During the winter meeting of National Association of Insurance Commissioners ("NAIC") (November 30 through December 4, 2007), the Reinsurance Task Force ("Task Force") of the Financial Condition (E) Committee unanimously adopted a framework memorandum outlining a three-part approach to modernizing current U.S. reinsurance regulation. The framework memorandum, which you can review by clicking here, calls for the following:
(1) Creation of a new Reinsurance Supervision Review Department to evaluate which foreign regulatory regimes are “functionally equivalent” to that of the United States – a process leading to mutual recognition between domestic and foreign jurisdictions with similar regulatory regimes;
(2) A single U.S. regulator system, under which authorization in one jurisdiction would give U.S. reinsurers access to the entire domestic market; and
(3) A single point of entry certification process that would allow non-U.S. reinsurers from certain countries to enter the U.S. reinsurance market through a single point of entry.
The Task Force did not, at this meeting, make a determination regarding the collateral requirements for non-U.S. reinsurers. Additionally, a number of issues, including how to implement inter-state uniformity and how to determine the appropriate standards for mutual recognition, are still open for further discussion.
It is expected that the NAIC’s full membership will consider adopting the framework memorandum later in December.
We will continue to monitor these developments and provide updates at InsureReinsure.com.