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NAIC Proposes Federal Legislation that Could Reduce Reinsurance Collateral Requirements |
October 22, 2009
Previously published on October 16, 2009
During its Fall Meeting, the National Association of Insurance Commissioners (NAIC) approved submission to Congress of a proposed piece of federal legislation (Reinsurance Regulatory Modernization Act of 2009, or RRMA) that is a step toward treating foreign regulators and reinsurers in a multilateral manner. The RRMA represents substantial reform of the current regulatory framework with respect to reinsurance, especially for non-U.S. reinsurers. If enacted, the RRMA would, inter alia, reduce the amount of collateral that certain non-U.S. reinsurers and U.S. reinsurers would need to post in order for their counterparty U.S. ceding insurers to receive reinsurance credit. Based upon an NAIC supporting memorandum, in the case of double-A and single-A rated reinsurers the reduction would be 90% and 80%, respectively. The RRMA also permits a one-year deferral of the obligation to post collateral for catastrophic reserves for fire, homeowners, auto, inland marine, multiperil and other property and casualty claims.
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The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance. |
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