§ 38.2-1316.5. Terms of agreements
A. The reinsurance agreement for which credit is allowed under this article shall contain the following provisions:
1. A provision making the reinsurance payable by the assuming insurer on the basis of the liability of the ceding insurer under the contract or contracts reinsured without diminution because of the insolvency of the ceding insurer;
2. A provision making the reinsurance payable directly to the ceding insurer or to its domiciliary liquidator or receiver except (i) where the contract specifically provides another payee of the reinsurance in the event of the insolvency of the ceding insurer or (ii) where the assuming insurer with the consent of the direct insured has assumed the policy obligations of the ceding insurer as direct obligations of the assuming insurer to the payees under the policies and in substitution for the obligations of the ceding insurer to the payees;
3. A provision that the receiver, liquidator or statutory successor of an insolvent ceding insurer shall give written notice to the assuming insurer of any impending claim on the policy or bond reinsured; and
4. If the ceding insurer is a domestic insurer and the assuming insurer is not licensed or accredited in this Commonwealth, provisions in which the assuming insurer:
a. Agrees that in the event of the failure of the assuming insurer to perform its obligations under the terms of the reinsurance agreement, the assuming insurer, at the request of the ceding insurer, shall submit to the jurisdiction of any court of competent jurisdiction in any state of the United States, will comply with all requirements necessary to give such court jurisdiction, and will abide by the final decision of such court or of any appellate court in the event of an appeal; and
b. Designate the Commission or a designated attorney as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the ceding company.
B. The notice required by subdivision 3 of subsection A shall be given within a reasonable time after the claim is filed in the insolvency proceeding. While waiting for the settlement of the claim, any assuming insurer at its own expense may investigate the claim and interpose in the proceeding in which the claim is to be adjudicated, any defense it considers available to the ceding insurer or its receiver, liquidator or statutory successor. The expense incurred by the assuming insurer shall be chargeable, subject to the approval of the court, against the insolvent ceding insurer as part of the expense of liquidation. The expense shall be chargeable to the extent of the proportionate share of any benefit that accrues to the ceding insurer solely as a result of the defense undertaken by the assuming insurer. Where two or more assuming insurers are involved in the same claim and a majority of interest elect to interpose a defense to the claim, the expense shall be apportioned according to the terms of the reinsurance agreement as though the expense had been incurred by the ceding insurer.
C. The requirements of this section shall not apply when credit is allowed pursuant to the provisions of subdivision 1 of § 38.2-1316.4.
(1991, c. 264.)
Sections: Previous 38.2-1315 38.2-1315.1 38.2-1316 38.2-1316.1 38.2-1316.2 38.2-1316.3 38.2-1316.4 38.2-1316.5 38.2-1316.6 38.2-1316.7 38.2-1316.8 38.2-1317 38.2-1317.1 38.2-1317.2 38.2-1318 NextLast modified: April 16, 2009