Kinds of Insurance — Reinsurance

Ark. Code Ann. tit. 23, ch. 62

in effect

Ark. Code Ann. § 23-62-101 Definitions not mutually exclusive.

It is intended that certain insurance coverages may come within the definitions of two (2) or more kinds of insurance as defined in this subchapter and §§ 23-62-201 , 23-62-202 , 23-62-203 , 23-62-204 , 23-62-205 , and 23-63-701 , and the inclusion of the coverage within one (1) definition shall not exclude it as to any other kind of insurance within the definition of which that coverage is reasonably includable.

Ark. Code Ann. § 23-62-102 Life insurance.

(a) As used in the Arkansas Insurance Code, unless the context otherwise requires, “life insurance” is insurance on human lives. (b) The transaction of life insurance includes also the granting of endowment benefits, benefits for expenses incurred in connection with death, additional benefits in event of death or dismemberment by accident or accidental means, additional benefits in event of the insured's disability, and optional modes of settlement of proceeds of life insurance. (c) Transaction of life insurance does not include workers' compensation, as defined in § 23-62-105(a)(3).

Ark. Code Ann. § 23-62-103 Accident and health insurance.

(a) As used in the Arkansas Insurance Code, unless the context otherwise requires, “accident and health insurance” is insurance of human beings against bodily injury, disablement, or death by accident or accidental means or the expense thereof or against loss of income due to disablement or expense resulting from sickness and every insurance appertaining thereto. (b) Transaction of accident and health insurance does not include workers' compensation, as defined in § 23-62-105(a)(3).

Ark. Code Ann. § 23-62-104 Property insurance.

As used in the Arkansas Insurance Code, unless the context otherwise requires, “property insurance” is insurance on real or personal property of every kind and of every interest therein, whether on land, water, or in the air, against loss or damage from any and all hazard or cause and against loss consequential upon the loss or damage, other than noncontractual legal liability for the loss or damage.

Ark. Code Ann. § 23-62-105 Casualty insurance — Definition.

(a) As used in the Arkansas Insurance Code, unless the context otherwise requires, “casualty insurance” includes: (1) Vehicle Insurance. Insurance against loss of or damage to any land vehicle or aircraft or any draft or riding animal or to property while contained therein or thereon or being loaded or unloaded therein or therefrom, from any hazard or cause, and against any loss, liability, or expense resulting from or incidental to ownership, maintenance, or use of the vehicle, aircraft, or animal, together with insurance against accidental death or accidental injury to individuals, including the named insured, while in, entering, alighting from, adjusting, repairing, cranking, or caused by being struck by a vehicle, aircraft, or draft or riding animal, if the insurance is issued as an incidental part of insurance on the vehicle, aircraft, or draft or riding animal; (2) Liability Insurance. Insurance against legal liability for the death, injury, or disability of any human being or for damage to property and the provision of medical, hospital, surgical, disability, or accident and health benefits to injured persons and funeral and death benefits to dependents, beneficiaries, or personal representatives of persons killed, irrespective of legal liability of the insured, when issued as an incidental coverage with or supplemental to liability insurance; (3) Workers' Compensation and Employer's Liability. Insurance of the obligations accepted by, imposed upon, or assumed by employers under law for death, disablement, or injury of employees; (4) Burglary and Theft. Insurance against loss or damage by burglary, theft, larceny, robbery, forgery, fraud, vandalism, malicious mischief, confiscation; or wrongful conversion, disposal, or concealment; or from any attempt at any of the foregoing; including supplemental coverage for medical, hospital, surgical, and funeral expense incurred by the named insured or any other person as a result of bodily injury during the commission of a burglary, robbery, or theft by another; also insurance against loss of or damage to moneys, coins, bullion, securities, notes, drafts, acceptances, or any other valuable papers and documents, resulting from any cause; (5) Personal Property Floater. Insurance upon personal effects against loss or damage from any cause under a personal property floater; (6) Glass. Insurance against loss or damage to glass, including its lettering, ornamentation, and fittings; (7) Boiler and Machinery. Insurance against any liability and loss or damage to property or interest therein resulting from accidents to or explosions of boilers, pipes, pressure containers, machinery, or apparatus, and to make inspection of and issue certificates of inspection upon boilers, machinery, and apparatus of any kind, whether or not insured; (8) Leakage and Fire Extinguishing Equipment. Insurance against loss or damage to any property or interest caused by the breakage or leakage of sprinklers, hoses, pumps, and other fire extinguishing equipment or apparatus, water pipes or containers, or by water entering through leaks or openings in buildings and insurance against loss or damage to sprinklers, hoses, pumps, and other fire extinguishing equipment or apparatus; (9) Credit. Insurance against loss or damage resulting from failure of debtors to pay their obligations to the insured; (10) Malpractice. Insurance against legal liability of the insured and against loss, damage, or expense incidental to a claim of liability including medical, hospital, surgical, and funeral benefits to injured persons, irrespective of legal liability of the insured, arising out of the death, injury, or disablement of any person or arising out of damage to the economic interest of any person, as the result of negligence in rendering expert, fiduciary, or professional service. However, malpractice insurance shall not include abstractor's professional liability insurance; (11) Livestock. Insurance against loss or damage to livestock and for services of a veterinarian for those animals; (12) Entertainments. Insurance indemnifying the producer of any motion picture, television, radio, theatrical, sport, spectacle, entertainment, or similar production, event, or exhibition against loss from interruption, postponement, or cancellation thereof due to death, accidental injury, or sickness of performers, participants, directors, or other principals; (13) Elevator. Insurance against loss of or damage to any property of the insured resulting from the ownership, maintenance, or use of elevators, escalators, and moving stairways, except loss or damage by fire, and to make inspection of and issue certificates of inspection upon elevators, escalators, and moving stairways; (14) Abstractor's Professional Liability. Insurance against legal liability of the insured, and against loss, damage, or expense incidental to a claim of liability arising out of damage to the economic interest of any person as the result of negligence in rendering the professional service of an abstractor; (15) Mortgage Lien Protection. (A) Insurance issued at the time a loan is originated to indemnify a lender against loss from a borrower's misrepresentation or nondisclosure of an outstanding lien encumbering the borrower's property if the lender has no actual knowledge of the lien. (B) Mortgage lien protection shall not be issued for: (i) A transaction involving: (a) A purchase money mortgage; or (b) A transfer of title; (ii) Coverage beyond the term of the loan; (iii) Coverage for a diminution in value of secured property; or (iv) Coverage in excess of two hundred fifty thousand dollars ($250,000). (C) The borrower's credit score shall not be used to determine the amount or cost of mortgage lien protection. (D) Mortgage lien protection insurance shall not include any other insurance coverage that may be issued by a title insurer as defined in § 23-103-402; and (16) Miscellaneous. Insurance against any other kind of loss, damage, or liability properly a subject of insurance and not within any other kind of insurance as defined in this subchapter and §§ 23-62-201, 23-62-202, 23-62-204, 23-62-205, and 23-63-701 if that insurance is not disapproved by the Insurance Commissioner as being contrary to law or public policy. (b) Provision of medical, hospital, surgical, and funeral benefits and of coverage against accidental death or injury as incidental to and part of other insurance as stated under subdivisions (a)(1), (2), (4), and (10) of this section shall for all purposes be deemed to be the same kind of insurance to which it is so incidental and shall not be subject to provisions of the Arkansas Insurance Code applicable to life insurance or accident and health insurance.

Ark. Code Ann. § 23-62-106 Surety insurance.

As used in the Arkansas Insurance Code, unless the context otherwise requires, “surety insurance” includes: (1) Fidelity insurance, which is insurance guaranteeing the fidelity of persons holding positions of public or private trust; (2) Insurance guaranteeing the performance of contracts, other than insurance policies, and guaranteeing and executing bonds, undertakings, and contracts of suretyship; and (3) Insurance indemnifying banks, bankers, brokers, and financial or moneyed corporations or associations against loss, resulting from any cause, of bills of exchange, notes, bonds, securities, evidences of debt, deeds, mortgages, warehouse receipts or other valuable papers, documents, money, precious metals and articles made therefrom, jewelry, watches, necklaces, bracelets, gems, precious and semiprecious stones, including any loss while they are being transported in armored motor vehicles or by messenger, but not including any other risks of transportation or navigation; also, insurance against loss or damage to an insured's premises or to his or her furnishings, fixtures, equipment, safes and vaults therein caused by burglary, robbery, theft, vandalism, or malicious mischief, or any attempt thereof.

Ark. Code Ann. § 23-62-107 Marine insurance.

As used in the Arkansas Insurance Code, unless the context otherwise requires, “marine insurance” includes: (1) Insurance against any and all kinds of loss or damage to: (A) Vessels, craft, aircraft, cars, automobiles, and vehicles of every kind as well as all goods, freights, cargoes, merchandise, effects, disbursements, profits, moneys, bullion, precious stones, securities, choses in action, evidences of debt, valuable papers, bottomry and respondentia interests, and all other kinds of property and interests therein, in respect to, appertaining to, or in connection with any and all risks or perils of navigation, transit, or transportation, including war risks, on or under any seas or other waters, on land or in the air, or while being assembled, packed, crated, baled, compressed, or similarly prepared for shipment or while awaiting shipment or during any delays, storage, transshipment, or reshipment incident thereto, including marine builder's risks and all personal property floater risks; (B) Person or property in connection with or appertaining to a marine, inland marine, transit, or transportation insurance, including liability for, loss of or damage to either, arising out of or in connection with the construction, repair, operation, maintenance, or use of the subject matter of the insurance, but not including life insurance or surety bonds nor insurance against loss by reason of bodily injury to the person arising out of the ownership, maintenance, or use of automobiles; (C) Precious stones, jewels, jewelry, gold, silver, and other precious metals, whether used in business or trade or otherwise and whether they are in course of transportation or otherwise; and (D) Bridges, tunnels, and other instrumentalities of transportation and communication, excluding buildings, their furniture and furnishings, fixed contents and supplies held in storage, unless fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot or civil commotion are the only hazards to be covered; piers, wharves, docks and ships, excluding the risks of fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot or civil commotion; other aids to navigation and transportation, including dry docks and marine railways, against all risks; (2) “Marine protection and indemnity insurance”, meaning insurance against, or against legal liability of the insured for, loss, damage, or expense arising out of, or incident to, the ownership, operation, chartering, maintenance, use, repair, or construction of any vessel, craft, or instrumentality in use in ocean or inland waterways, including liability of the insured for personal injury, illness, or death or for loss of or damage to the property of another person; and (3) Travel insurance, as defined in § 23-64-234.

Ark. Code Ann. § 23-62-108 Title insurance.

As used in the Arkansas Insurance Code, unless the context otherwise requires, “title insurance” is insurance of owners of property or others having an interest therein, or liens or encumbrances thereon, against loss by encumbrance, a defective or invalid title, adverse claim to title, or closing protection.

Ark. Code Ann. § 23-62-109 Funding agreements.

(a)(1) As used in this section, the term “funding agreement” means an agreement which authorizes an admitted life insurer to accept funds and which provides for an accumulation of those funds for the purpose of making one (1) or more payments at future dates in amounts that are not based on mortality or morbidity contingencies. (2)(A) However, the term “funding agreement” does not include any agreement in connection with the funding of one (1) or more payments which are excludable from the gross income of the recipient under section 104(a)(2) of the Internal Revenue Code, as it may be amended or renumbered from time to time. (B) The term “funding agreement” shall not be construed so as to include any annuity contract. (b) An insurer authorized to deliver or issue for delivery annuity contracts in this state may deliver or issue for delivery one (1) or more funding agreements. Notwithstanding the definition of “contracts of insurance”, “life insurance”, and “endowment insurance” or of “annuities” within subtitle 3 of this title, the issuance or delivery of a funding agreement meeting the definition set forth in subsection (a) of this section shall constitute a lawful activity of that insurer which is reasonably related to and incidental to its insurance activities and constitutes doing an insurance business in this state. (c)(1) Funding agreements may be issued to: (A) Individuals; (B) Entities authorized by this state to engage in an insurance business; (C) Entities other than individuals and other than persons or entities authorized to engage in an insurance business, but only for the purpose of funding benefits under any employee benefit plan as defined in the Employee Retirement Income Security Act of 1974, as now or hereafter amended, maintained in the United States or in a foreign country; (D) Fund any employee benefit plan or any other program sponsored by the United States Government, the government of any state or foreign country, or political subdivision thereof, or any agency thereof, and only if such agreement is issued in an amount of no less than five hundred thousand dollars ($500,000); or (E) Fund a program of an institution which has assets in excess of twenty-five million dollars ($25,000,000). (2) Otherwise, funding agreements may only be issued to any person or entity identified in this subsection, and in any sum, if the funding agreements are issued to fund an agreement providing for periodic payments in satisfaction of a claim and pursuant to order of a court of competent jurisdiction or a settlement agreement between the claimant and the putative or apparent obligor. (d) No amounts shall be guaranteed or credited under a funding agreement except upon reasonable assumptions as to investment income and expenses and on a basis equitable to all holders of funding agreements of a given class. The funding agreements shall not provide for payments to or by the insurer based on mortality or morbidity contingencies. (e) Amounts paid to the insurer and proceeds applied under optional modes of settlement under the funding agreements may be allocated by the insurer to one (1) or more separate accounts pursuant to § 23-81-402, but only if the insurer has separately qualified to issue variable products and only if the policy owner has elected and directed the insurer to invest the moneys backing the funding agreement in variable accounts. (f) Any and all funding agreements or guaranteed investment contracts issued prior to April 21, 1993, which do not meet the definition of “insurance”, “life insurance”, or “annuity” as hereinabove set forth are, nonetheless, valid obligations of the respective insurers which issue them according to the terms of the particular agreements. (g)(1) All basic or generic funding agreement forms shall be submitted to the Insurance Commissioner for approval and pursuant to the procedures at § 23-79-109. (2) The commissioner may adopt rules relating to: (A) The standards to be followed in the approval of the forms of the funding agreements; (B) The reserves to be maintained by insurers issuing the funding agreements; (C) The accounting and reporting of funds credited under the funding agreements; (D) The disclosure of information to be given to holders and prospective holders of the funding agreements; and (E) The qualification and compensation of persons selling the funding agreements on behalf of insurers. (h) Notwithstanding any other provision of law, the commissioner has sole authority to regulate the issuance and sale of the funding agreements, including the persons selling the funding agreements on behalf of insurers.

Ark. Code Ann. § 23-62-110 Mortgage guaranty insurance.

As used in the Arkansas Insurance Code, “mortgage guaranty insurance” means insurance that insures lenders against financial loss by reason of nonpayment of principal, interest, or other sums agreed to be paid under the terms of any note, bond, or other evidence of indebtedness secured by a mortgage, deed of trust, or other instrument constituting a lien or charge on improved real estate.

Ark. Code Ann. § 23-62-111 Employee benefit stop-loss insurance.

(a) As used in this subchapter, “employee benefit stop-loss insurance” means coverage that insures an employer or an employer-sponsored health plan against the risk that: (1) One (1) claim will exceed a specific dollar amount; or (2) The entire loss of a self-insurance plan will exceed a specific dollar amount. (b) An insurer authorized to transact accident and health insurance business in this state may issue employee benefit stop-loss insurance in this state. (c) An insurer shall not issue an employee benefit stop-loss insurance policy that: (1) Has an annual attachment point for claims incurred per individual that is less than twenty thousand dollars ($20,000); (2) Has an annual aggregate attachment point for groups of fifty (50) or less that is lower than one hundred twenty percent (120%) of expected claims ; (3) Has an annual aggregate attachment point for groups of fifty-one (51) or more that is lower than one hundred ten percent (110%) of expected claims; or (4) Provides for direct coverage of healthcare expenses of an individual. (d) The Insurance Commissioner may adopt rules that carry out the requirements of this section, including without limitation rules that require: (1) Additional standards for employee benefit stop-loss insurance policies; and (2) Disclosures to policyholders by an insurance carrier providing employee benefit stop-loss insurance.

Ark. Code Ann. § 23-62-112 Family leave insurance — Purpose — Definition.

(a) The purpose of this section is to create a new line of insurance, known as "family leave insurance", to allow an insurer licensed to transact accident and health or life insurance business in this state to issue an insurance policy covering the risk of family leave. (b) As used in the Arkansas Insurance Code, "family leave insurance" means an insurance policy that is issued to an employer related to a benefit program that is provided to an employee to pay for a percentage or portion of the employee's income loss due to: (1) The birth of the employee's child or adoption of a child by the employee; (2) The placement of a foster child in the home of the employee; (3) The care of the employee's family member who has a serious health condition; or (4) Circumstances arising because the employee's family member, who is a service member, is on active duty or has been notified of an impending call or order to active duty. (c) Family leave insurance may be: (1) Written as: (A) An amendment or rider to a group disability income insurance policy; or (B) A separate group insurance policy purchased by an employer; or (2) Included in a group disability income insurance policy. (d) An insurer that is authorized to transact accident and health or life insurance business in this state may issue family leave insurance in this state.

Ark. Code Ann. § 23-62-201 Exception.

This subchapter shall not apply to insurance of wet marine and foreign trade insurance risks.

Ark. Code Ann. § 23-62-202 Limits of risk.

Any authorized insurer may accept reinsurance only of such risks, in this state, and retain risk thereon within such limits, as it is authorized to insure.

Ark. Code Ann. § 23-62-203 Rules.

The Insurance Commissioner may adopt reasonable rules to implement the provisions of this subchapter.

Ark. Code Ann. § 23-62-204 Allowance of credit.

(a)(1) Except as provided in subsection (b) of this section, no credit shall be allowed as an asset or a deduction from liability to any ceding insurer for reinsurance unless the reinsurance contract provides that in the event of the insolvency of the ceding insurer, the reinsurance is payable under one (1) or more contracts reinsured by the assuming insurer on the basis of reported claims allowed by the liquidation court without diminution because of the insolvency of the ceding insurer. (2) The payments shall be made directly to the ceding insurer or to its domiciliary liquidator unless: (A) The contract or other written agreement specifically provides another payee of the reinsurance in the event of the insolvency of the ceding insurer; or (B) The assuming insurer with the consent of the direct insured or insureds 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. (b)(1) If a life and health insurance guaranty association has made the election to succeed to the rights and obligations of the insolvent insurer under the contract of reinsurance, then the reinsurer's liability to pay covered reinsured claims shall continue under the contract of reinsurance, provided that the reinsurer is paid the reinsurance premiums for coverage. (2) Payment of the reinsured claims shall be made by the reinsurer only pursuant to the direction of the guaranty association or its designated successor. (3) Any claim payment made at the direction of the guaranty association or its designated successor by the reinsurer will discharge the reinsurer of all further liability to any other party for the payment. (c)(1) The reinsurance agreement may provide that the domiciliary liquidator of an insolvent ceding insurer shall give written notice to the assuming insurer of the pendency of a claim against the ceding insurer on the contract reinsured within a reasonable time after the claim is filed in the liquidation proceeding. (2) During the pendency of the claim, any assuming insurer may investigate the claim and interpose at its own expense in the proceeding any defenses which it deems available to the ceding insurer or its liquidator. (3) The expense of asserting a defense may be filed as a claim against the insolvent ceding insurer to the extent of a proportionate share of the benefit which may accrue to the ceding insurer solely as a result of the defense undertaken by the assuming insurer. (4) If two (2) or more assuming insurers are involved in a claim and a majority in interest elect to interpose one (1) or more defenses 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.

Ark. Code Ann. § 23-62-205 Approval and notice of reinsurance.

(a) Every insurer authorized to do business in the State of Arkansas, whether foreign, domestic, or alien, including, but not limited to, farmers' mutual aid associations or companies, reciprocal insurers, stipulated premium insurers, mutual assessment life and disability companies, and foreign fraternal benefit societies, shall petition the Insurance Commissioner for prior approval of any agreement of assumption reinsurance which provides for the ceding of Arkansas risks to an insurer not authorized to do business in this state. (b) After notice and hearing, the commissioner may approve the agreement for reinsurance if it is found: (1) That the agreement is fair and equitable and does not lessen or diminish any benefit to a policyholder which would have been provided by the ceding entity; (2) That the agreement promotes the public interest and does not create a monopoly; (3) That the agreement is not harmful to the best interests of the policyholders; (4) That the agreement will not impair the financial condition of either the ceding insurer or the assuming insurer; (5) That the assuming insurer is in sound financial condition; and (6) That the assumption certificates, after being filed with and approved by the commissioner, shall be given to Arkansas policyholders affected by the agreement, provided, that notice to credit life and credit disability policyholders may be given to the creditor beneficiary of the credit life or credit disability policy. (c) The commissioner, in his or her sole discretion, may waive notice and hearing as to any agreement under subsection (b) of this section pursuant to written motion by any party to the agreement. (d)(1) Every insurer authorized to do business in the State of Arkansas, whether foreign, domestic, or alien, including, but not limited to, farmers' mutual aid associations or companies, reciprocal insurers, stipulated premium insurers, mutual assessment life and disability companies, and foreign fraternal benefit societies, shall file with the commissioner any agreement of assumption reinsurance which provides for the ceding of Arkansas risks to any insurer authorized to do business in this state. The agreement shall be deemed approved within thirty (30) days after the date filed. (2) This subsection shall not apply to any agreement for assumption reinsurance which cedes Arkansas risks if the assuming insurer is authorized to do business in this state and the transaction is approved by the state insurance regulator of the domiciliary state of the ceding insurer. (e) Any assumption certificates issued to Arkansas policyholders pursuant to assumption reinsurance agreements shall be filed with and approved by the commissioner prior to delivery to policyholders. (f) Domestic stock and domestic mutual insurers shall be exempt from the requirements of subsections (a)-(d) of this section, but shall comply with the provisions of §§ 23-69-149 and 23-69-150, respectively. (g) Domestic fraternal benefit societies shall be exempt from the requirements of subsections (a)-(d) of this section, but shall comply with the provisions of § 23-74-304.

Ark. Code Ann. § 23-62-301 Title — Applicability.

(a) This subchapter may be cited as the “Arkansas Credit for Reinsurance Law”. (b) All reserves ceded to a nonadmitted reinsurer on insurance written in this state shall be subject to the provisions of this subchapter.

Ark. Code Ann. § 23-62-302 Sections 23-62-201, 23-62-202, 23-62-204, and 23-62-205 applicable — Purpose — Construction.

(a) Reinsurance of insurance risks by domestic and foreign insurance companies is also regulated under the provisions of §§ 23-62-201, 23-62-202, 23-62-204, and 23-62-205. (b)(1) The purpose of this subchapter is to protect the interest of insureds, claimants, ceding insurers, assuming insurers, and the public generally. The General Assembly declares its intent is to ensure adequate regulation of insurers and reinsurers and adequate protection for those to whom they owe obligations. (2) In furtherance of the state's interest, the General Assembly provides a mandate that upon the insolvency of an insurer or reinsurer not domiciled in the United States that provides security to fund its obligations within the United States in accordance with this subchapter: (A) The assets representing the security shall be maintained in the United States, and claims shall be filed with and valued by the state insurance commissioner with regulatory oversight; and (B) The assets shall be distributed in accordance with the insurance laws of the state in which the trust is domiciled that are applicable to the liquidation of domestic United States insurance companies. (3) The General Assembly further declares that the matters contained in this subchapter are fundamental to the business of insurance in accordance with 15 U.S.C. §§ 1011-1012, as it existed on January 1, 2005. (c)(1) Nothing in this subchapter is intended to prohibit or discourage reasonable competition or to prohibit or discourage the continued availability of insurance regulated by this subchapter. (2) The provisions of this subchapter shall be liberally construed.

Ark. Code Ann. § 23-62-303 Report of funds withheld under reinsurance treaties.

Deposits and funds withheld under reinsurance treaties shall be reported in the annual statement in the exhibit entitled “Special Deposits Not for the Protection of All Policyholders”.

Ark. Code Ann. § 23-62-304 Agreement examination.

The Insurance Commissioner shall have the right to examine any of the reinsurance agreements or deposit arrangements of the ceding insurer at any time.

Ark. Code Ann. § 23-62-305 Credit allowed a domestic ceding insurer.

(a)(1)(A) A domestic ceding insurer shall be allowed credit for reinsurance as an asset or a reduction from liability on account of reinsurance ceded only when the reinsurer meets the requirements of subdivisions (a)(4) and (5) of this section and subsections (b)—(f) of this section. (B) The Insurance Commissioner may adopt rules under § 23-62-308(b) to implement this section and specify additional requirements relating to: (i) The valuation of assets or reserve credits; (ii) The amount and forms of security supporting reinsurance arrangements as described in § 23-62-308(b); and (iii) The circumstances in which credit of a noncomplying assuming insurer shall be reduced or eliminated. (2) Credit shall be allowed under subdivisions (a)(4) and (5) of this section or subsection (b) of this section only for cessions of the kinds or classes of business that the assuming insurer is licensed or otherwise permitted to write or assume in: (A) Its state of domicile; or (B) In the case of a United States branch of an alien assuming insurer, in the state through which it is entered and licensed to transact insurance or reinsurance. (3) Credit shall be allowed under subsection (b) or subsection (c) of this section only if the applicable requirements of subsection (g) of this section have been satisfied. (4) Credit shall be allowed if the reinsurance is ceded to an assuming insurer that is licensed to transact insurance or reinsurance in this state. (5)(A) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is accredited by the Insurance Commissioner as a reinsurer in this state. (B) To be eligible for accreditation by the Insurance Commissioner under this section, a reinsurer shall: (i) File with the Insurance Commissioner evidence of its submission to this state's jurisdiction; (ii) Submit to this state's authority to examine its books and records; (iii) Be licensed to transact insurance or reinsurance in at least one (1) state, or, in the case of a United States branch of an alien assuming insurer, be entered through and licensed to transact insurance or reinsurance in at least one (1) state; (iv) File annually with the Insurance Commissioner a copy of its annual statement filed with the insurance department of its state of domicile and a copy of its most recent audited financial statement; and (v)(a) Demonstrate to the satisfaction of the Insurance Commissioner that the reinsurer has adequate financial capacity to meet the reinsurer's reinsurance obligations and is otherwise qualified to assume reinsurance from domestic insurers. (b) A reinsurer is considered to meet the requirements under subdivision (a)(5)(B)(v)(a) of this section if, at the time of application to the Insurance Commissioner, the reinsurer maintains a surplus regarding policyholders in an amount not less than twenty million dollars ($20,000,000) and whose accreditation has not been denied by the Insurance Commissioner within ninety (90) days of applying. (b)(1) Credit shall be allowed if the reinsurance is ceded to an assuming insurer that is domiciled in, or, in the case of a United States branch of an alien assuming insurer, is entered through a state that employs standards regarding credit for reinsurance substantially similar to those applicable under this subchapter and the assuming insurer or United States branch of an alien assuming insurer: (A) Maintains a surplus regarding policyholders in an amount not less than twenty million dollars ($20,000,000); and (B) Submits to the authority of this state to examine its books and records. (2) The requirement of subdivision (b)(1)(A) of this section does not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system. (c)(1)(A) Credit shall be allowed if the reinsurance is ceded to an assuming insurer that maintains a trust fund in a qualified United States financial institution, as defined in § 23-62-307(b), for the payment of the valid claims of its United States ceding insurers, their assigns, and their successors in interest. (B) To enable the Insurance Commissioner to determine the sufficiency of the trust fund, the assuming insurer shall report annually to the Insurance Commissioner information substantially the same as that required to be reported on the National Association of Insurance Commissioners annual statement form by licensed insurers. (C) The assuming insurer shall submit to examination of its books and records by the Insurance Commissioner and bear the expense of examination. (2) A credit for reinsurance shall not be granted under this section unless the form of the trust and any amendments to the trust have been approved by: (A) The insurance commissioner of the state where the trust is domiciled; or (B) The insurance commissioner of another state who, under the terms of the trust instrument, has accepted principal regulatory oversight of the trust. (3)(A) The form of the trust and any trust amendments also shall be filed with the insurance commissioner of every state in which the ceding insurer beneficiaries of the trust are domiciled. (B) The trust instrument shall provide that contested claims shall be valid and enforceable upon the final order of any court of competent jurisdiction in the United States. (C) The trust shall vest legal title to its assets in its trustees for the benefit of the assuming insurer's United States ceding insurers, their assigns, and their successors in interest. (D) The trust and the assuming insurer shall be subject to examination as determined by the Insurance Commissioner. (4)(A) The trust shall remain in effect for as long as the assuming insurer has outstanding obligations due under the reinsurance agreements subject to the trust. (B) By February 28 of each year, the trustees of the trust shall: (i) Report to the Insurance Commissioner in writing the balance of the trust; (ii) List the trust's investments at the preceding year's end; and (iii) Certify: (a) The date of termination of the trust, if so planned; or (b) That the trust will not expire before the following December 31. (d) An assuming insurer is subject to the requirements, as applicable, for the following categories: (1)(A) The trust fund for a single assuming insurer shall consist of funds in trust in an amount not less than the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers. (B) Except as provided in subdivision (d)(2) of this section, the assuming insurer shall maintain a trusteed surplus of at least twenty million dollars ($20,000,000); (2)(A) The commissioner with principal regulatory oversight of the trust may authorize a reduction in the assuming insurer's required trusteed surplus if the Insurance Commissioner finds that: (i) The assuming insurer has permanently discontinued underwriting new business secured by the trust for at least three (3) years; and (ii) In light of reasonably foreseeable adverse loss development and based on an assessment of the risk, the assuming insurer's new required surplus level is adequate to protect United States ceding insurers, policyholders, and claimants. (B)(i) The risk assessment may involve an actuarial review, including an independent analysis of reserves and cash flows. (ii) The risk assessment shall consider any applicable material risk factors, including without limitation: (a) The lines of business involved; (b) The stability of the incurred loss estimates; and (c) The effect of the surplus requirements on the assuming insurer's liquidity or solvency. (C) The minimum required trusteed surplus shall not be reduced to an amount less than thirty percent (30%) of the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers covered by the trust; (3)(A) In the case of a group, including incorporated and individual unincorporated underwriters: (i) For reinsurance ceded under reinsurance agreements with an inception, amendment, or renewal date on or after January 1, 1993, the trust shall consist of a trusteed account in an amount not less than the underwriters' several liabilities attributable to business ceded by United States domiciled ceding insurers to any underwriter of the group; (ii) For reinsurance ceded under reinsurance agreements with an inception date on or before December 31, 1992, and not amended or renewed after that date, notwithstanding the other provisions of this act, the trust shall consist of a trusteed account in an amount not less than the underwriters' several insurance and reinsurance liabilities attributable to business written in the United States; and (iii) In addition to the trusts under this subdivision (d)(3)(A), the group shall maintain in trust a trusteed surplus of which one hundred million dollars ($100,000,000) shall be held jointly for the benefit of the United States domiciled ceding insurers of any member of the group for all years of account. (B) The incorporated members of the group shall not be engaged in any business other than underwriting as a member of the group and shall be subject to the same level of regulation and solvency control by the group's domiciliary regulator as are the unincorporated members. (C) Within ninety (90) days after its financial statements are due to be filed with the group's domiciliary regulator, the group shall provide to the Insurance Commissioner: (i) An annual certification by the group's domiciliary regulator of the solvency of each underwriter member; or (ii) If a certification is unavailable, financial statements prepared by independent public accountants of each underwriter member of the group; and (4) In the case of a group of incorporated underwriters under common administration, the group shall: (A) Have continuously transacted an insurance business outside the United States for at least three (3) years immediately before making application for accreditation; (B) Maintain aggregate policyholders' surplus of at least ten billion dollars ($10,000,000,000); (C) Maintain a trust fund in an amount that is not less than the group's several liabilities attributable to business ceded by United States domiciled ceding insurers to any member of the group under reinsurance contracts issued in the name of the group; (D) Maintain a joint trusteed surplus of which one hundred million dollars ($100,000,000) shall be held jointly for the benefit of United States domiciled ceding insurers of any member of the group as additional security for these liabilities; and (E) Within ninety (90) days after its financial statements are due to be filed with the group's domiciliary regulator, make available to the commissioner an annual certification of each underwriter member's solvency by the member's domiciliary regulator and financial statements of each underwriter member of the group prepared by its independent public accountant. (e)(1) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that has been certified by the Insurance Commissioner as a reinsurer in this state and secures its obligations under the requirements of this section. (2) In order to be eligible for certification, the assuming insurer shall: (A) Be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction, as determined by the Insurance Commissioner under subdivision (e)(4) of this section; (B) Maintain minimum capital and surplus, or its equivalent, in an amount to be determined by rule adopted by the commissioner; (C) Maintain financial strength ratings from at least two (2) rating agencies deemed acceptable as determined by rule adopted by the commissioner; (D) Agree to: (i) Submit to the jurisdiction of this state; (ii) Appoint the Insurance Commissioner as its agent for service of process in this state; (iii) Provide security for one hundred percent (100%) of the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers if it resists enforcement of a final United States judgment; and (iv) Meet any additional filing requirements as determined by rule adopted by the Insurance Commissioner concerning an initial application for certification and on an ongoing basis; and (E) Satisfy any other requirements for certification deemed necessary by rule adopted by the Insurance Commissioner. (3)(A) A certified reinsurer may be an association, including an incorporated underwriter and an individual unincorporated underwriter. (B) In order to be eligible for certification, an association that meets the requirements in subdivision (e)(2) of this section shall: (i) Satisfy the association's minimum capital and surplus requirements through the capital and surplus equivalents or net of liabilities of the association and the association's members, including a joint central fund that may be applied to any unsatisfied obligation of the association or any of the association's members, in an amount determined by the Insurance Commissioner to provide adequate protection; (ii) The incorporated members of the association shall not be engaged in any business other than underwriting as a member of the association and shall be subject to the same level of regulation and solvency control by the association's domiciliary regulator as are the unincorporated members; and (iii) Within ninety (90) days after its financial statements are due to be filed with the association's domiciliary regulator, the association shall provide to the Insurance Commissioner an annual certification by the association's domiciliary regulator of the solvency of each underwriter member, or if a certification is unavailable, financial statements prepared by independent public accountants of each underwriter member of the association. (4)(A) The Insurance Commissioner shall create and publish a list of qualified jurisdictions under which an assuming insurer that is licensed and domiciled in the jurisdictions is eligible to be considered for certification by the commissioner as a certified reinsurer. (B) In order to determine whether or not the domiciliary jurisdiction of an assuming insurer that is not in the United States is eligible to be recognized as a qualified jurisdiction, the Insurance Commissioner shall: (i) Evaluate the appropriateness and effectiveness of the reinsurance supervisory system of the jurisdiction, both initially and on an ongoing basis; and (ii) Consider the rights, benefits, and the extent of reciprocal recognition afforded by the foreign jurisdiction to reinsurers licensed and domiciled in the United States. (C) A qualified jurisdiction shall agree to share information and cooperate with the Insurance Commissioner with respect to all certified reinsurers domiciled within that jurisdiction. (D) A jurisdiction shall not be recognized as a qualified jurisdiction if the Insurance Commissioner has determined that the jurisdiction does not adequately and promptly enforce final United States judgments and arbitration awards. (E) Additional factors may be considered in the discretion of the Insurance Commissioner. (5)(A) A list of qualified jurisdictions shall be published through the National Association of Insurance Commissioners committee process. (B) The Insurance Commissioner shall consider this list in determining qualified jurisdictions. (C) If the Insurance Commissioner approves a jurisdiction as qualified that does not appear on the list of qualified jurisdictions, the Insurance Commissioner shall provide thoroughly documented justification according to criteria to be developed by promulgation of rules by the Insurance Commissioner. (D) United States jurisdictions that meet the requirement for accreditation under the National Association of Insurance Commissioners financial standards and accreditation program shall be recognized as qualified jurisdictions. (E) If a certified reinsurer's domiciliary jurisdiction ceases to be a qualified jurisdiction, the Insurance Commissioner has the discretion to suspend the reinsurer's certification indefinitely, instead of revoking the certification. (6)(A) The Insurance Commissioner shall assign a rating to each certified reinsurer, giving due consideration to the financial strength ratings that have been assigned by rating agencies deemed acceptable to the Insurance Commissioner. (B) The Insurance Commissioner shall publish a list of all certified reinsurers and their ratings. (7)(A) A certified reinsurer shall secure obligations assumed from United States ceding insurers under this section at a level consistent with its rating, as determined in rules promulgated by the Insurance Commissioner. (B) In order for a domestic ceding insurer to qualify for full financial statement credit for reinsurance ceded to a certified reinsurer, the certified reinsurer shall maintain security in a form acceptable to the Insurance Commissioner and consistent with § 23-62-306 or, in the case of a multibeneficiary trust, according to subsection (c) of this section. (C)(i) If a certified reinsurer maintains a trust to fully secure its obligations subject to subsection (c) of this section and chooses to secure its obligations incurred as a certified reinsurer in the form of a multibeneficiary trust, the certified reinsurer shall maintain separate trust accounts for its obligations incurred under reinsurance agreements issued or renewed as a certified reinsurer with reduced security as permitted by this section. (ii) The certified reinsurer shall agree that the certified reinsurer has bound itself, by the language of the trust and agreement with the commissioner with principal regulatory oversight of each of the trust accounts, to fund, upon termination of any of the trust accounts, out of the remaining surplus of the trust any deficiency of any other of the trust accounts. (D) The minimum trusteed surplus requirements under subsection (d) of this section are not applicable to a multibeneficiary trust maintained by a certified reinsurer for the purpose of securing obligations incurred under this section, except that the trust shall maintain a minimum trusteed surplus of ten million dollars ($10,000,000). (E) For obligations incurred by a certified reinsurer under this section, if the security is insufficient, the Insurance Commissioner shall reduce the allowable credit by an amount proportionate to the deficiency and may impose further reductions in allowable credit if the commissioner finds a material risk of nonpayment of the certified reinsurer's obligations when due. (F)(i) For purposes of this section, a certified reinsurer whose certification is terminated shall be treated as a certified reinsurer required to secure one hundred percent (100%) of its obligations. (ii) As used in subdivision (e)(7)(F)(i) of this section, “terminated” means revocation, suspension, voluntary surrender, and inactive status. (iii) If the Insurance Commissioner continues to assign a higher rating under this section to a certified reinsurer, the requirement to secure one hundred percent (100%) of a certified reinsurer's obligations if certification is terminated does not apply to a certified reinsurer in inactive status or to a reinsurer under a suspended certification. (8) If an applicant for certification has been certified as a reinsurer in a National Association of Insurance Commissioners accredited jurisdiction, the Insurance Commissioner may defer to that jurisdiction's certification and to the assigned rating, and then the assuming insurer shall be considered a certified reinsurer in this state. (9)(A) A certified reinsurer that ceases to assume new business in this state may request to maintain its certification in inactive status to continue to qualify for a reduction in security for its in-force business. (B) An inactive certified reinsurer shall continue to comply with the requirements of this section. (C) The Insurance Commissioner shall assign a rating that accounts for the reasons the reinsurer does not assume new business in this state. (f)(1)(A) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that: (i) Either: (a) Has a head officer in a reciprocal jurisdiction; or (b) Is domiciled in a reciprocal jurisdiction, as applicable; and (ii) Is licensed in a reciprocal jurisdiction. (B) As used in subdivision (f)(1)(A) of this section, "reciprocal jurisdiction" means a jurisdiction that: (i)(a) Is a foreign jurisdiction outside the United States that is subject to an in-force covered agreement with the United States, each within its legal authority, or, in the case of a covered agreement between the United States and the European Union, is a member of the European Union. (b) As used in subdivision (f)(1)(B)(i)(a) of this section, "covered agreement" means an agreement entered into pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, as it existed on January 1, 2021, that addresses the elimination, under specified conditions, of collateral requirements as a condition for entering into any reinsurance agreement with a ceding insurer domiciled in this state or for allowing the ceding insurer to recognize credit for reinsurance; (ii) Is a United States jurisdiction that meets the requirements for accreditation under the National Association of Insurance Commissioners financial standards and accreditation program; or (iii) Is a qualified jurisdiction, as determined by the Insurance Commissioner under subdivision (f)(2)(B) of this section, that: (a) Is not otherwise described in subdivision (f)(1)(A)(i) or subdivision (f)(1)(A)(ii) of this section; and (b) Meets certain additional requirements, consistent with the terms and conditions of in-force covered agreements, as specified by the Insurance Commissioner by rule. (C) An assuming insurer shall have and maintain on an ongoing basis: (i) A minimum solvency or capital ratio, as applicable, that is established by rule; (ii) The minimum capital and surplus, or its equivalent, calculated according to the methodology of the jurisdiction of the assuming insurer, in an amount to be stated by rule; (iii) If the assuming insurer is an association, including incorporated and individual unincorporated underwriters, the minimum capital and surplus equivalents, net of liabilities, calculated according to the methodology applicable in its domiciliary jurisdiction, and a central fund containing a balance in amounts determined by the Insurance Commissioner through rule; and (iv) If an assuming insurer is an association, including incorporated and individual unincorporated underwriters, a minimum solvency or capital ratio in the reciprocal jurisdiction where the assuming insurer has its head office or is domiciled, as applicable, and is also licensed. (D) An assuming insurer shall agree and provide adequate assurance to the commissioner, in a form specified by the commissioner pursuant to rule, to provide: (i) A prompt written notice and explanation to the Insurance Commissioner if the assuming insurer falls below the minimum requirements stated in this subsection or if any regulatory action is taken against it for serious noncompliance with applicable law; (ii)(a) A statement of consent in writing to the jurisdiction of the courts of this state and to the appointment of the Insurance Commissioner as agent for service of process. (b) The Insurance Commissioner may require that consent for service of process be provided to the Insurance Commissioner and be included in each reinsurance agreement. (c) This subdivision (f)(1)(D)(ii) does not limit, or in any way alter, the capacity of parties to a reinsurance agreement to agree to alternative dispute resolution mechanisms, except to the extent these agreements are unenforceable under applicable insolvency or delinquency laws; (iii) A statement of consent in writing to pay all final judgments, wherever enforcement is sought, obtained by a ceding insurer or its legal successor, that have been declared enforceable in the jurisdiction where the judgment was obtained; (iv) A statement that each reinsurance agreement shall include a provision requiring the assuming insurer to provide security in an amount equal to one hundred percent (100%) of the assuming insurer’s liabilities attributable to reinsurance ceded pursuant to that agreement if the assuming insurer resists enforcement of a final judgment that is enforceable under the law of the jurisdiction in which it was obtained or a properly enforceable arbitration award, whether obtained by the ceding insurer or by its legal successor on behalf of its resolution estate; (v) A statement of confirmation that the assuming insurer is not presently participating in any solvent scheme of arrangement which involves this state’s ceding insurers; and (vi)(a) An agreement to notify the ceding insurer and the Insurance Commissioner and to provide security in an amount equal to one hundred percent (100%) of the assuming insurer’s liabilities to the ceding insurer should the assuming insurer enter into such a solvent scheme of arrangement. (b) A security described in subdivision (f)(1)(D)(vi)(a) of this section shall be in a form consistent with subsection (e) of this section, § 23-62-306, and as specified by the Insurance Commissioner by rule. (E) An assuming insurer or its legal successor shall provide, if requested by the Insurance Commissioner, on behalf of the assuming insurer and any legal predecessors, certain documentation to the Insurance Commissioner, as specified by the Insurance Commissioner by rule. (F) An assuming insurer shall maintain a practice of prompt payment of claims under reinsurance agreements, pursuant to criteria stated by the Insurance Commissioner by rule. (G) An assuming insurer’s supervisory authority shall confirm to the commissioner on an annual basis, as of the preceding December 31, or at the annual date otherwise reported to the reciprocal jurisdiction, that the assuming insurer complies with the requirements stated in subdivisions (f)(1)(C)(i)—(iv) of this section. (H) This subsection does not preclude an assuming insurer from providing the commissioner with information on a voluntary basis. (2)(A) The Insurance Commissioner shall timely create and publish a list of reciprocal jurisdictions. (B)(i) The Insurance Commissioner’s list as described in subdivision (f)(2)(A) of this section shall require the Insurance Commission to: (a) Include any reciprocal jurisdiction as defined in subdivisions (f)(1)(B)(i) and (ii) of this section; and (b) Consider other reciprocal jurisdictions that are included on the list of reciprocal jurisdictions published through the National Association of Insurance Commissioners. (ii) The Insurance Commissioner may approve a reciprocal jurisdiction that does not appear on the National Association of Insurance Commissioners list of reciprocal jurisdictions according to criteria adopted by the Insurance Commissioner by rule. (C)(i) The Insurance Commissioner may remove a jurisdiction from the list of reciprocal jurisdictions upon a determination that the jurisdiction no longer meets the requirements of a reciprocal jurisdiction, according to a process adopted by rule of the Insurance Commissioner, except that the Insurance Commissioner shall not remove from the list of a reciprocal jurisdiction as defined in subdivisions (f)(1)(B)(i) and (ii) of this section. (ii) Upon removal of a reciprocal jurisdiction from the list described in subdivision (f)(2)(A) of this section, credit for reinsurance ceded to an assuming insurer that has its home office or is domiciled in that jurisdiction shall be allowed, if otherwise allowed according to this subchapter. (iii) The Insurance Commissioner shall timely create and publish a list of assuming insurers that have satisfied the conditions stated in this subsection and to which cessions shall be granted credit according to this subsection. (iv) The Insurance Commissioner may add an assuming insurer to the list described in subdivision (f)(2)(C)(iii) of this section if a National Association of Insurance Commissioners accredited jurisdiction has added the assuming insurer to a list of assuming insurers or if, upon initial eligibility, the assuming insurer: (a) Submits the information to the Insurance Commissioner as required under subdivision (f)(1) of this section; and (b) Complies with any additional requirements that the Insurance Commissioner may impose by rule, except to the extent that the additional requirements conflict with an applicable covered agreement. (3)(A) If the Insurance Commissioner determines that an assuming insurer no longer meets one (1) or more of the requirements under subdivision (f)(1) of this section, the Insurance Commissioner may revoke or suspend the eligibility of the assuming insurer for recognition under subdivision (f)(1) of this section according to the Insurance Commissioner by rule. (B) While an assuming insurer’s eligibility is suspended, a reinsurance agreement issued, amended, or renewed after the effective date of the suspension shall not qualify for credit except to the extent that the assuming insurer’s obligations under the contract are secured according to § 23-62-306. (C) If an assuming insurer’s eligibility is revoked, credit for reinsurance shall not be granted after the effective date of the revocation with respect to any reinsurance agreements entered into by the assuming insurer, including reinsurance agreements entered into before the date of revocation, except to the extent that the assuming insurer’s obligations under the contract are secured in a form acceptable to the Insurance Commissioner and consistent with § 23-62-306. (D) If subject to a legal process of rehabilitation, liquidation, or conservation, as applicable, the ceding insurer, or its representative, may seek and, if determined appropriate by the court in which the proceedings are pending, may obtain an order requiring that the assuming insurer post security for all outstanding ceded liabilities. (E) This section does not limit or in any way alter the capacity of parties to a reinsurance agreement to agree on requirements for security or other terms in that reinsurance agreement, except as expressly prohibited by this subchapter or other applicable law or rule. (F) Credit may be taken under this subsection only for reinsurance agreements entered into, amended, or renewed on or after the effective date of this act, and only with respect to losses incurred and reserves reported on or after the later of: (i) The date on which the assuming insurer has met all eligibility requirements under subdivision (f)(1) of this section; and (ii) The effective date of the new reinsurance agreement, amendment, or renewal. (4) This section does not: (A) Alter or impair a ceding insurer’s right to take credit for reinsurance, to the extent that credit is not available under this subdivision (f)(3)(F), as long as the reinsurance qualifies for credit under any other applicable provision of § 23-62-301 et seq. (B) Allow an assuming insurer to withdraw or reduce the security provided under any reinsurance agreement except as permitted by the terms of the agreement; or (C) Limit, or in any way alter, the capacity of parties to any reinsurance agreement to renegotiate the agreement. (5) Credit shall be allowed when the reinsurance is ceded to an assuming insurer not meeting the requirements of this section but only as to the insurance of risks located in jurisdictions where the reinsurance is required by applicable law, rule, or regulation of that jurisdiction. (g)(1) If the assuming insurer is not licensed, accredited, or certified to transact insurance or reinsurance in this state, the credit permitted by subsections (b)-(d) of this section shall not be allowed unless the assuming insurer agrees in the reinsurance agreements: (A) 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: (i) Submit to the jurisdiction of any court of competent jurisdiction in any state of the United States; (ii) Comply with all requirements necessary to give the court jurisdiction; and (iii) Abide by the final decision of the court or of any appellate court in the event of an appeal; and (B) To designate the Insurance Commissioner 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 insurer. (2) This subsection is not intended to conflict with or override the obligation of the parties to a reinsurance agreement to arbitrate their disputes if the obligation is created in the agreement. (h) If the assuming insurer does not meet the requirements of subsection (a), subsection (b), subsection (c), subsection (d), subsection (e), or subsection (f) of this section, the assuming insurer shall not be allowed a credit unless the assuming insurer agrees in the trust agreements to the following conditions: (1) Notwithstanding any other provisions in the trust instrument, if the trust fund is inadequate because it contains an amount less than the amount required by subdivision (d)(3) of this section or if the grantor of the trust has been declared insolvent or placed into receivership, rehabilitation, liquidation, or similar proceedings under the laws of its state or country of domicile, then the trustee shall comply with an order of the insurance commissioner with regulatory oversight over the trust or with an order of a court of competent jurisdiction directing the trustee to transfer to the insurance commissioner with regulatory oversight all of the assets of the trust fund; (2) The assets shall be distributed by and claims shall be filed with and valued by the insurance commissioner with regulatory oversight according to the laws of the state in which the trust is domiciled that are applicable to the liquidation of domestic insurance companies; (3) If the insurance commissioner with regulatory oversight determines that the assets of the trust fund or any part of the trust fund are not necessary to satisfy the claims of the United States ceding insurers of the grantor of the trust, the assets or a part of the assets shall be returned by the insurance commissioner with regulatory oversight to the trustee for distribution in accordance with the trust agreement; and (4) The grantor shall waive any right otherwise available to it under any law of the United States that is inconsistent with this subsection. (i)(1) If an accredited or certified reinsurer ceases to meet the requirements for accreditation or certification, the Insurance Commissioner may suspend or revoke the reinsurer's accreditation or certification after notice and an opportunity for a hearing. (2) The suspension or revocation shall not take effect until after the Insurance Commissioner's order on hearing unless: (A) The reinsurer waives the right to a hearing; and (B) The Insurance Commissioner's order is based on: (i) Regulatory action by the reinsurer's domiciliary jurisdiction; (ii) The voluntary surrender or termination of the reinsurer's eligibility to transact insurance or reinsurance business in its domiciliary jurisdiction or in the primary certifying state of the reinsurer under subdivision (e)(8) of this section; or (iii) A finding by the commissioner of an emergency that requires immediate action and a court of competent jurisdiction has not stayed the commissioner's action. (3) While a reinsurer's accreditation or certification is suspended, a reinsurance contract issued or renewed after the effective date of the suspension shall not qualify for credit except to the extent that the reinsurer's obligations under the contract are secured under § 23-62-306. (4) If a reinsurer's accreditation or certification is revoked, credit for reinsurance shall not be granted after the effective date of the revocation except to the extent that the reinsurer's obligations under the contract are secured under subdivision (e)(7) of this section or § 23-62-306. (j)(1)(A) A ceding insurer shall take steps to manage its reinsurance recoverables proportionate to its own book of business. (B) A domestic ceding insurer shall notify the Insurance Commissioner within thirty (30) days after reinsurance recoverables from any single assuming insurer or group of affiliated assuming insurers exceeds fifty percent (50%) of the domestic ceding insurer's last reported surplus to policyholders or after it is determined that reinsurance recoverables from any single assuming insurer or group of affiliated assuming insurers is likely to exceed this limit. (C) The notification shall demonstrate to the Insurance Commissioner that the exposure is safely managed by the domestic ceding insurer. (2)(A) A ceding insurer shall take steps to diversify its reinsurance program. (B) A domestic ceding insurer shall notify the Insurance Commissioner within thirty (30) days after ceding to any single assuming insurer or group of affiliated assuming insurers more than twenty percent (20%) of the ceding insurer's gross written premium in the prior calendar year or after it has determined that the reinsurance ceded to any single assuming insurer or group of affiliated assuming insurers is likely to exceed this limit. (C) The notification shall demonstrate to the Insurance Commissioner that the exposure is safely managed by the domestic ceding insurer.

Ark. Code Ann. § 23-62-306 Asset or reduction from liability for reinsurance ceded by domestic insurer to assuming insurer — Noncompliant assuming insurer.

(a)(1) An asset or a reduction from liability for the reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of § 23-62-305 shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer. (2) The Insurance Commissioner shall promulgate rules necessary to implement this section that address: (A) The valuation of assets or reserve credits; (B) The amount and forms of security supporting reinsurance arrangements as described in § 23-62-308(b); and (C) The circumstances in which credit of a noncomplying assuming insurer shall be reduced or eliminated. (b) The reduction shall be in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the ceding insurer, under a reinsurance contract with the assuming insurer as security for the payment of obligations thereunder, if the security is held: (1) In the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer; or (2) In the case of a trust, in a qualified United States financial institution as defined in § 23-62-307(b). (c) The security may be in the form of: (1) Cash; (2) Securities listed by the Securities Valuation Office of the National Association of Insurance Commissioners, including those deemed exempt from filing as defined by the Purposes and Procedures Manual of the Securities Valuation Office, and qualifying as admitted assets; (3)(A) Clean, irrevocable, unconditional letters of credit, issued or confirmed by a qualified United States financial institution as defined in § 23-62-307(a), effective no later than December 31 of the year for which filing is being made, and in the possession of, or in trust for, the ceding insurer on or before the filing date of its annual statement. (B) Letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance or confirmation, notwithstanding the issuing or confirming institution's subsequent failure to meet applicable standards of issuer acceptability, shall continue to be acceptable as security until their expiration, extension, renewal, modification, or amendment, whichever first occurs; or (4) Any other form of security acceptable to the Insurance Commissioner.

Ark. Code Ann. § 23-62-307 Qualified United States financial institutions.

(a) For purposes of § 23-62-306(c)(3), a “qualified United States financial institution” means an institution that: (1) Is organized or, in the case of a United States office of a foreign banking organization, licensed under the laws of the United States or any state thereof; (2) Is regulated, supervised, and examined by United States federal or state authorities having regulatory authority over banks and trust companies; and (3) Has been determined by either the Insurance Commissioner or the Securities Valuation Office of the National Association of Insurance Commissioners to meet such standards of financial condition and standing as are considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the commissioner. (b) A “qualified United States financial institution” means, for purposes of those provisions of this law specifying those institutions that are eligible to act as a fiduciary of a trust, an institution that: (1) Is organized, or, in the case of a United States branch or agency office of a foreign banking organization, licensed under the laws of the United States or any state thereof and has been granted authority to operate with fiduciary powers; and (2) Is regulated, supervised, and examined by federal or state authorities having regulatory authority over banks and trust companies.

Ark. Code Ann. § 23-62-308 Rules.

(a) The Insurance Commissioner may adopt rules implementing this subchapter. (b) The Insurance Commissioner may adopt rules: (1) Applicable to a reinsurance arrangement that relates to: (A) A life insurance policy with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits; (B) A universal life insurance policy with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period; (C) A variable annuity with guaranteed death or living benefits; (D) A long-term care insurance policy; or (E) A life or health insurance or annuity product for which the National Association of Insurance Commissioners adopts model regulatory requirements with respect to credit for reinsurance; (2) Applicable to a rule adopted under this section may apply to a treaty containing: (A) A policy issued on or after January 1, 2015; or (B) A policy issued before January 1, 2015, if risk pertaining to the policy is ceded in connection with the treaty on or after January 1, 2015; and (3) That require a ceding insurer to calculate the amounts or forms of security according to rules promulgated by the Insurance Commissioner. (c) A rule adopted under this section shall not apply to cessions of an assuming insurer: (1) That: (A) Meets the conditions in § 23-62-305(f); (B) Is certified in this state; or (C) Maintains at least two hundred fifty million dollars ($250,000,000) in capital and surplus as determined according to the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, as it existed on January 1, 2021, and as adopted by the Insurance Commissioner by rule, excluding the impact of any permitted or prescribed practice; and (2) That is licensed in at least: (A) Twenty-six (26) states; or (B) Ten (10) states, and licensed or accredited in a total of thirty-five (35) states. (d) This section does not limit the general authority of the Insurance Commissioner to promulgate rules.

Ark. Code Ann. § 23-62-309 Applicability — Reinsurance agreements.

This subchapter applies to a cession of a reinsurance agreement if that reinsurance agreement has an inception, anniversary, or renewal date not less than six (6) months after July 1, 2021.

Ark. Code Ann. § 23-62-401 Short title.

This subchapter may be cited as the “Reinsurance Intermediary Act”.

Ark. Code Ann. § 23-62-402 Definitions.

As used in this subchapter: (1) “Actuary” means a person who is a member in good standing of the American Academy of Actuaries; (2) “Controlling person” means any person, firm, association, or corporation who directly or indirectly has the power to direct or cause to be directed the management, control, or activities of a reinsurance intermediary; (3) “Insurer” means any person, firm, association, or corporation duly licensed in this state pursuant to the applicable provisions of the insurance law as an insurer; (4) “Licensed producer” means an agent, broker, or reinsurance intermediary licensed pursuant to the applicable provision of the insurance law; (5) “Reinsurance intermediary” means a reinsurance intermediary broker or a reinsurance intermediary manager as these terms are defined in subdivisions (6) and (7) of this section; (6) “Reinsurance intermediary broker” means any person, other than an officer or employee of the ceding insurer, firm, association, or corporation who solicits, negotiates, or places reinsurance cessions or retrocessions on behalf of a ceding insurer without the authority or power to bind reinsurance on behalf of such insurer; (7)(A) “Reinsurance intermediary manager” means any person, firm, association, or corporation who has authority to bind, or who manages, all or part of the assumed reinsurance business of a reinsurer, including the management of a separate division, department, or underwriting office, and acts as an agent for such a reinsurer whether known as a reinsurance intermediary manager, a manager, or other similar term. (B) Notwithstanding the above, the following persons shall not be considered reinsurance intermediary managers, with respect to such a reinsurer, for the purposes of this subchapter: (i) An employee of the reinsurer; (ii) A United States manager of the United States branch of an alien reinsurer; (iii) An underwriting manager which, pursuant to contract, manages all the reinsurance operations of the reinsurer, is under common control with the reinsurer, subject to the Insurance Holding Company Regulatory Act, § 23-63-501 et seq., and whose compensation is not based on the volume of premiums written; and (iv) The manager of a group, association, pool, or organization of insurers which engages in joint underwriting or joint reinsurance and which is subject to examination by the insurance commissioner of the state in which the manager's principal business office is located; (8) “Reinsurer” means any person, firm, association, or corporation duly licensed in this state pursuant to the applicable provisions of the insurance law as an insurer with the authority to assume reinsurance; and (9) “To be in violation” means that the reinsurance intermediary, insurer, or reinsurer for whom the reinsurance intermediary was acting failed to substantially comply with the provisions of this subchapter.

Ark. Code Ann. § 23-62-403 Qualified United States financial institutions.

For purposes of this subchapter, a “qualified United States financial institution” means an institution that: (1) Is organized or, in the case of a United States office of a foreign banking organization, licensed under the laws of the United States or any state thereof; (2) Is regulated, supervised, and examined by federal or state authorities having regulatory authority over banks and trust companies; and (3) Has been determined by either the Insurance Commissioner or the Securities Valuation Office of the National Association of Insurance Commissioners to meet such standards of financial condition and standing as are considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the commissioner.

Ark. Code Ann. § 23-62-404 Licensure.

(a) No person, firm, association, or corporation shall act as a reinsurance intermediary broker in this state if the reinsurance intermediary broker maintains an office either directly, or as a member or employee of a firm or association, or as an officer, director, or employee of a corporation: (1) In this state, unless the reinsurance intermediary broker is a licensed producer in this state; or (2) In another state, unless the reinsurance intermediary broker is a licensed producer in this state or the reinsurance intermediary broker is licensed in this state as a nonresident reinsurance intermediary. (b) No person, firm, association, or corporation shall act as a reinsurance intermediary manager: (1) For a reinsurer domiciled in this state, unless the reinsurance intermediary manager is a licensed producer in this state; (2) In this state, if the reinsurance intermediary manager maintains an office either directly or as a member or employee of a firm or association, or as an officer, director, or employee of a corporation in this state, unless the reinsurance intermediary manager is a licensed producer in this state; and (3) In another state for a nondomestic insurer, unless the reinsurance intermediary manager is a licensed producer in this state or the person is licensed in this state as a nonresident reinsurance intermediary. (c) The Insurance Commissioner may require a reinsurance intermediary manager subject to subsection (b) of this section to: (1) File a bond in an amount from an insurer acceptable to the commissioner for the protection of the reinsurer; and (2) Maintain an errors and omissions policy in an amount acceptable to the commissioner. (d)(1)(A) The commissioner may issue a reinsurance intermediary license to any person, firm, association, or corporation who has complied with the requirements of this subchapter. (B) Any such license issued to a firm or association will authorize all the members of the firm or association and any designated employees to act as reinsurance intermediaries under the license, and all such persons shall be named in the application and any supplements thereto. (C) Any such license issued to a corporation shall authorize all of the officers, and any designated employees and directors thereof, to act as reinsurance intermediaries on behalf of the corporation, and all such persons shall be named in the application and any supplements thereto. (2)(A) If the applicant for a reinsurance intermediary license is a nonresident, the applicant, as a condition precedent to receiving or holding a license, shall designate the commissioner as agent for service of process in the manner, and with the same legal effect, provided for by this subchapter for designation of service of process upon unauthorized insurers; and also shall furnish the commissioner with the name and address of a resident of this state upon whom notices or orders of the commissioner or process affecting the nonresident reinsurance intermediary may be served. (B) The licensee shall promptly notify the commissioner in writing of every change in its designated agent for service of process, and the change shall not become effective until acknowledged by the commissioner. (e)(1) The commissioner may refuse to issue a reinsurance intermediary license if, in his or her judgment, the applicant, anyone named on the application, or any member, principal, officer, or director of the applicant is not trustworthy, or that any controlling person of the applicant is not trustworthy to act as a reinsurance intermediary, or that any one (1) of the foregoing has given cause for revocation or suspension of the license, or has failed to comply with any prerequisite for the issuance of the license. (2) Upon written request therefor, the commissioner will furnish a summary of the basis for refusal to issue a license, which document shall be privileged and not subject to the Freedom of Information Act of 1967, § 25-19-101 et seq. (f) Licensed attorneys at law of this state when acting in their professional capacity as such shall be exempt from this section.

Ark. Code Ann. § 23-62-405 Required contract provisions — Reinsurance intermediary brokers.

(a) Transactions between a reinsurance intermediary broker and the insurer it represents in such capacity shall only be entered into pursuant to a written authorization, specifying the responsibilities of each party. (b) The authorization shall, at a minimum, provide that: (1) The insurer may terminate the reinsurance intermediary broker's authority at any time; (2) The reinsurance intermediary broker will render accounts to the insurer accurately detailing all material transactions, including information necessary to support all commissions, charges, and other fees received by or owing to the reinsurance intermediary broker, and remit all funds due to the insurer within thirty (30) days of receipt; (3) All funds collected for the insurer's account will be held by the reinsurance intermediary broker in a fiduciary capacity in a bank which is a qualified United States financial institution, as defined in § 23-62-403; (4) The reinsurance intermediary broker will comply with § 23-62-406; (5) The reinsurance intermediary broker will comply with the written standards established by the insurer for the cession or retrocession of all risks; and (6) The reinsurance intermediary broker will disclose to the insurer any relationship with any reinsurer to which business will be ceded or retroceded.

Ark. Code Ann. § 23-62-406 Books and records — Reinsurance intermediary brokers.

(a) For at least ten (10) years after expiration of each contract of reinsurance transacted by the reinsurance intermediary broker, the reinsurance intermediary broker will keep a complete record for each transaction showing: (1) The type of contract, limits, underwriting restrictions, classes or risks, and territory; (2) The period of coverage, including effective and expiration dates, cancellation provisions, and notice required of cancellation; (3) The reporting and settlement requirements of balances; (4) The rate used to compute the reinsurance premium; (5) The names and addresses of assuming reinsurers; (6) The rates of all reinsurance commissions, including the commissions on any retrocessions handled by the reinsurance intermediary broker; (7) Related correspondence and memoranda; (8) Proof of placement; (9) Details regarding retrocessions handled by the reinsurance intermediary broker, including the identity of retrocessionaires and the percentage of each contract assumed or ceded; (10) Financial records, including, but not limited to, premium and loss accounts; and (11) When the reinsurance intermediary broker procures a reinsurance contract on behalf of a licensed ceding insurer: (A) Directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or (B) If placed through a representative of the assuming reinsurer, other than an employee, written evidence that the reinsurer has delegated binding authority to the representative. (b) The insurer will have access to and the right to copy and audit all accounts and records maintained by the reinsurance intermediary broker related to its business in a form usable by the insurer.

Ark. Code Ann. § 23-62-407 Duties of insurers utilizing the services of a reinsurance intermediary broker.

(a) An insurer shall not engage the services of any person, firm, association, or corporation to act as a reinsurance intermediary broker on its behalf unless the person is licensed as required by § 23-62-404. (b) An insurer may not employ an individual who is employed by a reinsurance intermediary broker with which it transacts business, unless the reinsurance intermediary broker is under common control with the insurer and subject to the Insurance Holding Company Regulatory Act, § 23-63-501 et seq. (c) The insurer shall annually obtain a copy of statements of the financial condition of each reinsurance intermediary broker with which it transacts business.

Ark. Code Ann. § 23-62-408 Required contract provisions — Reinsurance intermediary managers.

(a) Transactions between a reinsurance intermediary manager and the reinsurer it represents in such capacity shall only be entered into pursuant to a written contract, specifying the responsibilities of each party, which shall be approved by the reinsurer's board of directors. (b) At least thirty (30) days before the reinsurer assumes or cedes business through the producer, a true copy of the approved contract shall be filed with the Insurance Commissioner for approval. (c) The contract shall, at a minimum, contain provisions that: (1)(A) The reinsurer may terminate the contract for cause upon written notice to the reinsurance intermediary manager. (B) The reinsurer may immediately suspend the authority of the reinsurance intermediary manager to assume or cede business during the pendency of any dispute regarding the cause for termination; (2) The reinsurance intermediary manager will render accounts to the reinsurer accurately detailing all material transactions, including information necessary to support all commissions, charges, and other fees received by or owing to the reinsurance intermediary manager, and remit all funds due under the contract to the reinsurer on not less than a monthly basis; (3)(A) All funds collected for the reinsurer's account will be held by the reinsurance intermediary manager in a fiduciary capacity in a bank which is a qualified United States financial institution, as defined in § 23-62-403. (B) The reinsurance intermediary manager may retain no more than three (3) months' estimated claims payments and allocated loss adjustment expenses. (C) The reinsurance intermediary manager shall maintain a separate bank account for each reinsurer that it represents; (4) For at least ten (10) years after expiration of each contract of reinsurance transacted by the reinsurance intermediary manager, the reinsurance intermediary manager will keep a complete record for each transaction showing: (A) The type of contract, limits, underwriting restrictions, classes or risks, and territory; (B) The period of coverage, including effective and expiration dates, cancellation provisions and notice required of cancellation, and disposition of outstanding reserves on covered risks; (C) The reporting and settlement requirements of balances; (D) The rate used to compute the reinsurance premium; (E) The names and addresses of reinsurers; (F) The rates of all reinsurance commissions, including the commissions on any retrocessions handled by the reinsurance intermediary manager; (G) Related correspondence and memoranda; (H) Proof of placement; (I) Details regarding retrocessions handled by the reinsurance intermediary manager, as permitted by § 23-62-410(d), including the identity of retrocessionaires and the percentage of each contract assumed or ceded; (J) Financial records, including, but not limited to, premium and loss accounts; and (K) When the reinsurance intermediary manager places a reinsurance contract on behalf of a ceding insurer: (i) Directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or (ii) If placed through a representative of the assuming reinsurer, other than an employee, written evidence that the reinsurer has delegated binding authority to the representative; (5) The reinsurer will have access to and the right to copy all accounts and records maintained by the reinsurance intermediary manager related to its business in a form usable by the reinsurer; (6) The contract cannot be assigned in whole or in part by the reinsurance intermediary manager; (7) The reinsurance intermediary manager will comply with the written underwriting and rating standards established by the insurer for the acceptance, rejection, or cession of all risks; (8) Set forth the rates, terms, and purposes of commissions, charges, and other fees which the reinsurance intermediary manager may levy against the reinsurer; (9) If the contract permits the reinsurance intermediary manager to settle claims on behalf of the reinsurer: (A) All claims will be reported to the reinsurer in a timely manner; (B) A copy of the claim file will be sent to the reinsurer at its request or as soon as it becomes known that the claim: (i) Has the potential to exceed the lesser of an amount determined by the commissioner or the limit set by the reinsurer; (ii) Involves a coverage dispute; (iii) May exceed the reinsurance intermediary manager's claims settlement authority; (iv) Is open for more than six (6) months; or (v) Is closed by payment of the lesser of an amount set by the commissioner or an amount set by the reinsurer; (C) All claim files will be the joint property of the reinsurer and the reinsurance intermediary manager. However, upon an order of liquidation of the reinsurer the files shall become the sole property of the reinsurer or its estate. The reinsurance intermediary manager shall have reasonable access to and the right to copy the files on a timely basis; and (D) Any settlement authority granted to the reinsurance intermediary manager may be terminated for cause upon the reinsurer's written notice to the reinsurance intermediary manager or upon the termination of the contract. The reinsurer may suspend the settlement authority during the pendency of the dispute regarding the cause of termination; (10) If the contract provides for a sharing of interim profits by the reinsurance intermediary manager, then the interim profits will not be paid until one (1) year after the end of each underwriting period for property business and five (5) years after the end of each underwriting period for casualty business, or a later period set by the commissioner for specified lines of insurance, and not until the adequacy of reserves on remaining claims has been verified pursuant to § 23-62-410(c); (11) The reinsurance intermediary manager will annually provide the reinsurer with a statement of its financial condition prepared by an independent certified accountant; (12) The reinsurer shall periodically, at least semiannually, conduct an on-site review of the underwriting and claims processing operations of the reinsurance intermediary manager; (13) The reinsurance intermediary manager will disclose to the reinsurer any relationship it has with any insurer prior to ceding or assuming any business with the insurer pursuant to the contract; and (14) The acts of the reinsurance intermediary manager shall be deemed to be the acts of the reinsurer on whose behalf it is acting.

Ark. Code Ann. § 23-62-409 Prohibited acts.

The reinsurance intermediary manager shall not: (1)(A) Bind retrocessions on behalf of the reinsurer, except that the reinsurance intermediary manager may bind facultative retrocessions pursuant to obligatory facultative agreements if the contract with the reinsurer contains reinsurance underwriting guidelines for such retrocessions. (B) The guidelines shall include a list of reinsurers with which the automatic agreements are in effect, and for each reinsurer, the coverages and amounts or percentages that may be reinsured, and commission schedules; (2) Commit the reinsurer to participate in reinsurance syndicates; (3) Appoint any producer without assuring that the producer is lawfully licensed to transact the type of reinsurance for which he or she is appointed; (4) Without prior approval of the reinsurer, pay or commit the reinsurer to pay a claim, net of retrocessions, that exceeds the lesser of an amount specified by the reinsurer or one percent (1%) of the reinsurer's policyholder's surplus as of December 31 of the last complete calendar year; (5)(A) Collect any payment from a retrocessionaire or commit the reinsurer to any claim settlement with a retrocessionaire, without prior approval of the reinsurer. (B) If prior approval is given, a report must be promptly forwarded to the reinsurer; (6) Jointly employ an individual who is employed by the reinsurer; or (7) Appoint a reinsurance intermediary submanager.

Ark. Code Ann. § 23-62-410 Duties of reinsurers utilizing the services of a reinsurance intermediary manager.

(a) A reinsurer shall not engage the services of any person, firm, association, or corporation to act as a reinsurance intermediary manager on its behalf unless the person is licensed as required by § 23-62-404. (b) The reinsurer shall annually obtain a copy of statements of the financial condition of each reinsurance intermediary manager which the reinsurer has engaged, prepared by an independent certified accountant in a form acceptable to the Insurance Commissioner. (c)(1) If a reinsurance intermediary manager establishes loss reserves, the reinsurer shall annually obtain the opinion of an actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the reinsurance intermediary manager. (2) This opinion shall be in addition to any other required loss reserve certification. (d) Binding authority for all retrocessional contracts or participation in reinsurance syndicates shall rest with an officer of the reinsurer who shall not be affiliated with a reinsurance intermediary manager. (e) Within thirty (30) days of termination of a contract with a reinsurance intermediary manager, the reinsurer shall provide written notification of the termination to the commissioner. (f)(1) A reinsurer shall not appoint to its board of directors any officer, director, employee, controlling shareholder, or subproducer of its reinsurance intermediary manager. (2) This subsection shall not apply to relationships governed by the Insurance Holding Company Regulatory Act, § 23-63-501 et seq.

Ark. Code Ann. § 23-62-411 Examination authority.

(a)(1) A reinsurance intermediary shall be subject to examination by the Insurance Commissioner. (2) The commissioner shall have access to all books, bank accounts, and records of the reinsurance intermediary in a form usable to the commissioner. (b) A reinsurance intermediary manager may be examined as if it were the reinsurer.

Ark. Code Ann. § 23-62-412 Penalties and liabilities.

(a) A reinsurance intermediary, insurer, or reinsurer found by the Insurance Commissioner, after a hearing conducted in accordance with §§ 23-61-301 — 23-61-307, to be in violation of any provision of this subchapter shall: (1) For each separate violation, pay a penalty in an amount not exceeding five thousand dollars ($5,000); (2) Be subject to revocation or suspension of its license; and (3) If a violation was committed by the reinsurance intermediary, the reinsurance intermediary shall make restitution to the insurer, reinsurer, rehabilitator, or liquidator of the insurer or reinsurer for the net losses incurred by the insurer or reinsurer attributable to the violation. (b) The decision, determination, or order of the commissioner pursuant to subsection (a) of this section shall be subject to judicial review pursuant to § 23-61-307. (c) Nothing contained in this section shall affect the right of the commissioner to impose any other penalties provided in the insurance law. (d) Nothing contained in this subchapter is intended to or shall in any manner limit or restrict the rights of policyholders, claimants, creditors, or other third parties, or confer any rights to those persons.

Ark. Code Ann. § 23-62-413 Rules.

The Insurance Commissioner may adopt reasonable rules for the implementation and administration of the provisions of this subchapter.

Source: Public.Resource.Org / UniCourt, Official Code of Arkansas Annotated, Release 78 (2020) (unicourt.github.io/cic-code-ar)URL: https://unicourt.github.io/cic-code-ar/transforms/ar/ocar/r78/gov.ar.code.title.23.htmlFetched: 11/8/2026