- NAIC Survey Solicits Feedback on Amounts of Reinsurance Collateral Required of Certified Reinsurers
- July 8, 2014
- Law Firm: Colodny Fass P.A. - Fort Lauderdale Office
As originally set forth by its 2008 Reinsurance Regulatory Modernization Framework Proposal, the National Association of Insurance Commissioners ("NAIC") has once again committed to re-examine the amounts of reinsurance collateral required of certified reinsurers that are licensed and domiciled in qualified jurisdictions. These requirements are contained within the NAIC's Credit for Reinsurance Model Law (#785) and Credit for Reinsurance Model Regulation (#786).
To accomplish its current review, the NAIC distributed a Reinsurance Collateral Amount Survey ("Survey") last week (June 23, 2014) to regulators (state, federal and international) and interested parties in order to obtain an update on their thoughts about collateral amounts and other aspects of the revised models.
Completed Surveys must be returned to the NAIC by July 25, 2014.
The NAIC's Reinsurance Task Force will review the Survey results and discuss them at the upcoming 2014 NAIC Summer National Meeting.
The aforementioned 2008 re-examination provision was intended to acknowledge that the reinsurance collateral requirements are not necessarily static or permanent. It also underscored the NAIC's commitment to monitor the revised models' impact by considering future adjustments in either direction, or as the NAIC determines to be necessary or appropriate. The NAIC re-affirmed its commitment as part of the document entitled Preface to Credit for Reinsurance Models, as well as within the U.S.-European Union Dialogue Project. The collateral requirements also were amended in November 2011.
A previous version of the Credit for Reinsurance Models stated that, in order for U.S. ceding insurers to receive reinsurance credit, reinsurance was required to be ceded to U.S.-licensed reinsurers or secured by collateral representing 100 percent of U.S. liabilities for which the credit is recorded.