California’s Office of Administrative Law has approved “Reinsurance Accounting, Agreements and Oversight” regulations proposed by the Department of Insurance.
The regulations set forth the principal requirements of substance and procedure in accounting for reinsurance on insurer financial statements, the general requirements applicable to reinsurance agreements, and related sanctions and oversight.
The sections are applicable to all insurers licensed or accredited in California, the approved U.S. trusts of otherwise unauthorized reinsurers, and licensed reinsurance intermediaries.
Among the many issues addressed in the regulations, are:
- Credit for reinsurance ceded to admitted insurers and accredited reinsurers;
- Credit for reinsurance of foreign insurers;
- Credit for reinsurance secured by an approved U.S. trust, single beneficiary trust, letter of credit, or funds withheld;
- Transfer of risk;
- Contract requirements for statement credit and form of agreements;
- Oversight of reinsurance transactions;
- List of “volume insurers;”
- Examination of reinsurance intermediaries;
- Reporting of regulatory action; and
- Denial of statement credit and non-admission of assets.
The new regulations will take effect Jan. 1, 2007. To view the regulations in detail, visit: www20.insurance.ca.gov/epubacc/REG/89540.htm
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