Wis. Admin. Code Office of the Commissioner of Insurance § Ins 52.03 - Insolvency clause and jurisdiction; financial reinsurance disallowed

Current through March 28, 2022

(1) Except as permitted by s. Ins 52.02(5), a ceding domestic insurer may take credit for reinsurance ceded to a reinsurer which does not comply with s. Ins 52.02(1), (2), (3), (4), and (4m) only if the reinsurer in a written reinsurance agreement does all of the following:
(a) Agrees that if the reinsurer fails to perform its obligations under the terms of the reinsurance agreement, the reinsurer, at the request of the ceding insurer, shall submit to the jurisdiction of any court of competent jurisdiction in any state of the United States, will comply with all requirements necessary to give the court jurisdiction, and will abide by the final decision of such court or of any appellate court in the event of an appeal.
(b) Designates the commissioner or a designated attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the ceding insurer.
(2) Subsection (1) (a) and (b) do not affect or supersede the obligation of the parties to a reinsurance agreement to arbitrate their disputes, if the obligation is created in the agreement and complies with ch. 645, Stats.
(2m) Except as permitted by s. Ins 52.02(5), a ceding domestic insurer may take credit for reinsurance under a reinsurance agreement effective on or after January 1, 1980, only if the agreement provides that the reinsurer assumes all credit risks of an intermediary relating to payments to an intermediary if the agreement by its terms requires payment to an intermediary.
(3) A ceding domestic insurer may not take credit for reinsurance unless the assuming insurer in the reinsurance contract:
(a) Undertakes to protect the ceding insurer from loss or liability on coverage the ceding insurer issues not only in form but in fact; and
(b) Includes a proper insolvency clause under s. 645.58(1), Stats., or for an alien or nondomestic insurer includes an insolvency clause which guarantees payment of the liability of the reinsurer without diminution because of the insolvency of the ceding insurer.
(4) A ceding domestic insurer may take credit for reinsurance ceded only to the extent the ceding insurer has established adequate gross reserves on the business ceded.
(5) A ceding domestic insurer may not take credit for reinsurance ceded in excess of the amount of the gross reserves carried on the business, or portion of the business, ceded.

Notes

Wis. Admin. Code Office of the Commissioner of Insurance § Ins 52.03
Cr. Register, July, 1993, No. 451, eff. 8-1-93; am. (1) (intro.), (b) and (2), renum. (1) (c) to be (2m) and am., cr. (4) and (5), Register, December, 1995, No. 480, eff. 1-1-96. Amended by, CR 17-004: am. (1) Register December 2017 No. 744, eff. 1/1/2018

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