N.J. Admin. Code § 11:2-28.12

Current through Register Vol. 57, No. 1, January 6, 2025

Section 11:2-28.12 - Reinsurance contract

(a) Credit will not be granted to a ceding insurer for reinsurance effected with assuming insurers meeting the requirements at N.J.A.C. 11:2-28.3, 28.4, 28.5, 28.6, 28.7, 28.7A through 28.7E, or 28.8, unless the reinsurance agreement meets the following standards:

1. Includes a provision that if the assuming insurer is an unauthorized assuming insurer:

i. It has submitted to the jurisdiction of an alternative dispute resolution panel or court of competent jurisdiction within the United States;

ii. It has agreed to comply with all requirements necessary to give such court or panel jurisdiction;

iii. It has designated an agent upon whom service of process may be effected; and

iv. It has agreed to abide by the final decision of such court or panel;

2. Includes an insolvency clause which shall provide the following:

i. In the event of a receivership, the reinsurance recoverables due under any reinsurance contract shall be payable by the reinsurer directly to the receiver, after reasonable provision for verification, on the basis of claims allowed against the insolvent company by any court of competent jurisdiction having authority to allow such claims or allowed by the receiver as a result of the conclusion of the claim filing, approval and appeal process before the receiver. Regardless of any provision in the reinsurance contract or other agreement to the contrary, payment shall be made without diminution because of such insolvency or because the receiver has failed to pay all or a portion of any claims;

ii. The receiver of a ceding insurer shall give or arrange to give to the reinsurer, written notice of the pendency of a claim against the ceding insurer, within a reasonable period of time after the initiation of the receivership. Failure to give such notice shall not excuse the obligation of the reinsurer unless it is substantially prejudiced thereby. The reinsurer may interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses which it may deem available to the ceding company or its receiver. The reasonable expense thus incurred by the reinsurer shall be payable, subject to court approval, out of the estate of the insolvent ceding insurer as part of the expense of the receivership to the extent of a proportionate share of the benefit which may accrue to the ceding insurer in receivership, solely as a result of the defense undertaken by the reinsurer; and

iii. Payments by the reinsurer shall be made directly to the receiver of the ceding insurer except where the contract of insurance or reinsurance specifically provides another payee for such reinsurance in the event of the insolvency of the ceding insurer; and

3. Includes a proper reinsurance intermediary clause, if applicable, which stipulates that the credit risk for the intermediary is carried by the assuming insurer.

N.J. Admin. Code § 11:2-28.12

Amended by R.1993 d.557, effective 11/15/1993.
See: 25 N.J.R. 4289(a), 25 N.J.R. 5184(a).
Amended by R.1996 d.3, effective 1/2/1996.
See: 27 N.J.R. 3278(b), 28 N.J.R. 152(b).
Amended by R.2012 d.154, effective 9/4/2012.
See: 44 N.J.R. 360(a), 44 N.J.R. 2169(a).
In the introductory paragraph of (a), inserted "28.7A through 28.7D,", and deleted "of this subchapter" following "28.8"; in the introductory paragraph of (a)1, substituted a colon for a semicolon at the end; in (a)1iv, deleted "and" from the end; in (a)2iii, substiuted "; and" for a period at the end; and added (a)3.

Amended by 54 N.J.R. 1735(a), effective 9/6/2022