Claims News Service, Jan.25, 10:21 a.m. EST -- New reinsurance regulations proposed by the California Department of Insurance are "unnecessary, burdensome, and anti-market competition," according to comments filed by several insurance trade associations at recent CDI hearings.

According to the California Department of Insurance, the proposed regulations set forth the procedures in accounting for reinsurance on insurers' financial statements, the general requirements applicable to reinsurance agreements, and related sanctions and oversight.

"In light of the new financial responsibilities imposed on insurance carriers as a result of the Terrorism Risk Insurance Extension Act of 2005 and the widespread natural disaster claims that the insurance industry has had to deal with this past year, it is imprudent to impose new regulations that could limit an insurance carrier's reinsurance options," said Christian John Rataj, National Association of Mutual Insurance Companies' state affairs manager for the western United States.

NAMIC and its state advocacy partner, the Pacific Association of Domestic Insurance Companies, argued that the proposed regulations are problematic for these reasons:

They offer no noticeable benefit to the insurance consumer;

They might potentially limit availability of reinsurance to small, domestic insurance companies;

They likely will raise the cost of reinsurance products for insurance carriers, which could increase premium rates for policyholders; and

They could adversely impact insurance carriers' ability to secure reinsurance to handle natural disaster and terrorism-related claims.

"Historically, regulations are created and adopted to resolve a particular problem within the insurance industry or to deal with a potential problem. Yet there does not appear to be any evidence that insurance company insolvencies are on the increase, or at least to the extent that would warrant the adoption of these regulations," said PADIC Executive Director Milo Pearson.

More information is available at www.namic.org.

Special Reports /

NAMIC: Proposed Calif. Reinsurance Regulations &quot;Burdensome&quot;

Related Stories

Recommended For You

NAMIC: Proposed Calif. Reinsurance Regulations "Burdensome"