- NAIC Reinsurance Task Force Hears Updates on Draft of Process for Developing and Maintaining List of Qualified Jurisdictions
- June 21, 2013
- Law Firm: Colodny Fass Talenfeld Karlinsky Abate Webb P.A. - Fort Lauderdale Office
During a meeting of the National Association of Insurance Commissioners ("NAIC") Reinsurance Task Force ("Task Force") on June 18, 2013, members were updated on ongoing revisions to a draft Process for Developing and Maintaining the NAIC List of Qualified Jurisdictions ("Process").
Pennsylvania Insurance Department Commissioner Michael F. Consedine, the committee chair, said the current draft reflects suggestions from 11 comments that were submitted after the most recent draft was released. The NAIC accepted comments on the draft document until March 22, 2013. The updated draft is expected to be released later this month, he said.
The NAIC's revised Credit for Reinsurance Model Law and Regulation requires an assuming insurer to be licensed and domiciled in a Qualified Jurisdiction in order to be eligible for certification by a state as a certified reinsurer for reinsurance collateral reduction purposes. The intent of the Process is to provide a documented evaluation method for creating and maintaining the list of Qualified Jurisdictions.
The NAIC is developing a documented evaluation process for creating and maintaining its list of "qualified jurisdictions" from which reinsurers will be able to apply to qualify as "certified reinsurers" and thus be eligible to post less than 100 percent collateral as permitted under the revised NAIC Reinsurance Model Law and Regulation.
Bermuda, the United Kingdom, Germany and Switzerland are among the jurisdictions identified for consideration for the proposed expedited conditional qualification process.
Commissioner Consedine said many of the comments received on the first draft expressed general support for its outlined concepts, although more revisions are needed. Two areas of interest include the application of the expedited review procedures and the enforcement of the U.S. judgments issue, he said.
He added that many of the comments indicated interest in extending jurisdiction beyond the four countries previously mentioned.
"(The list) may potentially include jurisdictions if approved by a state before the process is approved by the NAIC," Mr. Consedine said.
He added that the topic of enforcement of judgment has been an important issue as well.
"This has been a topic of considerable discussion throughout the entire history of the reinsurance collateral debate. It's of significant concern for some of the U.S. companies," Mr. Consedine stated.
Other areas of the Process draft need clarity and more consistency, he said.
"We continue to make editorial technical revisions in an effort to streamline and improve the overall document," he noted.
Since the initial round of comments, only one additional written comment was received. It was from the Reinsurance Association of America ("RAA"), which supports an expedited review procedure within the process for evaluating jurisdictions.
In its letter to the Task Force, the RAA stated that it supports an expedited review procedure for assessing jurisdictions and agrees that moving forward with regulatory regimes that have already been approved in a state at the time the NAIC process is finalized makes sense. Those include Bermuda, the United Kingdom, Germany, and Switzerland.
However, the RAA suggested the following changes to the draft: The wording "in no instance will a jurisdiction be permitted to maintain the designation of Conditional Qualified Jurisdiction for more than a year" should be modified, the RAA said, because a state or the NAIC might not have finished its evaluation process in that time frame.
Thirdly, the RAA requests that, in the draft Process, the NAIC specifically address the mutual treatment of U.S. domestic insurers operating in a jurisdiction seeking qualified statutes.
"The process should be mutual and transparent," wrote Tracey Laws, RAA senior vice president and general counsel.
"I think we can expect to see most of what we addressed in the next draft," said Matt Wolfe of the RAA. He said he believes confidentiality will be of great importance.
Before ending the meeting, Mr. Consedine noted that an updated draft should be released for public comment by June 28, 2013, followed by a 30-day period for public comment.
With no other business before the Task Force, the meeting was adjourned.