Florida has become the second state after New York to unilaterally consider dropping the automatic, hefty 100 percent of liabilities collateral requirement imposed on foreign reinsurers in an effort to lower entry barriers and bolster Florida's insurance marketplace.
"Allowing foreign reinsurers to conduct business with Florida insurers without requiring them to post millions of dollars in collateral will lead to increased capital and competition in our state," said Insurance Commissioner Kevin McCarty in a Nov. 28 statement issued in the wake of a workshop a couple of days earlier on his proposed new rule. "These factors will help to stabilize and potentially reduce property insurance rates."
Like the reinsurance regulation proposed in New York last month by Insurance Superintendent Eric Dinallo (see NU, Oct. 29, page 6), Florida would forgo collateral for foreign and nonaccredited insurers, in part, if they were judged to have sound finances by financial rating firms.
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