NAIC’s submission to Congress, the Reinsurance Regulatory Modernization Act of 2009, is meant to compete with H.R. 2571, the Nonadmitted and Reinsurance Reform Act of 2009, which passed the House earlier this month.
“We are supporting this federal legislation in order to preserve and improve state-based regulation of reinsurance, ensure timely and uniform implementation of this legislation throughout all states, and as a more comprehensive alternative to the reinsurance provisions of the recently passed Nonadmitted and Reinsurance Reform Act,” Director of the South Carolina Department of Insurance and Acting Chair of the Reinsurance Task Force Scott Richardson said in a statement.
H.R. 2571 seeks to reduce overlapping, multiple-state regulation of ceding insurers by assigning primary responsibility for regulation of a reinsurance transaction to the insured’s home state and prohibiting the application of insurance laws from other states.
Conversely, NAIC’s proposal would create two new classes of reinsurers: U.S.-domiciled National Reinsurers and foreign-based Port of Entry Reinsurers. In order to transact reinsurance business here, the former would be licensed through a single Home State, while the latter would be certified through a single Port of Entry State.
“The NAIC has endorsed the proposed federal legislation to facilitate cross-border reinsurance transactions and enhance competition within the U.S. market, while ensuring that U.S. insurers and policyholders are adequately protected against the risk of insolvency,” said Roger Sevigny, NAIC President, New Hampshire Insurance Commissioner and Chair of GRLC.
