer from being allowed credit under Section 493.102(a)(3) for reinsurance ceded to an assuming insurer that is not authorized, accredited, or certified to engage in the business of insurance or reinsurance in this state unless the assuming insurer agrees in the reinsurance contract.
SECTION 13. Makes application of this Act prospective to January 1, 2014.
SECTION 14. Effective date: September 1, 2013.