Mich. Admin. Code R. 500.53 - Nonrenewals, cancellations, or revisions of ceded reinsurance agreements explained

Current through Vol. 22-05, April 1, 2022

Rule 3.

(1) As used in R 500.51, a material nonrenewal, cancellation, or revision of ceded reinsurance is one that, for property and casualty business, including accident and health business written by a property and casualty insurer, affects more than 50% of the health insurer's total ceded written premium or more than 50% of the insurer's total ceded indemnity and loss adjustment reserves as indicated in the insurer's most recent annual statement or, for life, annuity, anc accident and health business, affects more than 50% of the total reserve credit taken for business ceded, on an annualized basis, as indicated in the insurer's most recent annual statement.
(2) For either property and casualty business or life, annuity, and accident and health business, either of the following events shall constitute a material revision that shall be reported:
(a) An authorized reinsurer reinsuring more than 10% of the insurer's total ceded written premium is replaced by 1 or more unauthorized reinsurers.
(b) Previously established collateral requirements have been reduced or waived for 1 or more unauthorized reinsurers reinsuring collectively more than 10% of the insurer's total ceded written premium.
(3) Notwithstanding the provisions of subrules (1) and (2) of this rule, a report under R 500.51 shall not be required of either of the following provisions is complied with, as applicable:
(a) For property and casualty business, including accident and health business written by a property and casualty insurer, the insurer's total ceded written premium represents, on an annualized basis, less than 10% of its total written premium for direct and assumed business.
(b) For life, annuity, and accident and health business, the total reserve credit taken for business ceded represents, on an annualized basis, less than 10% of the statutory reserve requirement before any cession.
(4) All of the following information is required to be disclosed in any report of a material nonrenewal, cancellation, or revision of ceded reinsurance agreements:
(a) The effective date of the nonrenewal, cancellation, or revision.
(b) A description of the transaction, including identification of the initiator of the transaction.
(c) Purpose of, or reason for, the transaction.
(d) If applicable, the entity of the replacement reinsurers.

Notes

Mich. Admin. Code R. 500.53
1996 AACS

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