The protracted nature of trying to unify changes across the state-based regulatory system in the US means a more uniform approach would be beneficial to all, as Frank Nutter explains.
In November 2011, the National Association of Insurance Commissioners (NAIC) unanimously approved changes to its credit for reinsurance model law and regulation. When adopted by the states, these changes grant discretion to the state insurance commissioner to allow insurers to take credit for reinsurance purchased from reinsurers that the commissioner has determined meet certain eligibility criteria, without posting 100 percent collateral as previously required.
These provisions provide incentives to financially sound reinsurers to do business in the US and enhance international regulatory cooperation. The legislation is viewed as critical to the US states’ role in the insurance regulatory modernisation debate both at the federal level and internationally.
In the two years since NAIC adoption, 18 states have passed revisions to their credit for reinsurance laws and/or regulations: Alabama, California, Connecticut, Delaware, Florida, Georgia, Indiana, Iowa, Louisiana, Maine, Maryland, Missouri, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Virginia. However, only a handful of these states have implemented the reinsurer certification process fully.
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Intelligent Insurer, Frank Nutter, US, Regulation, National Association of Insurance Commissioners