The victory scored last month when the Empire State enticed Berkshire Hathaway to begin writing municipal bond insurance in New York is part of a larger strategy to help stabilize the faltering market for that coverage, said the state insurance department.
The centerpiece of that plan is to attract more capital and increase capacity in an effort to protect policyholders and ensure continued availability of bond insurance — especially for municipal issuers. The invitation to Berkshire Hathaway to open a new bond insurance company – Berkshire Hathaway Assurance Corporation – in New York, won quick regulatory approval, and the department said it’s in discussions with other firms about possible future capital investments.
In addition, the state said it’s working with the state’s existing insurers, banks, credit rating agencies and other stakeholders to develop “measures to help stabilize the market.”
Greater regulation is also in the works. The department said it’s drafting new regulations that would redefine the future activities of bond insurers.
“As a regulator, (the department’s) primary responsibility is to protect policyholders and safeguard the solvency of insurance companies so they can pay any claims,” said Superintendent Eric R. Dinallo in an e-mailed statement. “Additionally, we work to ensure that consumers, businesses and governments have access to the insurance products they need from a healthy, competitive market. Our activities in the bond insurance market are aimed at achieving those goals.”
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