41-512. REINSURANCE BY IMPAIRED OR WITHDRAWING INSURERS — PENALTY FOR VIOLATION. (1) No authorized insurer whose capital stock (if a stock insurer) or required minimum surplus (if a mutual or reciprocal insurer) is impaired, or which is insolvent, or which is withdrawing from business in this state, shall reinsure its insurance in force on Idaho risks with any insurer not authorized to transact such insurance in this state, until the plan of such reinsurance has been submitted to the director and has been approved by him in writing.
(2) The director shall approve such plan of reinsurance unless he finds that one or more of the following grounds for disapproval exist:
(a) The proposed reinsurer is in unsound financial condition; or
(b) The proposed reinsurance would not provide the Idaho policy holders involved, with reasonably adequate service; or
(c) The proposed reinsurer could not qualify for a certificate of authority to transact such insurance in this state; or
(d) The proposed reinsurance would be contrary to the interests of such Idaho policy holders.
(3) No domestic insurer shall accept reinsurance of all or substantially all of the risks of another insurer unless the plan for such reinsurance has been submitted to and approved by the director, as provided in sections 41-2856[, Idaho Code,] (mergers and consolidations of stock insurers) and 41-2858[, Idaho Code,] (bulk reinsurance, mutual insurers).
(4) Upon effectuation of any such reinsurance the reinsurer shall become liable to the insured under the policy for any loss occurring under the policy so reinsured, and shall, within a reasonable time after such effectuation, replace such policies with its own policies, or by endorsement on the original policies acknowledge liability thereunder. In the case of cancelation of such a policy after effectuation of the reinsurance, the reinsurer shall be liable to the insured thereunder for the return premium due.
(5) Any person who acts for, or purports to act for, any insurer or reinsurer in violating any of the provisions of this section shall be guilty of a felony and, upon conviction, shall be punished by a fine of not exceeding ten thousand dollars ($10,000) or by imprisonment in the penitentiary for not exceeding ten (10) years, or by both such fine and imprisonment.
History:
[41-512, added 1961, ch. 330, sec. 121, p. 645.]
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