(a) The amount recoverable by the liquidator from reinsurers shall not be reduced as a result of the delinquency proceedings, regardless of any provision in the reinsurance contract or other agreement.
(b) All reinsurance contracts to which an insurer domiciled in this state is a party that do not contain the provisions required with respect to the obligation of reinsurers in the event of insolvency of the reinsured in order to obtain credit for reinsurance or other applicable statutes, shall be construed to contain the following provisions:
(1)
(A) In the event of insolvency and the appointment of a receiver, the reinsurance obligation shall be payable to the receiver upon demand, with reasonable provision for verification, on the basis of claims allowed pursuant to this subchapter, without diminution because of the insolvency or because the receiver has failed to pay all or a portion of any claims.
(B) Payments by the reinsurer as set forth above shall be made directly to the ceding insurer or to its receiver; and
(2)
(A) The receiver of a reinsured company shall give written notice of the pendency of a claim against the reinsured company indicating the policy or bond reinsured within a reasonable time after the claim is filed.
(B) The receiver of a reinsured company may arrange for the giving of notice of the pendency of claims on reinsured policies by guaranty funds or by other persons responsible for the adjustment and settlement of the reinsured company's claims.
(C) Failure to give notice shall not excuse the obligation of the reinsurer unless it is substantially prejudiced thereby.
(D) The reinsurer may interpose, at its own expense, in the proceeding where the claim is to be adjudicated, any defense or defenses which it may deem available to the reinsured company or its receiver.
(c)
(1) Payments by the reinsurer as set forth shall be made directly to the ceding insurer or its receiver, except where the contract of insurance or reinsurance specifically provides for another payee in the event of insolvency of the ceding insurer in accordance with any applicable requirements of statutes, rules, or orders of the domiciliary state of the ceding insurer.
(2) The receiver shall be entitled to recover from any person who unsuccessfully makes a claim directly against the reinsurer the receiver's attorneys' fees and expenses incurred in preventing any collection by the person.
(d) This section shall become effective on and after January 1, 1998, and shall apply to all contracts entered into, renewed, extended, or amended on or after that date, and to obligations arising from any business written or transaction occurring covered by reinsurance after January 1, 1998, pursuant to any contract, including those in existence prior to the effective date.