NAIC Risk Retention Group (E) Task Force Conference Call

The National Association of Insurance Commissioners (“NAIC”) Risk Retention Group (E) Task Force has scheduled an open conference call for Tuesday, September 11, 2007 from 11:00 am – 12:00 pm EST.

The purpose of the call is to continue discussions on the Reinsurance Ceded Part A accreditation standard and discuss any comment letters received regarding the two exposures ending August 24.  Please see the instructions below on how to participate on this call.

The NAIC advises that the agenda and advanced materials are not yet available and will be sent at a later date.

Conference Call Instructions:

Task Force members will be automatically be included on a dial-out listing for the conference center.

Interested Regulators and Media should send e-mail notification to Phyllis Meyer (PMeyer@naic.org) if participation in the call is desired. Once notification has been received, that persons name will be included on the conference center dial-out listing.

If other interested parties desire to participate in the conference call, please follow the instructions included on Web site link by clicking here. The conference call has been registered under “NAIC, Glaszczak.” 

To view a summary discussion of Part A Standards from June 8, 2007, click here.

Minutes from the June 2, 2007 Task Force meeting are below:

Risk Retention Group (E) Task Force
June 2, 2007

The Risk Retention Group (E) Task Force met on Saturday, June 2, 2007.
During this meeting, the Task Force:

• Continued discussions on the tenth Part A standard regarding reinsurance ceded. This standard requires adoption of the Credit for Reinsurance Model Law and Regulation or substantially similar language.

The Task Force re-visited the seven significant elements of the Model Law that are required for accreditation. These elements indicate that an insurer may take credit for reinsurance in four different situations: (a) when the business is ceded to a licensed insurer; (b) when the business is ceded to an accredited insurer that meets specific requirements set forth in the Model Law; (c) when the business is ceded to an insurer domiciled in a state which employs substantially similar standards for credit for reinsurance and maintains capital and surplus of at least $20 million; and (d) when the business is ceded to an insurer who maintains a trust fund meeting various requirements.

The Task Force briefly discussed significant element (a) and voted to add a sentence to the current standard which states that, “If the reinsurer is licensed as a risk retention group, then the ceding risk retention group or its members must qualify for membership with the reinsurer.”

The Task Force also continued discussions on the sixth significant element which indicates that for those insurers taking credit for reinsurance under situations (c) and (d) above, the assuming insurer must agree in the reinsurance agreement that in the event of the assuming insurer’s failure to perform its obligations, it shall submit to the jurisdiction of any competent court in any state of the U.S. and that it will designate the Commissioner or a designated attorney as its true and lawful attorney. During its Spring National Meeting, some concern was raised by the Task Force regarding this item and it was decided to survey the Task Force members regarding any potential issues. The Task Force reviewed the results of the survey and voted that significant element (f) should be included in the Part A standards that apply to RRGs incorporated as captives.

The Task Force also discussed the survey results regarding significant element (g) that allows an insurer to take credit for reinsurance in an amount up to the amount of funds held by or on behalf of the ceding insurer when said insurer does not meet any of the requirements discussed in elements (a) through (d) above. Based on the results of the survey for this item and further discussion during this meeting, the Task Force agreed to hold at least one interim conference call prior to the Fall National Meeting to continue its discussions as to whether significant element (g) should be included in the Part A standards that apply to RRGs incorporated as captives would be necessary.

Action Items:

• The Task Force approved a motion to add the following sentence to the current significant element (a) of the Reinsurance Ceded standard: “If the reinsurer is licensed as a risk retention group, then the ceding risk retention group or its members must qualify for membership with the reinsurer.”

• The Task Force approved a motion that the sixth Credit for Reinsurance significant element should be included in the Part A standards applicable to RRGs incorporated as captives.

• The Task Force agreed to schedule an interim conference call to continue discussions as to whether significant element (g) should be included in the Part A standards that apply to RRGs incorporated as captives.

 

 

Should you have any questions or comments, please do not hesitate to call this office.