California’s Assembly Insurance Committee will be hearing a bill today co-sponsored by the Association of California Insurance Companies (ACIC) that is designed to assure a competitive reinsurance market in the state.
Jeff Fuller, ACIC executive vice president and general counsel, said the bill, AB 2400 by John Benoit (R-Palm Desert), would declare California’s intent to promote consistent regulation of reinsurance throughout the country. The bill also would amend several provisions of existing California law to be in conformity with the National Association of Insurance Commissioners’ (NAIC) model reinsurance statute. Reinsurance is coverage that insurers purchase to help spread their risks and, if needed, pay future claims.
“Maintaining a high level of competition is the chief purpose of AB 2400,” Fuller said. “The legislation’s intent is to make certain that reinsurance is available at competitive market rates.”
He noted that California must compete on a global scope to assure that its reinsurance needs are met at competitive prices.
“That goal cannot be achieved unless the reinsurance regulatory structure in California is consistent with the regulatory structure that exists in other states,” said Fuller. He noted that every other state in the nation is already in conformity with the NAIC model law.
“AB 2400 would make certain that the California Department of Insurance does not deviate substantially from the national reinsurance standards without seeking legislative authorization,” Fuller said.
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