National Association of Insurance Commissioners 2011 Fall National Meeting Summaries
Nov 22, 2011
During its November 3-6, 2011 Fall National Meeting, the National Association of Insurance Commissioners (“NAIC”) Executive Committee reviewed progress on the amendment of various model laws, including the Credit for Reinsurance Model Law (#785) and Credit for Reinsurance Model Regulation (#786).
The Credit For Reinsurance Model Law and Regulation modernizes U.S. state-based regulation of reinsurance by reducing reinsurance collateral requirements for non-U.S. reinsurers.
Under the current NAIC Credit for Reinsurance Model Law and Regulation, in order for U.S. ceding companies to receive reinsurance credit, the reinsurance must either be ceded to U.S. licensed reinsurers or secured by collateral representing 100 percent of U.S. liabilities for which the credit is recorded. The revisions to the reinsurance models would reduce these reinsurance collateral requirements for non-U.S. licensed reinsurers domiciled in qualified jurisdictions.
Other key elements of the revisions include:
- A state will evaluate a reinsurer that applies for certification, and will assign a rating based on the evaluation. A certified reinsurer will be required to post collateral in an amount that corresponds with its assigned rating (0, 10, 20, 50, 75 or 100 percent), in order for a U.S. ceding insurer to be allowed full credit for the reinsurance ceded.
- Each state will have the authority to certify reinsurers, or a commissioner has the authority to recognize the certification issued by another NAIC-accredited state.
- The NAIC will publish a list of qualified non-U.S. jurisdictions. The commissioner must document any reasons for approving a jurisdiction not on this list.
- A new notification provision was added requiring a U.S. ceding insurer to notify its domestic regulator if reinsurance ceded to an individual reinsurer or group of affiliated reinsurers exceeds certain specified amounts.
Other model laws under review include:
- The Model Law to Regulate Insurance Scoring Vendors
- The Risk-Based Capital for Fraternal Benefit Societies Model Act
- Amendments to Model Risk Retention Act (#705)
- Amendments to Standard Nonforfeiture Law for Life Insurance(#808)
- The Risk-Based Capital for Insurers Model Act (#312 Fraternal)
- The Risk-Based Capital for Insurers Model Act (#312 Life Trend Test)
- Joint Executive Committee/Plenary Agenda and Attachments
Summaries of other NAIC meetings held during November 3-6 are accessible through the hyperlinks below:
Should you have any questions or comments, please contact Colodny Fass.