Connecticut Insurance Commissioner Thomas Leonardi praised passage of two new laws that give the state greater financial oversight of large, globally active insurance companies and makes the state a more attractive place for international reinsurers to do business. Governor Dannel Malloy signed the two bills into law on June 4.• The holding company law (Public Act 103) allows the insurance commissioner to establish “supervisory colleges,” consortiums of domestic and international regulators who conduct financial examinations of an insurer that is part of an internationally active holding company.
Public Act 103 will allow regulators to gain an overview of the whole group and have the ability to peer through the window of the holding company to gauge the impact of certain financial activities on a domestic insurer. The state sought this enhanced authority as a result of the financial crisis of 2008.
• The reinsurance law (Public Act 139) grants the insurance department authority to evaluate and review the financial strength of a foreign reinsurer and the U.S. insurance company that buys the reinsurance.
Public Act 139 reduces collateral requirements on a sliding scale for those foreign reinsurers who meet the department’s financial requirements and who are regulated by credible insurance supervisors in their own country. This would allow those reinsurers to free up capital and write more business in Connecticut and elsewhere.
“These new laws give the department significant supervisory tools that allow us to better understand the risks of insurance conglomerates and help prevent a repeat of the financial crisis from which we are still recovering,” Commissioner Leonardi said.
“We also now have the ability to level the playing field for foreign reinsurers and that could result in lower costs to consumers in the long run.”
In February, Connecticut became the first U.S. jurisdiction to join an international agreement established by the International Association of Insurance Supervisors (IAIS) for the purpose of sharing financial data with regulators around the globe.
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