69O-144.011. Credit for Reinsurance from Reinsurers Domiciled in Reciprocal Jurisdictions

(1) Pursuant to Section 624.610(4), F.S., the Office shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that is licensed to write reinsurance by, and has its head office or is domiciled in, a reciprocal jurisdiction, and which meets the other requirements of the statute and this rule.

(2) As used in this chapter, a “reciprocal jurisdiction” is a jurisdiction, as designated by the Office pursuant to subsection (4) of this rule, that is one of the following:

(a) A non-United States jurisdiction 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, a jurisdiction that is a member state of the European Union. As used in this rule, the term “covered agreement” has the same definition as that within Section 624.610(4)(a)1., F.S.

(b) A United States jurisdiction that meets the requirements for accreditation under the Financial Regulation Standards and Accreditation Program of the National Association of Insurance Commissioners.

(c) A qualified jurisdiction, as defined in subsection 69O-144.007(9), F.A.C., which meets the additional requirements present in Section 624.610(4)(a)3., F.S.

(3) Credit shall be allowed when the reinsurance is ceded from an insurer domiciled in this state to an assuming insurer meeting each of the conditions set forth below.

(a) The assuming insurer must be licensed to transact reinsurance by, and have its head office or be domiciled in, a reciprocal jurisdiction.

(b) The assuming insurer must have and maintain on an ongoing basis minimum capital and surplus, or its equivalent, calculated on at least an annual basis as of the preceding December 31 or at the annual date otherwise statutorily reported to the reciprocal jurisdiction, and confirmed as set forth in paragraph (3)(g) according to the methodology of its domiciliary jurisdiction, in the following amounts:

1. No less than $250 million; or

2. If the assuming insurer is an association, including incorporated and individual unincorporated underwriters:

a. Minimum capital and surplus equivalents (net of liabilities) or own funds of the equivalent of at least $250 million; and 

b. A central fund containing a balance of the equivalent of at least $250 million.

(c) The assuming insurer must have and maintain on an ongoing basis a minimum solvency or capital ratio, as applicable, as follows:

1. If the assuming insurer has its head office or is domiciled in a reciprocal jurisdiction as defined in Section 624.610(4)(a)1., F.S., the ratio specified in the applicable covered agreement;

2. If the assuming insurer is domiciled in a reciprocal jurisdiction as defined in Section 624.610(4)(a)2., F.S., a risk-based capital (RBC) ratio of three hundred percent (300%) of the authorized control level, calculated in accordance with the formula developed by the NAIC; or

3. If the assuming insurer is domiciled in a reciprocal jurisdiction as defined in Section 624.610(4)(a)3., F.S., after consultation with the reciprocal jurisdiction and considering any recommendations published through the NAIC Committee Process, such solvency or capital ratio as the Office determines to be an effective measure of solvency.

(d) The assuming insurer must agree to and provide adequate assurance, in the form of a properly executed Form OIR-C1-517, “Certificate of Reinsurer Domiciled in Reciprocal Jurisdiction,” which may be obtained from https://www.floir.com/iportal, of its agreement to the following: 

1. The assuming insurer must agree to provide prompt written notice and explanation to the Office if it falls below the minimum requirements set forth in paragraph (3)(b) or (3)(c) of this subsection, or if any regulatory action is taken against it for serious noncompliance with applicable law.

2. The assuming insurer must consent in writing to the jurisdiction of the courts of this state and to the appointment of the Chief Financial Officer, pursuant to Section 48.151, F.S., as its agent for service of process in this state.

a. The Office may also require that such consent be provided and included in each reinsurance agreement under the Office’s jurisdiction.

b. Nothing in this provision shall 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 such agreements are unenforceable under applicable insolvency or delinquency laws.

3. The assuming insurer must consent in writing to pay all final judgments, wherever enforcement is sought, obtained by a ceding insurer, that have been declared enforceable in the territory where the judgment was obtained.

4. The assuming insurer must agree to include a provision in each reinsurance agreement 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 estate, if applicable.

5. The assuming insurer must confirm that it is not presently participating in any solvent scheme of arrangement, which involves this state’s ceding insurers, and agrees to notify the ceding insurer and the Office and to provide one hundred percent (100%) security to the ceding insurer consistent with the terms of the scheme, should the assuming insurer enter into such a solvent scheme of arrangement. Such security shall be in a form consistent with the provisions of Sections 624.610(3) and (5), F.S., and Rule 69O-144.009, F.A.C. For purposes of this rule, the term “solvent scheme of arrangement” means a foreign or alien statutory or regulatory compromise procedure subject to requisite majority creditor approval and judicial sanction in the assuming insurer’s domiciliary jurisdiction either to finally commute liabilities of duly noticed classed members or creditors of a solvent debtor, or to reorganize or restructure the debts and obligations of a solvent debtor on a final basis, and which may be subject to judicial recognition and enforcement of the arrangement by a governing authority outside the ceding insurer’s domiciliary jurisdiction.

6. The assuming insurer must agree in writing to meet the applicable information filing requirements as set forth in paragraphs (3)(e) and (3)(g) of this subsection.

(e) The assuming insurer must file an application for reciprocal jurisdiction reinsurer status, in accordance with paragraph 69O-144.002(5)(a), F.A.C., and the requirements of this rule. If an NAIC accredited jurisdiction has determined that a reciprocal jurisdiction reinsurer has met the conditions in that jurisdiction to become a reciprocal jurisdiction reinsurer, the Office may accept documentation filed with that NAIC accredited jurisdiction or with the NAIC to satisfy the reciprocal jurisdiction reinsurer’s status in this state.

(f) The assuming insurer must maintain a practice of prompt payment of claims under reinsurance agreements. The lack of prompt payment will be evidenced if any of the following criteria is met:

1. More than fifteen percent (15%) of the reinsurance recoverables from the assuming insurer are overdue and in dispute as reported to the Office;

2. More than fifteen percent (15%) of the assuming insurer’s ceding insurers or reinsurers have overdue reinsurance recoverable on paid losses of 90 days or more which are not in dispute and which exceed for each ceding insurer $100,000, or as otherwise specified in a covered agreement; or

3. The aggregate amount of reinsurance recoverable on paid losses which are not in dispute, but are overdue by 90 days or more, exceeds $50 million, or as otherwise specified in a covered agreement.

(g) To maintain its reciprocal jurisdiction reinsurer status in this state, the assuming insurer or its legal successor must annually provide the information required by paragraph 69O-144.002(5)(b), F.A.C. If an NAIC accredited jurisdiction has determined that a reciprocal jurisdiction reinsurer has met the conditions in that jurisdiction to become a reciprocal jurisdiction reinsurer, the Office may accept documentation filed with that NAIC accredited jurisdiction or with the NAIC to satisfy the reinsurer’s status in this state.

(h) Nothing in this chapter precludes an assuming insurer from providing the Office with information on a voluntary basis.

(i) The provisions of this chapter do not limit the authority of the Office to request additional information pertaining to the reinsurance agreement, or any subsequent reinsurance agreement entered into by the assuming insurer and Florida ceding insurers, under Section 624.610(4)(e), F.S.

(4) The Office shall publish and maintain a list of approved reciprocal jurisdictions on its website. The Office shall timely create and publish a list of Reciprocal Jurisdictions.

(a) A list of Reciprocal Jurisdictions is published through the NAIC Committee Process. The Office’s list shall include any Reciprocal Jurisdiction as defined under paragraphs (2)(a) and (2)(b) and shall consider any other Reciprocal Jurisdiction included on the NAIC list. The Office may approve a jurisdiction that does not appear on the NAIC list of Reciprocal Jurisdictions as provided by applicable law, regulation, or in accordance with criteria published through the NAIC Committee Process.

(b) The Office may remove a jurisdiction from the list of Reciprocal Jurisdictions upon a determination that the jurisdiction no longer meets one or more of the requirements of a Reciprocal Jurisdiction, as provided by applicable law, regulation, or in accordance with a process published through the NAIC Committee Process, except that the Office shall not remove from the list a Reciprocal Jurisdiction as defined under paragraphs (2)(a) and (2)(b). Upon removal of a Reciprocal Jurisdiction from this list credit for reinsurance ceded to an assuming insurer domiciled in that jurisdiction shall be allowed, if otherwise allowed pursuant to this rule and Section 624.610(4), F.S.

(5) The Office shall publish and maintain a list of reciprocal jurisdiction reinsurers on its website. The Office shall timely create and publish a list of assuming insurers that have satisfied the conditions set forth in this section and to which cessions shall be granted credit in accordance with this section.

(a) If an NAIC accredited jurisdiction has determined that the conditions set forth in subsection (3) have been met, the Office has the discretion to defer to that jurisdiction’s determination, and add such assuming insurer to the list of assuming insurers to which cessions shall be granted credit in accordance with this subsection. The Office may accept financial documentation filed with another NAIC accredited jurisdiction or with the NAIC in satisfaction of the requirements of subsection (3).

(b) When requesting that the Office defer to another NAIC accredited jurisdiction’s determination, an assuming insurer must submit a properly executed Form OIR-C1-517, “Certificate of Reinsurer Domiciled in Reciprocal Jurisdiction,” incorporated by reference in paragraph (3)(d),and additional information as the Office may require. A state that has received such a request will notify other states through the NAIC Committee Process and provide relevant information with respect to the determination of eligibility.

(6) The determination of reciprocal jurisdiction reinsurer status shall be made by order issued by the Office.

(7) If the Office determines that an assuming insurer no longer meets one or more of the requirements under Section 624.610, F.S., or this chapter, the Office may revoke or suspend the status of the assuming insurer. 

(a) While an assuming insurer’s status is suspended, no reinsurance agreement issued, amended or renewed after the effective date of the suspension qualifies for credit except to the extent that the assuming insurer’s obligations under the contract are secured in accordance with Section 624.610(5), F.S.

(b) If an assuming insurer’s status is revoked, no credit for reinsurance may 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 prior to 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 Office and consistent with the provisions of Section 624.610(4), F.S.

(8) Before denying statement credit or imposing a requirement to post security with respect to subsection (7) of this rule or adopting any similar requirement that will have substantially the same regulatory impact as security, the Office shall:

(a) Communicate with the ceding insurer, the assuming insurer, and the assuming insurer’s supervisory authority that the assuming insurer no longer satisfies one of the conditions listed in subsection (3) of this rule;

(b) Provide the assuming insurer with 30 days from the initial communication to submit a plan to remedy the defect, and 90 days from the initial communication to remedy the defect, except in exceptional circumstances in which a shorter period is necessary for policyholder and other consumer protection;

(c) After the expiration of 90 days or less, as set out in paragraph (8)(b), if the Office determines that no or insufficient action was taken by the assuming insurer, the Office may impose any of the requirements as set out in this subsection; and

(d) Provide a written explanation to the assuming insurer of any of the requirements set out in this subsection.

(9) 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 liabilities.

Rulemaking Authority 624.308(1), 624.610(15) FS. Law Implemented 624.610(4), (15) FS. History‒New 9-13-22.