Foreign reinsurers may be permitted to post less collateral whendoing business in New Jersey with legislation signed by Gov. ChrisChristie that gives regulators the ability to cut previousfull-collateral requirements.

New York and Florida have passed similar laws. Recently, Floridaannounced that Alterra Bermuda Ltd. has become the 11th eligiblereinsurer in the Sunshine State to post reduced collateral.

Illinois, Indiana and Louisiana are considering similar reducedcollateral requirements, according to the Florida Office ofInsurance Regulation.

Florida was the first state to allow a foreign reinsurer to postreduced collateral as long as it is highly rated and financiallysound. U.S. reinsurers post no collateral.

New Jersey's "Reinsurance and Surplus Lines Stimulus andEnhancement Act" also amends current law to permit surplus-linesinsurers domiciled in New Jersey to write surplus-lines insurancein the state.

Tom Considine, commissioner of the N.J. Dept. of Banking andInsurance, says the legislation completes a "pro-growth insurancepackage of laws" which includes one signed in February by Christieto license and regulate captive insurance companies.

The legislation will "bring jobs and economic opportunities tothe states," Considine adds.

At its recent meeting in Austin, Texas, the National Associationof Insurance Commissioners' (NAIC) Reinsurance Task Force proposedamendments to its reinsurance model law related to collateral forreinsurance.

The proposal requires foreign reinsurers to possess $250 millionin surplus, with reductions in collateral to be based on financialstrength ratings.

New Jersey's legislation requires the same amount of surplus.However, Florida requires $100 million.

Florida Insurance Commissioner Kevin McCarty says the surplusrequirement could be changed this legislative session to match theNAIC proposal, and it should be "no problem" for the foreignreinsurance companies approved in Florida to meet the $250 millionsurplus requirement.

Other reinsurers are "in the queue" to join the Floridamarketplace, including the London market, he says.

The Property Casualty Insurers Association of America (PCI)testified in Austin before the NAIC Reinsurance Task Force andoutlined its concerns about the proposal.

PCI would like to continue to see foreign reinsurers post 100percent collateral if they are rated below "A-minus." In addition,the trade association wants some provisions in place to assessslow-paying reinsurers.