State authorities, particularly in New York, have recently issued regulatory pronouncements on a number of reinsurance matters, including:
- New York’s Office of General Counsel issued an opinion relating to assumption reinsurance, stating that the insured’s consent must be obtained to effectuate a transfer of the contract and that state insurance law does not require foreign insurers’ assumption reinsurance transactions to be filed with the insurance department, except in the case of life insurers. New York’s Office of General Counsel also issued an opinion relating to credit for reinsurance with foreign entities, concluding that a New York domestic insurer may enter into a reinsurance agreement with an Illinois-based risk pooling trust and obtain credit for that reinsurance so long as the domestic insurer holds funds provided by the trust in accordance with certain New York insurance law requirements.
- The New York Insurance Department has proposed an amendment to Regulation No. 20 (121 NYCRR 125) - Credit for Reinsurance from Unauthorized Insurers. The amendment proposes application of principles-based credit risk management standards to all licensed ceded insurers, and provides an alternative credit for reinsurance ceded to unauthorized reinsurers, which adjusts the credit that the ceding insurer may take on its financial statement based on the financial strength of the unauthorized assuming reinsurer (as evidenced by ratings issued by Standard & Poor’s, Moody’s, Fitch, A.M. Best, or other rating agency recognized by the Securities Valuation Office of the NAIC).
- Connecticut issued a bulletin to accredited reinsurers regarding financial filing requirements for 2008 and 2009.
- Maine addressed the repeal by referendum of certain parts of “An Act To Continue Maine’s Leadership in Covering the Uninsured.” Part A of the Act established a reinsurance program for individual health insurance, but the state concluded that the reinsurance program could not be implemented because the funding provision and its revenue sources were repealed by the referendum and no other sources of funds were allocated or identified.
- Montana published an advisory memorandum explaining how certain provisions of the Terrorism Risk Insurance Program Reauthorization Extension Act of 2007 may require Montana insurers to file disclosure notices, policy language, and applicable rates.
- Hawaii proposed amendments to its Disclosure of Material Transactions regulation, including a definition of “material transaction” and the requirement that material, new ceded reinsurance agreements affecting in force life insurance business are to be subject to reporting requirements.