(a) The assuming insurer must be licensed in a reciprocal jurisdiction and have the assuming insurer’s home office in, or be domiciled in, as applicable, the reciprocal jurisdiction. For purposes of this paragraph, a reciprocal jurisdiction is a jurisdiction that meets one of the following:
(A) A jurisdiction outside the United States that is subject to an in-force covered agreement with the United States, each within the jurisdiction’s legal authority or, in the case of a covered agreement between the United States and the European Union, is a member state of the European Union. For purposes of this subparagraph, a covered agreement is an agreement entered into under the Dodd-Frank Wall Street Reform and Consumer Protection Act, 31 U.S.C. 313 and 314, that is currently in effect or in a period of provisional application and 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.
(B) A United States jurisdiction that meets the requirements for accreditation under the National Association of Insurance Commissioners’ Financial Regulation Standards and Accreditation Program.
(C) A qualified jurisdiction, as the Director of the Department of Consumer and Business Services determines in accordance with ORS 731.511 (5), that is not otherwise described in subparagraph (A) or (B) of this paragraph and that meets other requirements the director specifies by rule that are consistent with the terms and conditions of in-force covered agreements.
(b) The assuming insurer must have and maintain, on an ongoing basis, minimum capital and surplus, or an equivalent, calculated according to the methodology of the assuming insurer’s domiciliary jurisdiction, in an amount set forth in rule. If the assuming insurer is an association, including incorporated and individual unincorporated underwriters, the assuming insurer must have and maintain, on an ongoing basis, minimum capital and surplus equivalents, net of liabilities, calculated according to the methodology applicable in the assuming insurer’s domiciliary jurisdiction, and a central fund containing a balance in amounts set forth in rule.
(c) The assuming insurer must have and maintain, on an ongoing basis, a minimum solvency or capital ratio, as applicable, that is set forth in rule. If the assuming insurer is an association, including incorporated and individual unincorporated underwriters, the assuming insurer must have and maintain, on an ongoing basis, a minimum solvency or capital ratio in the reciprocal jurisdiction where the assuming insurer is licensed and has the assuming insurer’s head office or is domiciled.
(d) The assuming insurer must agree and provide adequate assurance to the director, in a form the director specifies by rule, as follows:
(A) The assuming insurer must provide prompt written notice and explanation to the director if the assuming insurer falls below the minimum requirements set forth in paragraph (b) or (c) of this subsection or if any regulatory action is taken against the assuming insurer for serious noncompliance with applicable law.
(B) The assuming insurer must consent in writing to the jurisdiction of the courts of this state and to the appointment of the director as agent for service of process. The director may require that consent for service of process be provided to the director and included in each reinsurance agreement. This subparagraph 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 that such agreements are unenforceable under applicable insolvency or delinquency laws.
(C) Wherever enforcement is sought, the assuming insurer must consent in writing to pay all final judgments that a ceding insurer or the ceding insurer’s successor obtains in a jurisdiction that has declared the final judgment enforceable.
(D) Each reinsurance agreement must include a provision requiring the assuming insurer to provide security in an amount equal to 100 percent of the assuming insurer’s liabilities attributable to reinsurance ceded under the reinsurance agreement if the assuming insurer resists enforcement of a final judgment that is enforceable under the law of the jurisdiction in which the final judgment was obtained or of a properly enforceable arbitration award, whether the ceding insurer or the ceding insurer’s legal successor obtains the final judgment or arbitration award on behalf of the ceding insurer or the ceding insurer’s resolution estate.
(E) The assuming insurer must confirm that the assuming insurer is not presently participating in any solvent scheme of arrangement that involves this state’s ceding insurers and, if the assuming insurer does enter into a solvent scheme of arrangement, must agree to notify the ceding insurer and the director and provide security in an amount equal to 100 percent of the assuming insurer’s liabilities to the ceding insurer. The security must be in a form that the director specifies by rule consistent with the provisions of ORS 731.510 and 731.511.
(e) At the director’s request, the assuming insurer or the assuming insurer’s legal successor must provide on the assuming insurer’s behalf and on behalf of any of the assuming insurer’s legal predecessors, documentation the director specifies by rule.
(f) The assuming insurer must maintain a practice of prompt payment of claims under reinsurance agreements in accordance with criteria the director specifies by rule.
(g) The assuming insurer’s supervisory authority must confirm to the director every year, as of the preceding December 31 or on the annual date otherwise statutorily reported to the reciprocal jurisdiction, that the assuming insurer complies with the requirements set forth in paragraphs (b) and (c) of this subsection.
(h) This subsection does not preclude an assuming insurer from providing the director with information on a voluntary basis.
(2) The director shall timely create and publish a list of reciprocal jurisdictions as follows:
(a) The director’s list must include any reciprocal jurisdiction described in subsection (1)(a)(A) and (B) of this section, and the director shall consider for inclusion in the list any other reciprocal jurisdiction included on the list of reciprocal jurisdictions that the National Association of Insurance Commissioners publishes. The director may include on the director’s list a jurisdiction that does not appear on the National Association of Insurance Commissioners’ list in accordance with criteria the director specifies by rule.
(b) The director may remove a jurisdiction from the list the director publishes after determining, in accordance with a process the director specifies by rule, that the jurisdiction no longer meets the requirements of a reciprocal jurisdiction, except that the director may not remove from the list a reciprocal jurisdiction described in subsection (1)(a)(A) and (B) of this section. The director shall allow credit for reinsurance ceded to an assuming insurer that has a home office in, or is domiciled in, a jurisdiction the director removed from the director’s list of reciprocal jurisdictions, if otherwise allowed under applicable provisions of the Insurance Code.
(3) The director shall timely create and publish a list of assuming insurers that have satisfied the conditions set forth in this section and to which cessions will be granted credit in accordance with this section. The director may add an assuming insurer to the list if a jurisdiction that the National Association of Insurance Commissioners has accredited has added the assuming insurer to the jurisdiction’s list of assuming insurers or if, upon initial eligibility, the assuming insurer submits information to the director as required under subsection (1)(d) of this section and complies with any additional requirements that the director may impose by rule, except to the extent that the additional requirements conflict with an applicable covered agreement.
(4) If the director determines that an assuming insurer no longer meets one or more of the requirements under this section, the director may revoke or suspend the eligibility of the assuming insurer for recognition under this section in accordance with procedures the director specifies by rule. The effect of the director’s revocation or suspension is:
(a) A reinsurance agreement issued, amended or renewed after the effective date of the assuming insurer’s suspension does not qualify for credit except to the extent that the assuming insurer’s obligations under the reinsurance agreement are secured in accordance with ORS 731.510 and rules the director adopts.
(b) Credit for reinsurance after the effective date of the assuming insurer’s revocation of eligibility may not be granted with respect to any reinsurance agreements the assuming insurer entered into, including reinsurance agreements the assuming insurer entered into before the effective date of the revocation, except to the extent that the assuming insurer’s obligations under the reinsurance agreement are secured consistent with the provisions of ORS 731.510 and rules the director adopts.
(5) If subject to a legal process of rehabilitation, liquidation or conservation, as applicable, the ceding insurer or a representative of the ceding insurer may seek and obtain an order requiring that the assuming insurer post security for all outstanding ceded liabilities, if the court in which the proceedings are pending determines that the order is appropriate.
(6) 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 the reinsurance agreement, except as expressly prohibited under the Insurance Code or other applicable law, rule or regulation.
(7)(a) Credit may be taken under this section only for reinsurance agreements entered into, amended or renewed on or after September 25, 2021, and only with respect to losses incurred and reserves reported on or after the later of:
(A) The date on which the assuming insurer has met all eligibility requirements under subsection (1) of this section; and
(B) The effective date of the new reinsurance agreement, amendment or renewal.
(b) This subsection does not alter or impair a ceding insurer’s right to take credit for reinsurance, to the extent that credit is not available under this section, as long as the reinsurance qualifies for credit under any other applicable provision of the Insurance Code.
(8) This section does not:
(a) Authorize an assuming insurer to withdraw or reduce the security provided under any reinsurance agreement, except as permitted by the terms of the reinsurance agreement; or
(b) Limit or in any way alter the capacity of parties to any reinsurance agreement to renegotiate the reinsurance agreement. [2021 c.204 §2]