Grapevine, Texas — The
NAIC says the framework will modernize the state-based regulatory system of reinsurance.
The proposal creates two new classes of reinsurers in the United States: U.S.-domiciled national reinsurers and non-U.S.-based port of entry (POE) reinsurers, and, more controversially, introduces modified collateral requirements for eligible reinsurers. Under the current system, foreign-based reinsurers are required to post 100% collateral for the liabilities they reinsure.
The proposal also establishes a new framework for state-based reinsurance regulation based on the concepts of supervisory recognition, single-state licensure for U.S. reinsurers and single-state certification for non-U.S. reinsurers from approved jurisdictions.
The proposal creates the NAIC Reinsurance Supervision Review Department (RSRD), which will evaluate the reinsurance supervisory regimes of other countries and establish standards for a state to be certified to regulate reinsurance on a cross-border basis. In order to be certified as a POE reinsurer, a reinsurer must be licensed by a non-U.S. jurisdiction recommended as eligible for recognition by the RSRD.
“This proposal sets forth a conceptual framework only,” says New Jersey Banking and Insurance Commissioner Steven Goldman, chair of the NAIC Reinsurance Task Force, which drafted the proposal. “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.”
Source: National Association of Insurance Commissioners
