Criteria to be met by assuming insurer in order to be accredited as reinsurer; rules
(1)For purposes of allowing credit to a ceding domestic insurer under ORS 731.509 (Legislative intent) if the reinsurance is ceded to an assuming insurer that is accredited as a reinsurer in this state, an insurer may be accredited as a reinsurer in this state if the insurer:
(a)Files and maintains with the Director of the Department of Consumer and Business Services evidence of the insurer’s submission to the jurisdiction of this state;
(b)Submits to the authority of the director to examine the insurer’s books and records;
(c)Is authorized or licensed to transact insurance or reinsurance in at least one state or, in the case of a United States branch of an alien assuming insurer, is entered through and authorized or licensed to transact insurance or reinsurance in at least one state;
(d)Files annually with the director a copy of the insurer’s annual statement filed with the insurance department of the insurer’s state of domicile and a copy of the insurer’s most recent audited financial statement; and
(e)Satisfies either of the following requirements:
(A)Maintains combined capital and surplus in an amount that is not less than $20,000,000. An application for accreditation by an insurer who maintains the amount of combined capital and surplus specified in this subparagraph is approved if the application is not disapproved on or before the 90th day after the application is complete and is filed with the director.
(B)Maintains combined capital and surplus in an amount less than $20,000,000. An insurer applying for accreditation who maintains the amount of combined capital and surplus specified in this subparagraph is not accredited until the application for accreditation is approved by the director.
(2)An insurer that is accredited as a reinsurer in this state may accept reinsurance only of those risks and retain the risk of the reinsurance within such limits as the accredited reinsurer is otherwise authorized to insure directly in a state in which the accredited reinsurer is authorized or licensed to transact insurance.
(3)The director may revoke the accreditation of an assuming insurer if the director determines that the assuming insurer has failed to continue to meet any of the requirements of subsection (1) of this section.
(4)(a) The director shall allow credit if the reinsurance is ceded to an assuming insurer that the director certifies has:
(A)Maintained a minimum amount of capital and a surplus, or the equivalent, in an amount the director specifies by rule;
(B)Maintained a financial strength rating from two or more rating agencies that the director by rule deems acceptable for this purpose;
(C)Agreed to submit to the jurisdiction of the state, to appoint the director as the assuming insurer’s agent for the service of process in this state and to provide security for 100 percent of the assuming insurer’s liabilities that are attributable to reinsurance that ceding insurers have ceded, if the assuming insurer resists enforcement of a United States judgment;
(D)Agreed to meet applicable information filing requirements that the director specifies by rule;
(E)Included a covenant in the language of any trust the assuming insurer maintains to secure the assuming insurer’s obligations under ORS 731.509 (Legislative intent) (8), and in the language of an agreement between the assuming insurer and the commissioner with principal regulatory authority over the assuming insurer, that requires the assuming insurer to fund out of the remaining surplus of the trust any deficiency in a trust account that terminates; and
(F)Satisfied any other requirements that the director specifies for certification.
(b)The director may accredit an association as a reinsurer, including an incorporated underwriter or individual unincorporated underwriters, if the association, the incorporated underwriter or the individual unincorporated underwriter, as appropriate, meets the requirements set forth in paragraph (a) of this subsection and, in addition:
(A)Satisfies minimum capital and surplus requirements by means of the capital and surplus equivalents, net of liabilities, of the association and the association’s members, which must include a joint central fund with an amount that the director determines is adequate to satisfy any unsatisfied obligation of the association or a member of the association;
(B)Does not engage, as an incorporated member of the association, in any business other than underwriting and is subject to the same level of regulation and solvency control as the association’s unincorporated members are under the association’s domiciliary regulator; and
(C)Provides to the director each year, within 90 days after the association must file financial statements with the association’s domiciliary regulator, a certification from the association’s domiciliary regulator as to the solvency of each underwriting member of the association or, if a certification is not available, financial statements of each underwriting member of the association that certified public accounts have prepared.
(5)(a) The director shall publish a list of jurisdictions that the director considers qualified for the purpose of accrediting as a reinsurer an assuming insurer that is licensed and domiciled in the jurisdiction.
(b)To determine whether a domiciliary jurisdiction outside the United States is qualified for the purpose described in paragraph (a) of this subsection, the director shall:
(A)Evaluate and monitor how appropriate and effective the jurisdiction’s insurance supervisory system is and the extent to which the jurisdiction affords reinsurers that are licensed and domiciled in the United States rights, benefits and reciprocal recognition;
(B)Require that the jurisdiction share information and cooperate with the director in any matter that concerns a reinsurer that the director accredits and that is domiciled within the jurisdiction;
(C)Refuse to accredit a jurisdiction if the jurisdiction does not promptly and adequately enforce final United States judgments and arbitration awards; and
(D)Consider other criteria the director deems appropriate.
(c)To determine whether a domiciliary jurisdiction inside the United States is qualified for the purpose described in paragraph (a) of this subsection, the director shall:
(A)Consider the list of qualified jurisdictions that the National Association of Insurance Commissioners publishes and, if the director accredits a jurisdiction that does not appear on the National Association of Insurance Commissioners’ list, justify the director’s accreditation with appropriate documentation in accordance with rules the director adopts for this purpose; and
(B)Accredit United States jurisdictions that meet the requirements of the National Association of Insurance Commissioners’ financial standards and accreditation program.
(d)If an assuming insurer’s domiciliary jurisdiction ceases to qualify under paragraph (b) or (c) of this subsection, the director may suspend indefinitely the assuming insurer’s accreditation as a reinsurer.
(6)(a) The director by rule shall designate rating agencies upon which the director will rely for financial strength ratings for accredited reinsurers and shall give appropriate consideration to the rating agencies’ financial strength ratings in assigning ratings to each accredited reinsurer. The director shall publish a list of the accredited reinsurers together with the director’s corresponding rating for each.
(b)An accredited reinsurer shall secure obligations the accredited reinsurer assumes from ceding insurers at a level that is consistent with the rating the director assigns and in accordance with rules the director adopts.
(7)(a) In order for a ceding domestic insurer to qualify for full financial statement credit for reinsurance that the ceding domestic insurer cedes to an accredited reinsurer, the accredited reinsurer must maintain security in a form that is acceptable to the director and that is consistent with the requirements of ORS 731.510 (Criteria for allowing reduction from liability for reinsurance) or maintain security in a trust fund in accordance with ORS 731.509 (Legislative intent) (8), except as otherwise provided in this section.
(b)If an accredited reinsurer maintains a trust fund to fully secure the accredited reinsurer’s obligations under ORS 731.509 (Legislative intent) (8) and the trust fund is a multibeneficiary trust, the accredited reinsurer shall maintain separate trust accounts for the obligations the accredited reinsurer incurs under reinsurance agreements the accredited reinsurer issued or renewed as an accredited reinsurer with reduced security, as provided under this section or under comparable laws of other United States jurisdictions, and for obligations the accredited reinsurer incurs that are subject to ORS 731.509 (Legislative intent) (8).
(c)The minimum trusteed surplus requirements under ORS 731.509 (Legislative intent) (8) do not apply to an accredited reinsurer that maintains a multibeneficiary trust for the purpose of securing obligations under this subsection, except that the trust must maintain a minimum trusteed surplus of $100,000,000.
(8)The director shall reduce the allowable credit for ceding insurers by an amount that is proportionate to any deficiency in the security required for an accredited reinsurer under this section. The director may also reduce the allowable credit further if the director finds that a material risk exists that the accredited reinsurer will not pay the accredited reinsurer’s obligations in full when due.
(9)(a) Except as provided in paragraph (b) of this subsection, the director shall require an accredited reinsurer that has become inactive or has voluntarily surrendered accreditation as an accredited reinsurer, or for which the director has revoked or suspended accreditation, to secure 100 percent of the reinsurer’s obligations.
(b)The security requirement described in paragraph (a) of this subsection does not apply to an accredited reinsurer that is inactive, or for which the director has suspended accreditation, if the director maintains a high rating for the reinsurer under subsection (6) of this section.
(10)The director may accredit an assuming insurer as a reinsurer in this state if a jurisdiction that the National Association of Insurance Commissioners has qualified as meeting the association’s financial standards and accreditation has certified the assuming insurer as a reinsurer. The director may also assign to the accredited reinsurer the rating that the qualifying jurisdiction assigned to the accredited reinsurer.
(11)An accredited reinsurer that ceases to assume new business in this state may apply to the director to become inactive and to qualify for a reduction in security for the business the accredited reinsurer maintains. An inactive accredited reinsurer shall comply with all other applicable requirements of this section and the director shall assign a rating to the accredited reinsurer that accounts for the reasons that the accredited reinsurer is not assuming new business, if the reasons are relevant to the rating.
(12)(a) The director may suspend or revoke an assuming insurer’s accreditation as a reinsurer in this state if the assuming insurer fails to meet applicable requirements for accreditation.
(b)The director shall give an accredited reinsurer notice and an opportunity for a hearing before taking action under paragraph (a) of this subsection and a suspension or revocation is not effective until after the director’s final order unless:
(A)The accredited reinsurer waives the opportunity for a hearing;
(B)The director bases the final order on regulatory action by the accredited reinsurer’s domiciliary jurisdiction or on the accredited reinsurer’s having voluntarily surrendered or terminated the accredited reinsurer’s authorization to transact insurance or reinsurance in the domiciliary jurisdiction or in a jurisdiction whose certification of the reinsurer formed the basis upon which the director accredited the reinsurer in this state under subsection (10) of this section; or
(C)The director finds that an emergency requires immediate action and a court does not stay the director’s action.
(13)A reinsurance contract issued or renewed after the director suspends an accredited reinsurer’s certification does not qualify for credit unless the reinsurer secures the reinsurer’s obligations in accordance with ORS 731.510 (Criteria for allowing reduction from liability for reinsurance). The director may not grant credit for reinsurance after the effective date of the director’s revocation of accreditation unless the reinsurer secures the reinsurer’s obligations in accordance with subsections (6), (7) and (9) of this section or ORS 731.510 (Criteria for allowing reduction from liability for reinsurance).
(14)The director may adopt rules to implement the provisions of this section including, but not limited to, rules that adopt guidelines, rules, regulations or interpretive letters from the National Association of Insurance Commissioners that apply to reinsurance collateral requirements for alien reinsurers. [1993 c.447 §67; 2019 c.151 §23]
Atty. Gen. Opinions
Vehicle service contracts sold to purchasers by motorcycle and motor vehicle dealers as constituting sale of insurance, (1978) Vol 38, p 2218