Reinsurer Collateral Tiff Resumes
The fight to reduce alien reinsurer collateral requirements will resume next week at the summer meeting of the National Conference of Insurance Legislators (NCOIL).
For years foreign nation's alien reinsurance companies have tried to create a so-called "white list" of reinsurers whose credit worthiness would entitle them up to a 50 percent reduction of the current 100 percent collateral requirements.
Their attempts have met with vigorous opposition from regulators and the domestic primary and secondary insurance industries who feel that solvency of those relying on that reinsurance would be at stake.
For two years now, both sides have been meeting with an ad hoc group of state commissioners in attempt to reach some sort of compromise to no avail. Their proposed solution, which the domestic group opposes, will be debated before the National Association of Insurance Commissioners Reinsurance Task Force this fall.
Meanwhile, alien insurers' representatives will clash with the domestic group before the Executive Committee of NCOIL. The NCOIL meeting is set for July 7-9 in Newport, R.I.
Three years ago the group gave preliminary approval to a White Paper proposal but withheld giving full endorsement while the parties tried to work out their own agreement.
Domestic representatives say that until international accounting standards are fully standardized and the sanctity of court judgments in foreign jurisdictions can be assured, it is too early to reduce collateral rules.
Mike Koziol, representing the Property Casualty Insurers Association of America (PCI), said that the action is premature now. He said European risk-based capital and accounting standards revisions have been deferred for several years.
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