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H. B. No. 212As IntroducedAs Introduced
124th General Assembly | Regular Session | 2001-2002 |
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REPRESENTATIVES Wolpert, G. Smith, Seitz, Willamowski, Kearns, Faber, Gilb, Britton, Rhine
A BILL
To amend sections 3901.64 and 3903.32 of the Revised
Code to permit assuming insurers, in the event of
the insolvency of a ceding insurer, to make
reinsurance payments directly to an insured or
beneficiary when this is provided for in a
reinsurance agreement, and to permit assuming
insurers to introduce defenses in an insolvency
proceeding that it deems to be available to the
ceding insurer.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 3901.64 and 3903.32 of the Revised
Code be amended to read as follows:
Sec. 3901.64. (A) A domestic ceding insurer may take
credit
for any reinsurance ceded as provided in sections 3901.61
to
3901.63 of the Revised Code only if the reinsurance agreement
contained in the reinsurance contract, and any agreement that
provides security for the payment of the obligations under the
reinsurance agreement, including any trust agreement, provide, in
substance, for
the following: (1)
The
In the event of the insolvency of the ceding insurer,
the reinsurance, whether paid directly or from trust
assets
securing the reinsurance agreement, shall be payable by
the
assuming insurer on the basis of the liability of the
domestic
ceding insurer under the policy or contract reinsured,
without any
diminution because the domestic ceding insurer is
insolvent or
because the liquidator or statutory receiver has
failed to pay all
or any portion of any claims; (2) The reinsurance payments, whether paid directly or
from
trust assets securing the reinsurance agreement, shall be
made by
the assuming insurer directly to the domestic ceding
insurer, or
in the event of its insolvency or liquidation, to its
liquidator
or statutory receiver
except where the reinsurance contract or
other written agreement specifically provides for direct payment
of the reinsurance to the insured or beneficiary of the insurance
policy in the event of the insolvency of the ceding insurer. (B)(1) The reinsurance agreement may provide that the
domiciliary
liquidator or statutory receiver shall give written
notice
to the assuming insurer that a
claim is pending against
the
domestic ceding insurer on the
policy or contract reinsured.
The notice shall be given within a
reasonable amount of time after
the claim is filed with the
liquidator or statutory receiver.
During the pendency of the claim, any assuming insurer may
investigate the claim and interpose, at its own expense, in the
proceeding where the claim is to be adjudicated any defenses which
it deems to be available to the ceding insurer or its liquidator.
(2) The expense may be filed as a claim against the
insolvent ceding insurer to the extent of a proportionate share of
the benefit that may accrue 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 in interest elect to interpose a defense to the claim,
the expense shall be apportioned in accordance with the terms of
the reinsurance agreement as though the expense had been incurred
by the ceding insurer.
Sec. 3903.32. The amount recoverable by the liquidator from
reinsurers shall
not be reduced as a result of delinquency
proceedings, regardless of any
provision in the reinsurance
contract or other agreement. Payment made
by a reinsurer
directly
to an insured or other creditor does not diminish the reinsurer's
obligation to the insurer's estate except when the reinsurance
contract, and
any
or other written agreement
that provides
security for the payment
of the obligations under
the contract,
provides
for direct
coverage of a named insured and the payment
is
made in discharge
of that obligation and the contract or agreement
has been
approved
pursuant to division (A)(3) of section 3901.341
or section 3907.12
or
3925.33 of the Revised Code
for direct
payment of the
reinsurance to the insured or beneficiary of the
insurance policy in the event of the
insolvency of the ceding
insurer.
Section 2. That existing sections 3901.64 and 3903.32 of the
Revised Code are hereby repealed.
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