Credit for Reinsurance Law

DATE: April 6, 2004 RE: Credit for Reinsurance Law Senate Bill 149, Alabama Act No. 2003-346 Alabama Insurance Regulation, Chapter 482-1-105 Please be advised that on June 20, 2003, Governor Riley signed into law House Bill 312, now Alabama Act No. 2003-346. This act became effective June 20, 2003, and applies to "all cessions after [June 20, 2003] that have an inception, anniversary, or renewal date not less than six months after [June 20, 2003]." The implementing regulation, Alabama Insurance Regulation, Chapter 482-1-105, was amended effective November 9, 2003. Included in the changes to this law was the revision of subsection (f) so as to permit a reinsurer to pay a specific consumer’s claim directly in case of the insolvency of the direct insurer. These so-called "cut-through" agreements were not previously permitted in this state, as was indicated in a bulletin issued on July 12, 1990. Inasmuch as the 2003 change in law supercedes the directives in the bulletin issued in 1990, said bulletin is hereby rescinded.