Reinsurance regulatory modernisation is essential, and the US should step up to the plate, says Tracey Laws, senior vice president and general counsel of the Reinsurance Association of America.
The need to modernise reinsurance regulation around the world is more important than ever, and as the world’s largest insurance market, the US should be a leader in this effort.
In November 2011, the National Association of Insurance Commissioners (NAIC) took an important step when it approved changes to its credit for reinsurance models. When adopted by a state, these changes grant the insurance commissioner discretion to allow an insurer to take 100 percent financial statement credit for reinsurance purchased from eligible reinsurers from qualified jurisdictions, but requiring the reinsurer to post less than the 100 percent collateral required under the old models. However, to realise the true benefits of reinsurance modernisation, including collateral reduction, these revisions must be uniformly adopted in all states.
Since 2011, 25 states have passed some version of the revised credit for reinsurance models: Alabama, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Indiana, Iowa, Louisiana, Maine, Maryland, Massachusetts, Missouri, New Hampshire, New Jersey, New Mexico, New York, Ohio, Pennsylvania, Rhode Island, Vermont and Virginia.
RAA, NAIC, Regulations, Federal Insurance Office