On December 7, 2008, the National Association of Insurance Commissioners (“NAIC”) issued a press release (“Release”) announcing adoption by the Plenary of the Reinsurance Regulatory Modernization Framework Proposal (“Proposal"), which had been previously adopted by the Reinsurance Task Force (“Task Force”) and Financial (E) Committee during the NAIC's September meeting.
As previously summarized, the Proposal would, among other things: (1) create a Reinsurance Supervision Review Department (“RSRD”) to evaluate which foreign regulatory regimes are similar to the U.S.; (2) establish a single U.S. regulatory system, under which authorization in one jurisdiction (the “home state”) would give such U.S. reinsurers (known as “national reinsurers”) access to the entire domestic market; and (3) institute 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 (known as “POE reinsurers”). Both the national reinsurers and POE reinsurers would be supervised by a single state (either the home state or POE state). National reinsurers would be licensed by the home state and POE reinsurers would be certified by the POE state. A non-U.S. reinsurer must be licensed by a non-U.S. jurisdiction recommended as eligible for recognition by the RSRD in order to be certified as a POE reinsurer. In order to qualify as a home state supervisor or a POE supervisor, a state must meet standards established by the RSRD.
The Release sets forth “Principles for the Creation of the RSRD” which will guide the Task Force in the implementation process. These principles are as follows:
- The RSRD should be created as a transparent, publicly accountable entity with a governing board composed of state or district insurance regulators, and with director eligibility open to all state or district insurance commissioners, directors and superintendents.
- RSRD criteria relating to ceded premium volume will not unfairly discriminate against otherwise qualified small jurisdictions from approval as a home state or POE state supervisor.