§ 58-7-30. Insolvent ceding insurer.
§ 58‑7‑30. Insolvent ceding insurer.
(a) Notwithstanding anyother provision of this Article, no credit shall be allowed, as an admittedasset or as a reduction from liability, to any ceding insurer for reinsurance,unless the reinsurance is payable by the assuming insurer, on the basis ofreported claims allowed by the court overseeing the liquidation against theceding insurer under the contract or contracts reinsured without diminutionbecause of the insolvency of the ceding insurer, directly to the ceding insureror to its domiciliary receiver except (1) where the contract or other writtenagreement specifically provides for another payee of the reinsurance in theevent of the insolvency of the ceding insurer or (2) where the assuminginsurer, with the consent of the direct insured or insureds, has assumed thepolicy obligations of the ceding insurer as direct obligations of the assuminginsurer to the payees under the policies and in substitution of the obligationsof the ceding insurer to the payees.
(b) No credit shall beallowed, as an admitted asset or as a reduction from liability, to any cedinginsurer for reinsurance, unless the reinsurance is documented by a policy,certificate, treaty, or other form of agreement that is properly executed by anauthorized officer of the assuming insurer. If the reinsurance is ceded throughan underwriting manager or agent, the manager or agent shall provide to thedomestic ceding insurer evidence of the manager or agent's authority to assumereinsurance for and on behalf of the assuming insurer. The evidence shallconsist of either an acceptable letter of authority executed by an authorizedofficer of the assuming insurer or a copy of the actual agency agreementbetween the underwriting manager or agent and the assuming insurer; and theevidence shall be specific as to the classes of business within the authorityand as to the term of the authority. If there is any conflict between thissubsection and Article 9 of this Chapter, the provisions of Article 9 govern.
(c) The reinsuranceagreement may provide that the domiciliary liquidator of an insolvent cedinginsurer shall give written notice to the assuming insurer of the pendency of aclaim against the ceding insurer on the contract reinsured within a reasonabletime after the claim is filed in the liquidation proceeding. During thependency of the claim, any assuming insurer may investigate the claim andinterpose at its own expense in the proceeding where the claim is to beadjudicated, any defenses which it deems available to the ceding insurer or itsliquidator. The expense may be filed as a claim against the insolvent cedinginsurer to the extent of a proportionate share of the benefit which may accrueto the ceding insurer solely as a result of the defense undertaken by theassuming insurer. Where two or more assuming insurers are involved in the sameclaim and a majority in interest elect to interpose a defense to the claim, theexpense shall be apportioned in accordance with the terms of the reinsuranceagreement as though the expense had been incurred by the ceding insurer. (1985, c. 572, s. 1; 1995, c.193, s. 14; c. 517, s. 4; 2001‑223, s. 3.3.)