Florida Office of Insurance Regulation Amending Reinsurance Collateral Rules; Workshop Scheduled for April 2

Mar 27, 2014


The Florida Office of Insurance Regulation (“OIR”) has scheduled a Rule Development Workshop for April 2, 2014 at 9:30 a.m. (ET) to address proposed changes to Florida’s reinsurance collateral regulations.  To be held only if requested in writing by a member of the public, the Workshop offers a forum for comment on proposed revisions to Rules 69O-144.005, F.A.C. and 69O-144.007, F.A.C. pertaining to a Florida insurer’s ability to take full credit for loss reserves ceded to an unauthorized reinsurer without holding 100 percent collateral. 

To access the meeting notice and hyperlinks to each Rule’s history, click here.

The changes are being made to conform the OIR’s Rules to those adopted by the National Association of Insurance Commissioners (“NAIC”) in 2013, including the adoption of certain forms that were promulgated by the NAIC.  The reinsurer must apply for certified status with the OIR and be approved via order/consent order.

Two substantive changes are proposed for Rule 69O-144.005:

1.  A domestic ceding insurer shall now be required to notify the OIR within 30 days if reinsurance recoverable from a single reinsurer or group (related) of reinsurers exceeds 50 percent of the cedant’s last reported surplus, or it is determined to be likely to exceed this amount.

2.  A domestic ceding insurer shall now be required to notify the OIR within 30 days after the ceding more than 20 percent of its prior year’s gross written premiums, or after it is determined it will likely exceed this amount to any single reinsurer or group of reinsurers.

Substantive changes proposed for Rule 69O-144.005 are as follows:

1.  In addition to a reinsurer’s last three years of audited financial statements, the reinsurer must provide the OIR with an actuarial opinion as filed with the insurer’s domiciliary jurisdiction.

2.  Provision for the submission of Form CR-1 in place of the previous documentation requiring that a reinsurer submits to a U.S. jurisdiction, appoints an agent for service of process in Florida and agrees to post 100 percent collateral for its Florida liabilities under certain circumstances.

3.  The requirement for a reinsurer to submit any regulatory filings made with its domiciliary jurisdiction.

4.  Provision for the submission of Form CR-F or CR-S, as applicable, in place of information regarding ceded and ceding insurance in the form of Schedule F.

5.  Requirement for a reinsurer to submit any other information that the OIR reasonably deems appropriate to the application.

6.  Upon receipt of an application, the OIR shall now post notice on its Website and allow a 30-day public comment period before taking final action on an application.

7.  Provision that each certified reinsurer shall be rated on a legal entity basis, with limited exception.

8.  Provision of clarification of the factors considered by the OIR in the evaluation process.

9.  Provision that the OIR shall publish a list of certified reinsurers on its Website, including the rating assigned.

10.  Listing of the information required to be filed annually by a reinsurer in order to maintain its rating.

11.  Requirement that a certified reinsurer must notify the OIR within 10 days of any change in its ratings assigned by rating agencies or any regulatory actions taken against it.

12.  Addition of NAIC-accredited states to the definition of “qualified jurisdiction.”

13.  Clarification of the OIR’s authority to suspend, revoke or otherwise modify a certified reinsurer’s certification.

14.   Provision that a certified reinsurer given an upgrade in status by the OIR must continue to post security under the previously applicable requirements for all contracts in force on, or before the effective date of the upgrade.  Where the OIR downgrades a certified reinsurer, the certified reinsurer must meet security requirements for the new rating for all business it has assumed as a certified reinsurer.

Presently, the OIR has only allowed reduced collateral for property catastrophe-assumed business and not for other lines, such as workers’ compensation or liability.  Upon adoption of these amended Rules, the OIR may give consideration to applications for certified reinsurer status for other lines of business.


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