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Texas Insurance Code - Not Codified - Section 21A.211. Reinsurer's Liability

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Sec. 21A.211. REINSURER'S LIABILITY.  (a) If the receiver
has claims under policies covered by reinsurance, the liability of
the reinsurer to the receiver under the policies reinsured may not
be diminished because of the insolvency of the insurer, regardless
of any provisions in the reinsurance contract to the contrary,
except under the following circumstances:
	(1)  a contract or other written agreement entered into
before the delinquency proceeding that is otherwise permitted by
law specifically provides another payee of the reinsurance in the
event of the insolvency of the ceding insurer;
	(2)  the assuming insurer, under an assumption reinsurance
agreement and with the consent of the direct insured, has assumed,
as direct obligations of the assuming insurer, the policy
obligations of the ceding insurer to the payees under policies and
in substitution for the obligations of the ceding insurer to those
payees;  or
	(3)  a life and health insurance guaranty association has
made the election to succeed to the rights and obligations of the
insolvent insurer under a contract of reinsurance in accordance
with the life and health guaranty association laws of this state or
its domiciliary state or another applicable law, rule, order, or
assignment contract, in which case payments shall be made directly
to or at the direction of the guaranty association.
	(b)  Except as provided by Subsection (a), any reinsurance
shall be payable to the receiver under a policy reinsured by the
assuming insurer on the basis of claims:
	(1)  allowed under Section 21A.253;  and
	(2)  paid under:
	(A)  Article 21.28-C or 21.28-D;
	(B)  Chapter 2602;  or
	(C)  the guaranty associations of other states.
	(c)  The liquidator or receiver, as applicable, shall give
written notice to affected reinsurers of the pendency of a claim
against the receiver under a reinsured policy within a reasonable
time after the claim is filed in the delinquency proceeding.  During
the pendency of the claim any affected reinsurer may:
	(1)  investigate the claim;  and
	(2)  intervene, at the reinsurer's own expense, in any
proceeding where the claim is to be adjusted and assert any defense
or defenses which it may deem available to the delinquent company,
the liquidator, or the receiver.
	(d)  Subject to court approval, an expense incurred under
Subsection (c)(1) or (2) shall be chargeable against the delinquent
company as part of the expense of liquidation, to the extent of a
proportionate share of the benefit which may accrue to the
delinquent company solely as a result of the defense undertaken by
the assuming insurer.
	(e)  If two or more assuming insurers are involved in the
same claim and a majority in interest elect to intervene and assert
a defense to a claim described by Subsection (c), an expense
incurred under Subsection (c)(1) or (2) shall be apportioned in
accordance with the terms of the reinsurance agreement as though
the expense had been incurred by the ceding insurer.
	(f)  Nothing in this chapter shall be construed as
authorizing the receiver, or other entity, to compel payment from a
non-life reinsurer on the basis of estimated incurred but not
reported losses or outstanding reserves, except outstanding
reserves with respect to claims made pursuant to Section 21A.255
and approved workers compensation claims filed under Section
21A.252(d).

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.

Last modified: August 11, 2007