SECTION 7.611. Indemnity Reinsurance Agreements--Required Provisions

Credit will not be granted to a ceding insurer for reinsurance effected with assuming insurers meeting the requirements of Insurance Code Chapter 493 or otherwise in compliance with this subchapter unless the reinsurance agreement:

(1) includes a proper insolvency clause pursuant to Insurance Code §493.106;

(2) includes a provision that the assuming insurer, if not authorized to transact insurance or reinsurance in this state, has submitted to a court of jurisdiction within the United States, has agreed to comply with all requirements necessary to give such court jurisdiction, has designated an agent on whom service of process may be effected, and has agreed to abide by the final decision of such court or an appellate court to which such court's decision is appealed;

(3) includes a provision for a periodic accounting and cash settlement at quarterly intervals or more frequently as required by the reinsurance agreement, or quarterly accrual for annual settlements for those agreements that are not susceptible to other than annual payments, such periodic accounting and cash settlement to be unconditional on the performance of any other agreement or person;

(4) provides that the operation of any offsetting provisions must be to limit offset to reinsurance agreements between the ceding insurer and the assuming insurer;

(5) includes an effective date on which the inception of the assuming insurer's liabilities commence;

(6) includes a termination date or description of duration;

(7) provides for a final accounting and settlement; and

(8) provides that if payments are made to a reinsurance intermediary, then the assuming insurer assumes all credit risk of the reinsurance intermediary related to payments made to the reinsurance intermediary. The following will be deemed acceptable for evidencing compliance with this subsection: payments by the ceding insurer to the intermediary must be deemed to constitute payments to the assuming insurer and that payments by the assuming insurer to the intermediary must be deemed to constitute payment to the ceding insurer only to the extent that such payments are actually received by the ceding insurer;

(9) includes a provision indicating that the written agreement must constitute the entire agreement between the parties with respect to the business being reinsured thereunder and that there are no understandings between the parties other than as expressed in the agreement;

(10) includes a provision whereby any change or modification to the agreement be made by amendment to the agreement and signed by the parties, except that facultative certificates duly executed by a property and casualty reinsurer or its duly appointed agent are excluded from this requirement; and

(11) complies with any other Texas Department of Insurance rules in effect.

Source Note: The provisions of this §7.611 adopted to be effective August 16, 1990, 15 TexReg 4435; amended to be effective June 30, 1995, 20 TexReg 4407; amended to be effective September 16, 1996, 21 TexReg 8508; amended to be effective June 19, 2018, 43 TexReg 3888