New York has published for comment proposed amendments to its regulations governing credit for reinsurance. The proposed regulations establish, inter alia, a ratings-based framework for the determination of collateral requirements. The applicability clause as included in this latest proposal indicates that New York intends the regulations to apply to reinsurance ceded by all insurers authorized to do business in the state, subject to one major exception: where the state of domicile of a foreign ceding insurer recognizes credit for a ceded risk and is an NAIC-accredited state (or has financial solvency requirements substantially similar to the requirements for NAIC accreditation), the foreign ceding insurer may take credit for the reinsurance.
Thus, while recognizing Dodd-Frank Act mandates relating to allowance for reinsurance credit, it appears that New York is aiming to impose certain principles of prudent reinsurance credit risk management on all NY-authorized insurers, without exception. Those principles, appearing in the proposed amendments as a new Section 125.3, include notification requirements for ceding insurers triggered when reinsurance recoverables from, or reinsurance cessions to, a single reinsurer, or affiliated group, exceed certain thresholds. A 45-day public comment period commenced on September 15, 2010.