Arbitrator Asks NAIC To Regulate Reinsurance Brokers
San Francisco
A reinsurance arbitrator is urging the National Association of Insurance Commissioners to look at the uncooperative nature of many reinsurance intermediaries during arbitration proceedings, which he described as a huge problem.
Robert Hall, a Rockport, Maine-based attorney who was also a senior officer at several insurance companies, addressed the NAICs Reinsurance Task Force during its meeting here last week. Mr. Hall, who has been an arbitrator, mediator and expert witness in disputes between insurers and reinsurers, and has served on over 60 arbitration panels, observed that most treaties in the world are drafted using reinsurance intermediaries.
In fact, he said, they bring attorneys together, design the reinsurance deal, and draft the contract. And when the deal breaks down, a lot of times intermediaries are very important in determining what the intent of the transaction was to begin with and coming up with any documents that are not available.
But Mr. Hall told regulators that as an arbitrator, a lot of times we ask intermediaries to explain what the transaction was, and unfortunately there are quite a number of intermediaries that simply refuse to provide information and refuse to comply with subpoenas from the arbitration panel.
Mr. Hall added that, unfortunately, there is a gap in the Federal Arbitration Act that prevents arbitrators from getting these intermediaries to talk and find out what the deal really was. So weve been considering alternative ways to go at this, he said. What I would suggest to regulators is: you might ask the interested parties to look and see if there is some sort of regulatory solution to this.
He emphasized that this is not merely a matter of assisting arbitration panels, but rather something more fundamental. Are these people fit and proper, if in fact they walk away from transactions they put together, structured and drafted? I recommend that regulators ask interested parties to look for a regulatory solution for this problem.
Reproduced from National Underwriter Edition, June 18, 2004. Copyright 2004 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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