- Additional Changes Posted for Florida Reinsurance Collateral Rules In Advance of June 23 Final Adoption Hearing
- June 22, 2015
- Law Firm: Colodny Fass P.A. - Fort Lauderdale Office
- Substantive changes have been posted for proposed Rules relating to reinsurance collateral in advance of a June 23, 2015 final public hearing on their adoption by the Florida Office of Insurance Regulation ("OIR" or "Office") as approved by the Florida Financial Services Commission (Florida Cabinet).
Proposed Rules 69O-144.005, entitled "Credit for Reinsurance" and 69O-144.007, "Credit for Reinsurance From Eligible Reinsurers," are being amended to conform to the National Association of Insurance Commissioners model laws for accreditation purposes. The proposed changes are intended to provide consistency among regulatory jurisdictions as to the manner in which reinsurers are granted the status of "certified reinsurer" (currently termed "eligible reinsurer" in the Rule) and the manner in which Florida domestic insurance companies can apply credit for reinsurance from these entities.
The amendments pertain to:
- A requirement that ceding insurers notify the OIR in the event that reinsurance recoverables or reinsurance ceded exceeds a certain amount
- The filing requirements for certified reinsurers
- The factors to be considered in the evaluation and rating of certified reinsurers
- The method by which a jurisdiction is determined to be qualified
- The circumstances under which the Florida Insurance Commissioner may suspend, revoke or otherwise modify a certified reinsurer's certificationThe effect of a rating downgrade, rating upgrade, or revocation of a certified reinsurer's certification
- Changing the status name from "eligible reinsurer" to "certified reinsurer"
- Clarifying and expanding the documentation required to be filed in order to obtain and maintain the status as a "certified reinsurer"
- Clarifying process and regulatory responsibilities when the financial condition of a certified reinsurer changes (i.e., there is a change in financial strength rating)
- Clarifying disclosure requirements of the OIR when it receives an application from a reinsurer for this status
- Adding reinsurance concentration disclosure requirements
- Adding language that would allow the trusteed surplus of Trusteed Reinsurers to drop below $20 million if the Trusteed reinsurer is no longer underwriting new business and demonstrated that surplus below $20 million was warranted
For proposed Rule 69O-144.005 "Credit for Reinsurance"
- Subparagraph 69O-144.005(3)(a)2.b is revised in part to read:
- Subparagraph 69O-144.005(4)(b)2.a.I. has been revised to read:
(I) For reinsurance ceded under reinsurance agreements with an inception, amendment, or renewal date on or after August 1, 1995, the trust consists of a trusteed account funds in trust in an amount not less than the group's several liabilities attributable to business ceded by United States U.S. domiciled ceding insurers to any member of the group;
For proposed Rule 69O-144.007 "Credit for Reinsurance From Eligible Reinsurers"
- Subsection 69O-144.007(3) is revised by changing the first sentence by replacing "or renewed" with "renewed or amended."
- Subsection 69O-144.007(4) is revised by correcting the reference in the chart in cell Vulnerable -6 and S&P on the third line to:B,&under;&under;&under;B-,
- Subparagraph 69O-144.007(8)(a)8. is revised to read:
- Any information that the OIR may reasonably deem appropriate to clarify or explain information submitted with the application.
- Subparagraph 69O-144.007(8)(h)2. the second sentence is revised to read:
- If a U.S. GAPP audit is not reasonably available, the OIR may allow the reinsurer to provide audited International Financial Reporting Standards (IFRS) basis statements, so long as a reconciliation of equity and net income are provided on a U.S. GAPP basis.