§ 31A-22-1201. Assumption agreement.

(1) Subject to Subsection (2), a credit for reinsurance ceded under Section 31A-17-404, 31A-17-404.1, or 31A-17-404.2, is not allowed unless, in addition to meeting the requirements of Section 31A-17-404, 31A-17-404.1, or 31A-17-404.2, the reinsurance agreement provides in substance that if the ceding insurer is insolvent, the reinsurance is payable by the assuming insurer:

(a) on the basis of the liability of the ceding insurer under the contract or contracts reinsured;

(b) without diminution because of the insolvency of the ceding insurer; and

(c) directly to the ceding insurer or to its domiciliary liquidator or receiver.

(2) Subsection (1) applies except if:

(a) a contract specifically provides another payee of the insurance in the event of the insolvency of the ceding insurer; or

(b) the assuming insurer, with the consent of the one or more direct insureds, assumes the policy obligations of the ceding insurer:

(i) as direct obligations of the assuming insurer to the payees under the policies; and

(ii) in substitution for the obligations of the ceding insurer to the payees.

Amended by Chapter 257, 2008 General Session