NAIC Examines Foreign Reinsurance Requirements
New Orleans
The battle between U.S. and foreign reinsurers ratcheted up a notch as the National Association of Insurance Commissioners continued its fact-finding on whether to endorse reducing collateral requirements for non-U.S. reinsurers.
The NAICs Reinsurance (G) Task Force, convened here for the group's Fall National Meeting, heard a report addressing various aspects surrounding a proposal to reduce the requirement that alien reinsurers place 100 percent of estimated U.S. losses into a U.S. trust fund to qualify for credit for reinsurance.
The report to the task force, prepared by the law firm Stroock & Stroock & Lavan LLP, compared regulatory requirements for credit for reinsurance in the United States, the United Kingdom, and European Union countries.
Presented by Vincent Laurenzano, a consultant to New York-based Stroock, the report looked at solvency requirements, risk-transfer definitions and requirements, and other regulatory differences.
In conclusion, Mr. Laurenzano urged the Kansas City, Mo.-based NAIC not to decrease the collateral requirements for non-U.S. reinsurers. He told the regulators that "this is not a trade issue."
He was referring to previous arguments by European reinsurers that the 100 percent requirement acts as a barrier to international trade. Mr. Laurenzano asked the regulators not to reduce the collateral requirement merely to accommodate "a business model created by someone in Europe."
Representatives from the International Underwriting Association of London and from Cologne, Germany-based Cologne Re responded by asking the task force for time to study the previously unseen Stroock report.
Dave J. Matcham, IUA director of operations, indicated that without input from U.K., Bermuda, and EU insurance regulators–which they expect to present to the NAIC at its next meeting in San Diego in December–the task force would not have a balanced view of the regulatory environment.
The task force also heard a report from the Washington-based Reinsurance Association of America updating information about, among other things, the relative U.S. marketshare of alien and U.S. reinsurers. According to the RAA, foreign reinsurers are enjoying an ever-increasing share of the U.S. reinsurance market, presumably to the detriment of U.S. reinsurers.
Although the IUA questioned that declaration, the group could not definitively tell the task force's chairman–Georgia Insurance Commissioner John Oxendine–that the statement wasnt accurate.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, September 16, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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