HB199 Summary

• Adds Chapter 5B to Title 27 of Alabama Code establishing comprehensive regulation of reinsurance to protect insureds, claimants, ceding insurers, and the public.

• Establishes five pathways for domestic insurers to obtain credit for reinsurance: through licensed reinsurers, accredited reinsurers, reinsurers in states with substantially similar laws, reinsurers maintaining trust funds, and certified reinsurers.

• Requires non-U.S. reinsurers providing security for U.S. obligations to maintain assets in the United States, with claims filed with and valued by the state insurance commissioner in case of insolvency.

• Implements concentration risk management by requiring domestic ceding insurers to notify the commissioner when reinsurance recoverables from a single assuming insurer exceed 50% of surplus or when ceding exceeds 20% of gross written premiums to a single assuming insurer.

• Repeals Section 27-5-12 and becomes effective January 1 following passage and gubernatorial approval.