RHODE ISLAND ENACTS AMENDMENTS TO CREDIT FOR REINSURANCE ACT
Rhode Island recently amended its Credit for Reinsurance Act to include two provisions regarding credits for reinsurance relating to the insolvency of the ceding insurer. Specifically, the first provision states that no credit is allowed “unless the reinsurance is payable by the assuming company on the basis of liability of the ceding company under the contractor contracts reinsured without diminution because of the insolvency of the ceding company.” Additionally, the second provision states that no credit is allowed “unless the reinsurance agreement provides that payments by the assuming company shall be made directly to the ceding company or to its liquidator, receiver, or statutory successor” or directly to the insured. Finally, the amendments state that no assuming company “may pay or settle, or agree to pay or settle, any policy claim, or portion of a claim, directly to or with a policyholder of any ceding company if an order of rehabilitation or liquidation has been entered against the ceding company.” These changes appear to be to bring Rhode Island’s statute closer to the model act promulgated by the National Association of Insurance Commissioners.
R.I. HB 6179 (enacted June 17, 2015) and R.I. SB 939.
This post written by Zach Ludens.
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