Last month, the New Jersey legislature passed the “Reinsurance and Surplus Lines Stimulus and Enhancement Act” (A2670, the “Act”). The Act amends state law to permit surplus lines insurers domiciled in New Jersey to write surplus lines insurance in the state. This would make New Jersey the second state in the U.S. after Illinois to allow its domestic surplus lines companies to write insurance in the home state’s surplus lines market.
The Act also eases the requirements of insurers seeking credit for reinsurance. As an alternative to the standard options of admission, accreditation, reciprocity or establishment of a trust, the Act would permit the insurance commissioner to allow credit for reinsurance if the reinsurer holds surplus or equivalent in excess of $250,000,000. Factors that the insurance commissioner should consider when deciding whether to exercise this discretion include: the financial strength rating of the reinsurer; its domiciliary regulatory jurisdiction; the solvency regulation requirements and the financial surveillance of the reinsurer; the domiciliary regulator’s willingness to cooperate with the U.S.; and the enforceability of U.S. judgments in the domiciliary jurisdictions.
The Act has been presented to Governor Chris Christie and is awaiting his signature. Click here for a complete copy of the Act.