NAIC Reinsurance Proposal Advances Toward Full Adoption
Sep 29, 2008
The National Association of Insurance Commissioners (“NAIC”) will consider the full adoption of its Reinsurance Regulatory Modernization Framework Proposal during the 2008 NAIC Winter National Meeting to be held from December 5-7 in Dallas, Texas. The Proposal is expected to modernize the United States’ current system of state-based reinsurance regulation.
To view the September 12, 2008 Reinsurance Regulatory Modernization Framework Proposal Memorandum exposure draft, click here. For more information on the Reinsurance Task Force, click here.
The NAIC press release is below.
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NAIC Reinsurance Proposal Advances Toward Full Adoption
State Insurance Regulators Carefully Consider Steps to Strengthen Reinsurance Regulation
NATIONAL HARBOR, Md. (Sept. 25, 2008) – The National Association of Insurance Commissioners (NAIC) has advanced for full adoption its Reinsurance Regulatory Modernization Framework Proposal, which would modernize U.S. state-based regulation of reinsurance.
“This approach would facilitate cross-border reinsurance transactions and supervision in a rapidly evolving international marketplace,” said New Jersey Banking and Insurance Commissioner Steven M. Goldman, chair of the NAIC Reinsurance Task Force, which drafted the proposal. “State insurance regulators have carefully evaluated the current unsettled state of the financial markets and the insurance industry, and feel confident that the proposal is a prudent step that protects the interests of U.S. insurers and policyholders against the risk of insolvency, while modernizing the reinsurance regulatory structure.”
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 would introduce modified collateral requirements for eligible reinsurers. The proposal would establish 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 would also create the NAIC Reinsurance Supervision Review Department (RSRD), which would 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.
The current NAIC Credit for Reinsurance Model Act would remain in place for reinsurers that do not choose to become either national or POE reinsurers. The entire NAIC membership will consider the proposal for adoption during the 2008 Winter National Meeting, Dec. 5-7 in Dallas.
For more information, visit the Web page for the Reinsurance Task Force at www.naic.org/committees_e_reinsurance.htm.
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