Louisiana House Insurance Committee Approves Bill Reducing Collateral Requirements for Offshore Insurers
Apr 9, 2012
Last week, the Louisiana House of Representatives Insurance Committee passed House Bill 849, which would allow international insurance companies to reduce the amount of collateral they have to set aside to cover possible losses.
A copy of the bill is attached in PDF format. Following is a report from The Advocate (Baton Rouge):
Bill reducing insurance collateral passes panel Capitol news bureau
April 6, 2012
A House committee advanced legislation Wednesday to allow international insurance companies to reduce collateral, a move that Insurance Commissioner Jim Donelon said would attract more companies to sell hurricane damage policies.
Offshore insurance companies, such as those located in London, Zurich and Bermuda, must set aside for possible payout enough money to cover all the potential damage they insure. Smaller companies that sell “wind and hail” insurance to people on Louisiana’s coastal areas will buy policies with the large international firms to offset losses should a hurricane hit and everyday consumers demand payments, Donelon said.
House Bill 849 would allow the large international “reinsurance” companies to set aside a lesser amount to cover the possible losses.
HB849 was reported favorably without objection by the House Insurance committee. It goes to the full House.
Donelon said the technical wording, generally, would base the calculations on how much “collateral” is necessary on the size and solvency of the company, he said.
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