NAIC Reinsurance Task Force July 23-25 Meeting Report

The National Association of Insurance Commissioners (“NAIC”) Reinsurance (E) Task Force (“Task Force”) has concluded the first half of its interim meeting regarding the NAIC’s Reinsurance Regulatory Modernization Proposal (“Proposal”). 

A Colodny Fass representative attended the open portion of the meeting, at which several organizations offered support for a streamlined regulatory process.

Among the concerns raised were:

• The need for federal involvement in order to ensure uniform adoption of the Proposal by all states
• Objection to the requirement for mandatory contract wording for all reinsurance agreements.  It was suggested this should be a matter of negotiation between sophisticated commercial entities
• The posting of collateral should always be a market issue based on product negotiation rather than be mandated by regulation 
• Any ceding insurer insolvencies related to the lack of collateral ultimately will be borne by policyholders and U.S. citizens
• Under the Proposal provisions, smaller and mid-sized insurers will not have any negotiating leverage, but may need to have collateral posted in order to manage risk
• An exception to the collateral requirement should be adopted for affiliate transactions which are subject to standard holding company approval requirements
• Revisions to the risk transfer rules are needed

Additional documents and comment letters regarding the Proposal are below. 

General comments and suggested amendments to specific sections of the Proposal received by the NAIC in advance of the meeting are located within the document labeled “July 3, 2008 Reinsurance Regulatory Modernization Framework Proposal (with comments).”  

• July 3, 2008 Reinsurance Regulatory Modernization Framework Proposal (with comments)
• July 3, 2008 Reinsurance Regulatory Modernization Framework Proposal
• Proposed Amendment to the NAIC Proposal

Comments from interested parties include:

• Association of Bermuda Insurers & Reinsurers
• American Council of Life Insurers
• American Insurance Association
• CEA Insurers of Europe
• Genworth Financial 
• General Insurance Association of Japan
• International Underwriting Association of London
• Lloyd’s America, Inc.
• National Association of Mutual Insurance Companies
• Property & Casualty Insurers Association of America
• Reinsurance Association of America 

To access previously-distributed documents, click here.

A regulator-to-regulator meeting will be held today (July 25, 2008) to consider comments received at the open portion of the Task Force meeting.  Details of this meeting will be provided as information becomes available.

During today’s meeting, Proposal language will be solidified and a proposed implementation methodology will be crafted and subsequently circulated for additional public comment.  The Proposal is expected to be finalized in time for the NAIC Fall 2008 National Meeting to be held September 22-24, 2008 in Washington, DC.

Additional comments on the Proposal may be submitted to the NAIC within the next 10 days.  Regulators are particularly interested in comments concerning development of standards for the Reinsurance Supervision Review Department (“RSRD”) detailed in the Proposal.  As part of the proposed modernization of the U.S. reinsurance regulatory system, the RSRD would determine, with the approval of U.S. insurance regulators, which non-U.S. jurisdictions are entitled to enter into mutual recognition agreements

 

Should you have any questions or comments, please do not hesitate to contact Colodny Fass.

 

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