Except as provided in Section 27-5B-17, no credit shall be allowed, as an admitted asset or deduction from liability, to any ceding insurer for reinsurance placed with a reinsurer qualified under this chapter, unless the reinsurance contract provides, in substance, that in the event of the insolvency of the ceding insurer, the reinsurance shall be payable under a contract reinsured by the assuming insurer on the basis of reported claims allowed by the liquidation court, without diminution because of the insolvency of the ceding insurer. The payments shall be made directly to the ceding insurer or to its domiciliary liquidator except in either of the following instances:

(1) Where the contract or other written agreement specifically provides another payee of the reinsurance in the event of the insolvency of the ceding insurer.
lawyer at desk

Ask an insurance law question, get an answer ASAP!
Click here to chat with a lawyer about your rights.

Terms Used In Alabama Code 27-5B-16

  • Contract: A legal written agreement that becomes binding when signed.
  • following: means next after. See Alabama Code 1-1-1
(2) Where the assuming insurer, with the consent of the direct insured, has assumed the policy obligations of the ceding insurer as direct obligations of the assuming insurer to the payees under the policies and in substitution for the obligations of the ceding insurer to the payees.
  Previous section
Next section  
 Chapter 5B Contents