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September 25, 2008 at 08:42 AM
Members of the Financial Condition Committee at the National Association of Insurance Commissioners have voted to advance a reinsurance modernization and collateral proposal.
The executive committee of the NAIC, Kansas City, Mo., and the plenary, a body that includes all voting members of the NAIC, expect to consider the proposal in Grapevine, Texas, in December, at the NAIC’s winter meeting.
Members of the Financial Condition Committee’s Reinsurance Task Force approved the measure earlier this week.
The plan would link collateral posted by a foreign reinsurer to a financial strength rating from a rating agency approved by the U.S. Securities and Exchange Commission and to the discretion of a port-of-entry or home state supervisor.
Based on a 5-tier system, collateral would range from no collateral for tiers 3 and above, 75% collateral for tier 4 (secure) and 100% collateral for tier 5 (vulnerable.)
The American Council of Life Insurers, Washington, says it supports the goal of modernizing existing U.S. life reinsurance regulation but cannot not support the current NAIC collateral proposal because it wants to see broader regulatory reform.
The NAIC proposal offers a “narrow” focus, the ACLI says.
Trade groups that have expressed opposition to the reinsurance collateral proposal include the American Insurance Association, Washington; the National Association of Mutual Insurance Companies, Indianapolis; and the Property Casualty Insurers Association of America, Des Plaines, Ill.
