mailing by the receiver, interest on the unpaid billed amount will begin to accrue at the statutorylegal rate provided in Subsection 15-1-1(2), except that all or a portion of the interest may bewaived as part of an arbitration proceeding.
(5) (a) The receiver shall notify in writing, in accordance with the terms of the contract,each reinsurer obligated in relation to the claim or the pendency of a claim against the reinsuredcompany.
(b) The receiver's failure to give notice of a pending claim pursuant to a provision in areinsurance contract:
(i) does not excuse the obligation of the reinsurer unless the reinsurer is prejudiced by thereceiver's failure; and
(ii) if the reinsurer is prejudiced, reduces the reinsurer's obligations only to the extent ofthe prejudice.
(c) A reinsurer may interpose, at its own expense, in a proceeding in which a claim is tobe adjudicated, any one or more defenses that the reinsurer considers available to the reinsuredcompany or its receiver.
(6) The entry of an order of rehabilitation or liquidation:
(a) may not be considered a breach or an anticipatory breach of a reinsurance contract;and
(b) is not grounds for retroactive revocation or retroactive cancellation of a reinsurancecontract by the reinsurer.
(7) (a) If a reinsurance payment to a receiver of a ceding insurer is later determined to bea payment in excess of the amounts actually due to the receiver, the excess shall be:
(i) credited against future payments due to the receiver; or
(ii) repaid to the reinsurer as an administrative expense of the estate pursuant toSubsection 31A-27a-701(2)(g).
(b) A repayment under this Subsection (7) may be limited on the basis of the propertyremaining in the estate.
(8) (a) Subject to Subsection (1):
(i) except as provided in Subsection (8)(a)(ii):
(A) a payment made by the reinsurer directly to an insured or other creditor does notdiminish the reinsurer's obligation to the insurer's estate; and
(B) a payment made by the reinsurer shall be made directly to the ceding insurer or itsreceiver;
(ii) Subsection (8)(a)(i) does not apply when:
(A) the reinsurance contract or other written agreement to which the insured, cedinginsurer, and reinsurer are all parties:
(I) specifically provides another payee, other than an affiliate of the ceding insurer orreinsurer, of the reinsurance in the event of the insolvency or receivership of the ceding insurer;and
(II) the provision described in this Subsection (8)(a)(ii)(A) is contained in:
(Aa) the reinsurance contract as it is written on the day on which the reinsurance contractis initially executed; or
(Bb) the other written agreement as it is written on the day on which the initial policy isissued;
(B) the reinsurance contract, as it is written on the day on which the reinsurance contract
is initially executed, contains a provision where the assuming insurer with the consent of thedirect insured and the ceding insurer assumes all policy obligations of the ceding insurer:
(I) as a direct obligation of the assuming insurer to the payees under the policies; and
(II) in substitution for the entire obligations of the ceding insurer to the payees; or
(C) a life and health insurance guaranty association makes the election to succeed to therights and obligations of the insolvent insurer under a contract of reinsurance:
(I) in accordance with:
(Aa) Section 31A-27a-513; or
(Bb) the life and health guaranty association laws of its domiciliary state; or
(II) pursuant to other applicable law, rule, order, or assignment contract; and
(iii) in the circumstances described in Subsection (8)(a)(ii)(C), a payment shall be madedirectly to or at the direction of the guaranty association.
(b) Both the receiver and the reinsurer are entitled to recover from a person, other thanthe receiver or a guaranty association, who unsuccessfully makes a claim directly against thereinsurer the following incurred in preventing any collection by that person:
(i) the person's attorney fees; and
(ii) expenses.
(9) This chapter may not be construed to authorize the liquidator or any other entity tocompel payment from a nonlife reinsurer:
(a) on the basis of estimated incurred but not reported losses, loss expenses, or casereserves for unpaid losses and loss expenses, except under Sections 31A-27a-515 and31A-27a-516; and
(b) with respect to a claim allowed in accordance with Section 31A-27a-605.
Enacted by Chapter 309, 2007 General Session