On September 16, 2008, the Florida Office of Insurance Regulation (OIR) announced that, in its capacity as the Financial Services Commission, the Florida Cabinet approved a rule permitting approved, unaccredited reinsurance companies to conduct business in Florida without posting 100% collateral. The Florida rule immediately implements 2007 legislation that gives the state’s insurance commissioner discretion to allow financially strong, foreign reinsurers to conduct business with Florida insurers without posting collateral. The OIR cites the move as an alternative approach to improving Florida’s property insurance market. As previously reported on our Blog (please click here, here and here), the New York Insurance Superintendent and the National Association of Insurance Commissioners (NAIC) are considering similar proposals but have not taken final action.
Florida Insurance Commissioner Kevin McCarty stated:
“Florida needs to have well-capitalized and well-regulated foreign reinsurers to conduct business with Florida insurers without requiring them to post millions of dollars in collateral. Attracting this capital is an important step toward stabilizing our insurance market. This rule sends a message of openness to the reinsurance market and encourages the investment of capital in reinsurance for Florida property risk. Increasing capital and increasing competition are very important to cover hurricane risk in our state.”
The OIR news release is available by clicking here.