Posted on 24 Sep 2009
The National Association of Insurance Commissioners' (NAIC) Government Relations Leadership Council (GRLC) has approved for submission to Congress the Reinsurance Regulatory Modernization Act of 2009, a proposed federal bill that would modernize the regulation of reinsurance by the states.
“The NAIC has endorsed the proposed federal legislation to facilitate cross-border reinsurance transactions and enhance competition within the U.S. market, while ensuring that U.S. insurers and policyholders are adequately protected against the risk of insolvency,” said Roger Sevigny, NAIC President, New Hampshire Insurance Commissioner and Chair of GRLC.
“We are supporting this federal legislation in order to preserve and improve state-based regulation of reinsurance, ensure timely and uniform implementation of this legislation throughout all states, and as a more comprehensive alternative to the reinsurance provisions of the recently passed Nonadmitted and Reinsurance Reform Act,” added Scott Richardson, Director of the South Carolina Department of Insurance and Acting Chair of the Reinsurance Task Force.
The legislation would create two new classes of reinsurers in the U.S.: National Reinsurers (U.S.) and Port of Entry Reinsurers (non-U.S.). In order to transact reinsurance business in the U.S., National Reinsurers would be licensed through a single Home State, while Port of Entry reinsurers would be certified through a single Port of Entry State. Reinsurers would continue to have the option of operating under the existing regulatory approach. The legislation also provides for the establishment of the Reinsurance Supervision Review Board as a federal entity responsible for evaluating states and non-U.S. jurisdictions.
State insurance supervisors would be responsible for evaluating their respective National and Port of Entry Reinsurers and establishing appropriate collateral requirements for reinsurance agreements. State laws with credit for reinsurance requirements different from the federal legislation would be preempted as to National and Port of Entry Reinsurers.