A Florida law revising reinsurance statutes has just been enacted. The law provides insurers with credit for reinsurance and eliminates additional collateral requirements for a reinsurer if it is domiciled in a "reciprocal jurisdiction" and meets additional requirements. The measure is SB 728.
SB 728 was signed into law by Florida Governor Ron DeSantis. The new law incorporates recent changes the National Association of Insurance Commissioners (NAIC) have made to its model reinsurance law and regulation.
The relevant definition in this statute is "reciprocal jurisdiction," which is defined as a non-U.S. jurisdiction that is subject to an in-force covered agreement with the U.S. or, in case of an agreement between the U.S. and the European Union (EU), an EU member state, a U.S. jurisdiction that meets the NAIC accreditation requirements, and any other qualified jurisdiction that meets certain statutory requirements, listed below, and any additional requirements of the Florida Office of Insurance Regulation set forth in the rule.
The reinsurer must meet the following requirements:
- Minimum capital and surplus requirements
- Minimum solvency or capital ratios
- Annual confirmation from the domiciliary supervisory authority stating the reinsurer meets the capital, surplus, and minimum solvency or capital ration requirements; and
- Prompt claims payment practices.
According to the new law, insurers will now be provided some new protections against reinsurer failure, including;
- Requiring the reinsurer to post collateral equal to all outstanding reinsurance liabilities in the event the reinsurer enters into receivership
- Requiring the reinsurer to consent to the jurisdiction of courts of the state of Florida, and
- Requiring the reinsurer to post collateral equal to all outstanding liabilities if the reinsurer resists enforcement of a court order from a jurisdiction in which it has consented.
The new law will be effective on July 1, 2021.