New York State Insurance Superintendent Eric Dinallo signed a memorandum of understanding today with a German regulator, designed to allow closer cooperation between their two jurisdictions on insurance matters.
The signing process for the 14-page document was transacted without fanfare in Mr. Dinallo's Manhattan office with Thomas Steffen, chief executive director of insurance supervision, signing for Germany's financial regulator, the Bundesanstalt f?r Finanzdienstleistungsaufsicht (BaFin).
A spokesman for Mr. Dinallo, Ron Klug, said German officials had approached the New York department about the agreement several months ago because of Mr. Dinallo's continuing efforts to ease collateral requirements for foreign reinsurers who transact U.S. business.
New York was also was approached because the superintendent has been active attempting to solidify the solvency and ratings of bond insurers–a topic of much interest for the European insurance community, Mr. Klug said.
The memo of understanding establishes a formal basis for consultation, cooperation and coordination between the BaFin and the New York State Insurance Department, and provides for the exchange of information relevant to each authority's supervisory, regulatory and examination responsibilities, according to a department statement.
"In an increasingly global insurance market, regulators often work together to ensure policyholders are protected and the market is safe and vibrant," Mr. Dinallo said.
The agreement, he added, "recognizes the importance of the relationship between Germany and New York, and allows us to cooperate to protect consumers and support the industry."
Mr. Steffen said that "it is encouraging to see that insurance supervisory authorities in the U.S. and in the EU member states are making good progress in establishing close working relationships. Today we have laid an important foundation for an improved informational infrastructure between supervisors, which will benefit consumers, insurance undertakings and the overall financial stability."
Under the memorandum, either regulator may request assistance from the other, including obtaining information on a person or entity.
Either regulator may provide the other with investigative assistance with respect to companies and people engaged in the business of insurance, including questioning or taking testimony, as well as conducting inspections and investigations.
The memorandum commits the German and New York regulators to cooperating with each other in the interest of fulfilling their respective regulatory mandates and functions.
Negotiating the agreement for the department were deputy superintendent and general counsel Robert Easton, and supervising attorney D. Monica Marsh. For the BaFin, negotiations were handled by senior advisor Michael Kehr.
BaFin, as the Federal Financial Supervisory Authority, supervises banks, financial services institutions and insurance undertakings as well as pension funds, investment funds and investment companies.
Under the German Insurance Supervision Act, BaFin administers the supervision of insurance undertakings operating in Germany, which are of material economic significance, as well as pension funds and domestic companies engaging in reinsurance business. The scope of supervision includes "all aspects of prudent supervision and good business conduct."
Mr. Dinallo has proposed allowing foreign reinsurers to operate without posting collateral when they meet a variety of conditions–a key one being a determination by major U.S. rating firms that that they are strong financially.
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