Okla. Admin. Code § 365:25-7-50

Current through Vol. 41, No. 19, June 17, 2024

Section 365:25-7-50 - Purpose and scope

(a) The Oklahoma Insurance Department recognizes that life insurers routinely enter into reinsurance agreements that yield legitimate relief to the ceding insurer from strain to surplus.

(b) However, it is improper for a licensed insurer, in the capacity of ceding insurer, to enter into reinsurance agreements for the principal purpose of producing significant surplus aid for the ceding insurer, typically on a temporary basis, while not transferring all of the significant risks inherent in the business being reinsured. In substance or effect, the expected potential liability to the ceding insurer remains basically unchanged by the reinsurance transaction, notwithstanding certain risk elements in the reinsurance agreement, such as catastrophic mortality or extraordinary survival. The terms of such agreements referred to in this Part and described in 365:25-7-51 violate:

(1) Section 311.1 of Title 36 relating to financial statements which do not properly reflect the financial condition of the ceding insurer;

(2) Section 5122 of Title 36 relating to reinsurance reserve credits, thus resulting in a ceding insurer improperly reducing liabilities or establishing assets for reinsurance ceded; and

(3) Section 1201 et seq. of Title 36 relating to creating a situation that may be hazardous to policyholders and the people of this state.

(c) This part shall apply to all domestic life and accident and health insurers and to all other licensed life and accident and health insurers which are not subject to a substantially similar regulation in their domiciliary state. This part shall also similarly apply to licensed property and casualty insurers with respect to their accident and health business. This part shall not apply to assumption reinsurance, yearly renewable term reinsurance or certain nonproportional reinsurance such as stop loss or catastrophe reinsurance.

Okla. Admin. Code § 365:25-7-50

Added at 9 Ok Reg 3305, eff 7-27-92; Amended at 11 Ok Reg 405, eff 4-19-93 (emergency); Amended at 11 Ok Reg 3319, eff 7-1-94