A bulletin on the Lloyd’s web site (www.lloyds.com) notes that the National Association of Insurance Commissioners (NAIC) has confirmed it will meet “to consider the proposal to end collateral requirements before the end of this month.”
Lloyd’s has led the efforts, in conjunction with other “alien reinsurers,” to convince the U.S. regulators to do away with the need to post collateral to operate as a reinsurer in the U.S.
“Confidence was high among the attendees of this year’s Monte Carlo Rendezvous of an imminent change in the current regulatory structure that requires non-US reinsurers to post collateral of 100 percent of potential liabilities that may arise from any business they write in the US,” said Lloyd’s.
Speaking in June at the Lloyd’s New York City Dinner, Lloyd’s Chairman Lord Levene said the U.S. and Europe shouldn’t be pitted in competition. “One of the issues that European reinsurers complain about is US reinsurance regulation, which discriminates according to geography rather than financial strength,” he stated.
Last year New York and Florida both took their own steps towards a relaxation of collateral requirements [See IJ web site – https://www.insurancejournal.com/news/national/2007/10/18/84395.htm and https://www.insurancejournal.com/news/southeast/2008/04/29/89537.htm].
Sean McGovern, Director, General Counsel at Lloyd’s, stated: “All well regulated reinsurers should be treated equally, whether domiciled in the US or in other countries, and shouldn’t be required by regulators to put up collateral for the reinsurance they write.
“We welcome the NAIC’s continued work on its Reinsurance Framework proposal. This is a significant step in the right direction: towards the total abolition of collateral requirements, which we favor.
“It’s also encouraging that they are recommending federal involvement to help them implement the proposals across all States.”
A spokesman for the NAIC confirmed that regulators had presented a draft proposal, which they will discuss on September 22.
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