On December 3, 2008, prior to the National Association of Insurance Commissioners (“NAIC”) Winter Meeting, Senator Seward (NY), President of the National Conference of Insurance Legislatures (“NCOIL”), sent a letter (“Letter”) to Commissioner Goldman, Chair of the NAIC Reinsurance Task Force (“Task Force”), regarding the NAIC Reinsurance Regulatory Modernization Framework Proposal (“Proposal”).
The Letter (1) supports reassessment of the collateral rules so that they “provide sufficient security for reinsurance contracts while avoiding excessive requirements that would increase costs or reduce capacity”; (2) supports an October 29, 2008 letter from Vermont, Maine, Nebraska, District of Columbia and Ohio regulators, by expressing a need for transparent governance of the Reinsurance Supervision Review Department (“RSRD”) and encouraging adoption of governing principles with respect to such governance (certain principles were adopted at the NAIC Winter Meeting; see the December 7, 2008 NAIC press release); and (3) expresses concern regarding the Proposal’s recommendation for federal enabling legislation to provide the RSRD with sufficient authority to perform its functions. With respect to item 3, the Letter states that “[s]eeking a federal hand in reinsurance could lead states down the path to an undesirable federal regulator, or to a national overseer in the form of the NAIC.” It also notes that NCOIL “believe[s] deeply that the business of insurance is best governed by the states and that state-based mechanisms are the most appropriate way to effect needed change.” The Letter suggests a compact, similar to the Interstate Insurance Product Regulation Compact, as a possible means to facilitate cross-border reinsurance oversight.
The Proposal adopted at the NAIC Winter Meeting [insert link to blog below] is the same version previously adopted by the Task Force and the Financial (E) Committee and still contains language recommending a federal enabling statute with respect to the RSRD. Click here for a copy of the adopted Proposal, and see our September 29, 2008 blog for a summary of the Proposal.