The nation’s insurance regulators are moving to modernize reinsurance regulation in the United States.
The proposal — developed by a subgroup of the National Association of Insurance Commissioners’ (NAIC) Reinsurance Task Force — calls for amending the existing regulatory framework to allow for single-state licensing of U.S. reinsurers, and encourages the NAIC to develop a Reinsurance Supervision Review Department (RSRD).
“As state insurance regulators look at enhancements to reinsurance regulation in the United States,” said NAIC President and Alabama Insurance Commissioner Walter Bell, “we are encouraged by supervisory developments in non-U.S. jurisdictions where robust regulation of reinsurance has recently been introduced.”
In the European Union, for example, member states are in the process of implementing a new reinsurance directive. The NAIC’s reinsurance proposal could ultimately provide a framework for mutual recognition between the U.S. and non-U.S. jurisdictions.
The RSRD would assist in the evaluation of the extent to which non-U.S. jurisdictions apply regulatory oversight that is “functionally equivalent” to U.S. regulation. Under the proposal, non-U.S. reinsurers domiciled in “functionally equivalent” jurisdictions would be allowed to access the entire U.S. market through a single port of entry state.
“U.S. regulators believe that a reinsurance regulatory framework also must be sufficiently flexible to accommodate the rapidly changing reinsurance environment, while providing for appropriate levels of financial stability, solvency and predictability that are critical to a vigorous market, consumer protection and a strong and secure insurance regulatory system,” Bell added.
The Task Force will discuss this propsal further during a meeting Nov. 7-8, 2007, held in conjunction with the NAIC Financial Summit in Atlanta.