NAIC and state actions: Although the Dodd-Frank Act (DFA) did not include any significant provisions with respect to reinsurance collateral requirements, it did prohibit states from denying credit for reinsurance if the domiciliary state of the ceding insurer recognizes such credit under certain circumstances. In light of the NAIC’s previously proposed Reinsurance Regulatory Modernization Act (RRMA), Florida’s existing reinsurance collateral reduction provision (69O-144.007) and the perceived interest of states in moving forward with “individual state-based reinsurance collateral reduction reforms,” the NAIC’s Financial Regulation Standards and Accreditation Committee made an “informal request” to the Reinsurance Task Force “to consider which key elements of the [RRMA] should be considered in reviewing any individual state initiatives, and whether these key elements should be incorporated into the Credit for Reinsurance Model Law and Regulation.” The Task Force has already received comments on a draft recommendation that cites and contains many similarities to the Florida regulation. Meanwhile, the New York Insurance Department published a Notice of Proposed Rulemaking for proposed amendments to New York’s reinsurance collateral requirements, which include provisions for the management of reinsurance credit risk and a sliding scale for required collateral based upon the financial strength of the reinsurer. It appears that rather than promoting uniform collateral reform, the NAIC will be permitting state-by-state variations with some form of guidance. In addition, the NAIC’s Executive Committee formed a special task force to consider issues relating to surplus lines premium taxes raised by the DFA.
Federal actions: As the Office of National Insurance and the Financial Stability Oversight Council are being organized, one point of interest for those in the reinsurance and insurance industries is the rulemaking with respect to swaps and other financial products. The principal focal points of those efforts are the SEC and the CFTC, which held a joint swap roundtable and are engaged in rulemaking on a broad range of DFA-related issues.