In the era of globalization, should U.S. reinsurers be treatedno differently than their alien counterparts? Thats the keyquestion facing regulators next week as they debate a controversialproposal to assess all reinsurers equally when it comes tocollateral requirements.

Indeed, the collateral proposal is one of the hottest issues up fordebate at next week's meeting of the National Association ofInsurance Commissioners. Instead of imposing more burdensomemandates on “alien” carriers, the idea is to require all reinsurersto post some collateral to cover potential U.S. liabilities–withthe amount depending upon a number of criteria, to be determined bya new Reinsurance Evaluation Office.

Making such a plan feasible, proponents say, is the fact thatfour major foreign domiciles generate the bulk of U.S. “alien”reinsurance capacity–the United Kingdom, Germany, Switzerland andBermuda, all with sophisticated and capable regulatory authorities.That lessens the need to impose a burdensome collateral charge oncarriers that just happen to be from outside the United States.