Indiana recently enacted HB 1486 (enacted as PL 11, 2011, the “Act”), which, effective April 6, 2011, grants the Indiana Insurance Commissioner (the "Commissioner") discretion to reduce the amount of collateral required for domestic insurers to receive full financial statement credit for reinsurance ceded to assuming insurers that are not licensed or accredited by, or for an alien company entered through, Indiana or a state with similar standards regarding credit for reinsurance. To be eligible for reduced collateral, such reinsurers must meet a number of requirements, including maintenance of surplus or equivalent in excess of $250,000,000 and submission of an application and subsequent annual filings to the Commissioner. In determining whether credit should be allowed, the Commissioner is required to consider certain factors enumerated in the Act relating to the reinsurer’s financial strength and the adequacy of its domiciliary regulator. Like New York, the Act restricts the level to which collateral may be reduced based upon the financial strength ratings of the reinsurer. In addition, the Commissioner is required to publish a list of alien jurisdictions whose reinsurers may be approved for reduced collateral and to monitor such jurisdictions on an ongoing basis.

To view the Act, click here.