- Florida Office of Insurance Regulation Officials Hold Informal Reinsurance Collateral Discussion
- April 4, 2014
- Law Firm: Colodny Fass P.A. - Fort Lauderdale Office
A Florida Office of Insurance Regulation ("OIR") Rule Development Workshop to address proposed changes to Florida's reinsurance collateral regulations scheduled for today, April 2, 2014, was not held, inasmuch as no formal public request to do so had been made.
However, OIR officials were present at the Workshop location and held an informal meeting with interested parties in attendance today to discuss proposed changes to Rules 69O-144.005, F.A.C. and 69O-144.007, F.A.C., which pertain to a Florida insurer's ability to take full credit for loss reserves ceded to an unauthorized reinsurer without holding 100 percent collateral.
The OIR will continue to take written comment on the proposed Rule amendments through the close of business tomorrow, April 3, 2014.
OIR Director of Property and Casualty Financial Oversight David Altmaier opened the discussion, explaining that the OIR was trying to align Florida's rules to that of the corresponding National Association of Insurance Commissioners' model regulation. He highlighted substantive changes in both Rules 69O-144.005 and 69O-144.007.
The following comments were made during the meeting, or previously received in writing by the OIR and discussed today:
Both Rules contain requirements for Florida ceding insurers to notify the OIR when their recoverables from, or premium ceded to any single assuming insurer, or "group" of assuming insurers, has or is likely to exceed certain thresholds. It was requested that the word "group" be further defined. The assumption is that the OIR intends the word "group" to mean "affiliated group."
In reference to the attached copy of draft Rule 69O-144-007:
The Rule provides that a certified eligible reinsurer must hold surplus in excess of $250 million and maintain a secure financial strength rating "on a stand-alone basis separate from its parent or any affiliated entities." The OIR received a written comment suggesting the phrase "on a stand-alone basis separate from its parent or any affiliated entities" should be deleted, inasmuch as other provisions in the Rule give the OIR authority to consider group ratings in its review of an application for certified status (See Page 1 of the attached draft).
Demotech has asked to be included in the rating chart in Section (4) (See Page 2 of the attached draft).
The Rule currently contains a provision that, for short-tailed lines of business, any collateral required to be posted may be subject to a one-year deferral from the date of the first instance of a reserve liability entry as a result of a catastrophic loss "from a named Hurricane." The OIR received a written comment suggesting the deletion of the phrase "from a named Hurricane." This would give the Florida Insurance Commissioner discretion to allow the deferral for other catastrophes not related to a named Hurricane. (See Page 2 of the attached draft)
The proposed Rule requires applicants to submit "Any other regulatory filing made with the insurer's domiciliary jurisdiction." A written request was made to change this language to "any other regulatory filing . . . requested by the OIR." A suggestion was made that the sentence be changed to "Any other required regulatory filing made with . . . " Subsection 8 still gives the OIR a catch-all ability to request other information filed with the assuming insurer's domiciliary jurisdiction. This change would also be made in section (h), which discusses renewal of the certification (See Page 5 and 8 of the attached draft).
At the beginning of section (h) on page 8, the renewal information is proposed to be filed no later than March 1. The OIR is considering changing that to a date in June or July to ensure the most recent audited statements are for the immediately preceding year.
The next steps will be:
- An April 3, 2014 deadline for submitting written comments to the OIR.
- The OIR will complete a redraft and provide it to Cabinet Aides by April 11, 2014.
- The next Cabinet Aides' meeting is April 16, 2014.
- The next meeting of the Florida Financial Services Commission is April 22, 2014.
- There will be another opportunity for public hearing after the Financial Services Commission meeting.
- After hearing, the Rules will be returned to the Financial Services Commission for final approval.
Both draft Rules are attached for review.