The National Association of Insurance Commissioners of Kansas City, Mo., yesterday adopted a new proposal to modernize state-based regulation of reinsurance.
The National Association of Insurance Commissioners of Kansas City, Mo., yesterday adopted a new proposal to modernize state-based regulation of reinsurance.
This new proposal creates two new groups of reinsurers in the United States: Those that are based in the United States and non-U.S-based port of entry reinsurers.
There are also modified collateral requirements for eligible reinsurance companies.
The proposal establishes a new framework for state regulation based on supervisory recognition concepts, single-state licensure for U.S. reinsurers and single-state certification for foreign reinsurers from approved jurisdictions.
For now, the proposal is only a conceptual framework, New Jersey insurance commissioner Steven M. Goldman said in a statement.
“Now, we must focus on developing the specifics of this new regulatory regime and taking the appropriate legislative steps to make the proposal a reality,” he said.
This proposal also creates the NAIC Reinsurance Supervision Review Department, which will evaluate reinsurance supervision regimes in foreign countries and establish standards for states to be qualified to regulate reinsurance on a cross-border basis.
In order for a foreign reinsurer to become a port-of-entry certified carrier, it must be licensed by a non-U.S. jurisdiction that’s eligible for recognition by the RSRD.
The RSRD will be created as a transparent, publicly accountable entity with a governing board of insurance regulators.
Criteria relating to ceded premium volume won’t discriminate against other qualified small jurisdictions from approval as a home state or point-of-entry supervisor, the NAIC said in its announcement.
Those that don’t become national or port-of-entry reinsurers will be governed the NAIC Credit for Reinsurance Model Act.
