Sec. 7. Credit for reinsurance shall be allowed to any domestic ceding insurer as either an asset or a reduction from liability on account of reinsurance ceded only as follows:

(1) The reinsurer meets the requirements of one (1) of the following:

(A) Only with respect to cessions of the kind of insurance or reinsurance business for which the assuming insurer is licensed or otherwise permitted to assume in:

(i) the assuming insurer's state of domicile; or

(ii) with respect to a United States branch of an alien assuming insurer, the state through which the alien assuming insurer is entered and licensed to engage in the business of insurance or reinsurance;

section 8, 9, or 10 of this chapter.

(B) Sections 10 and 12 of this chapter.

(C) Sections 11 and 12 of this chapter.

(D) Section 11.5 of this chapter.

(E) Section 13 of this chapter.

(2) The reinsurance contract provides in substance that, in the event of the insolvency of the ceding insurer, the reinsurance is payable under a contract reinsured by the assuming insurer on the basis of reported claims allowed in the liquidation proceedings, subject to court approval, without diminution because of the insolvency of the ceding insurer. Payments under this subdivision must be made directly to the ceding insurer or to the ceding insurer's domiciliary liquidator except as provided in IC 27-9-3-30.1. The reinsurance agreement may provide that the domiciliary liquidator of an insolvent ceding insurer shall give written notice to an assuming insurer of the pendency of a claim against the ceding insurer on the contract reinsured within a reasonable time after the claim is filed in the liquidation proceeding. During the pendency of the claim, any assuming insurer may investigate the claim and interpose in the proceeding where the claim is to be adjudicated, at the assuming insurer's expense, any defenses that the assuming insurer considers available to the ceding insurer or the liquidator. If two (2) or more assuming insurers are involved in the same claim and a majority in interest elect to interpose a defense to the claim, the expense must be apportioned under the terms of the reinsurance agreement as though the expense had been incurred by the ceding insurer.

As added by P.L.116-1994, SEC.54. Amended by P.L.233-1999, SEC.7; P.L.11-2011, SEC.26; P.L.81-2012, SEC.25.