Second Notice of Change Posted for Proposed Rule: Credit for Reinsurance From Eligible Reinsurers

In response to comments by the Florida Joint Administrative Procedures Committee (“JAPC”), the Florida Office of Insurance Regulation (“OIR”) has issued a second Notice of Change for proposed Rule 69O-144.007: Credit for Reinsurance From Eligible Reinsurers. 

An initial Notice of Change was posted on June 27, 2008 subsequent to public comments received at an April 29 hearing regarding the proposed Rule.  To view this Notice, in addition to full text of the proposed Rule incorporating revisions made pursuant to the April 29 hearing, click here.

The additional revisions documented by the July 18 secondary Notice of Change are below:

Subsection (6) of  proposed Rule 69O-144.007: Credit for Reinsurance From Eligible Reinsurers now reads as follows:

(6) In addition to the trust fund required under paragraph (3)(c) of Section 624.610, F.S., the commissioner shall permit an assuming insurer that maintains a trust fund in a qualified United States financial institution, as that term is defined in paragraph (5)(b) of Section 624.610, F.S., for the payment of the valid claims of its United States cedent insurers and their assigns and successors in interest to also maintain in a qualified United States financial institution a trust fund constituting a trusteed amount at least equal to the collateral required in accordance with subsection (4) of this rule to secure the liabilities attributable to United States cedent insurers under reinsurance policies (contracts) entered into or renewed by such assuming insurer on or after the effective date of this rule or such other date as may be established in other states for cedent insurers domiciled in such states, but only when maintenance of such a trust fund serves to protect the interests of the public and the interests of insurer solvency.

Subparagraph (8)(a)3. now reads as follows:

3. A report that provides information to the office as to its ceded and ceding insurance; the information may be provided in the form of the NAIC Property and Casualty Annual Filing Blank Schedule F, or in any manner that provides the Office with the same information about its ceded and ceding insurance that is disclosed by the NAIC Property and Casualty Annual Filing Blank Schedule F;

Subsection (13) now reads as follows:

(13)(a) Upon the entry of an order of rehabilitation, liquidation, or conservation against the ceding insurer, pursuant to Chapter 631, Part I, F.A.C., or the equivalent law of another jurisdiction, an eligible reinsurer, within 30 days of the order, shall fund the entire amount that the ceding insurer has taken, as an asset or deduction from reserves, for reinsurance recoverable from the eligible reinsurer. The insurer may request a variance and waiver from this provision as provided by Section 120.542, F.S. (b) If an eligible reinsurer fails to comply on a timely basis with paragraph (a) of this subsection, the Commissioner shall withdraw the reinsurer’s eligibility under this rule.

The remainder of the Rule reads as previously published.

To view an April 25, 2008 letter from OIR Assistant General Counsel Bob Prentiss to JAPC Chief Attorney John Rosner regarding the matter, click here.  To view a follow-up June 17 letter from Mr. Prentiss to Mr. Rosner, click here.

To view Mr. Rosner’s June 23, 2008 reply to Mr. Prentiss, click here.

Note:  September 1, 2008 represents the 90-Day Filing Exception Deadline for this Rule.

If, as in this case, a Rule change is effected in order to meet JAPC objections, another public hearing is not required.  However, challenges still may be made to the Rule as changed within 21 days after publication of notice (July 18).

 

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

 

 

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