The implementation of the Dodd-Frank Act (“DFA”) is underway with a flurry of rulemaking and other activity.
NAIC and state actions
Although the DFA did not include any significant requirements with respect to reinsurance collateral requirements, it did include a provision prohibiting 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 prior Reinsurance Regulatory Modernization Act (“RRMA”), which is the subject of prior blog entries, this DFA provision, 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 has made an “informal request” to the Reinsurance Task Force “to consider which key elements of the [NAIC’s RRMA] should be considered in reviewing any individual state initiates, and whether these key elements should be incorporated into the Credit for Reinsurance Model Law and Regulation.” An initial draft recommendation has been exposed for comment, with the comment period expiring September 16, 2010. This document contains many similarities to the Florida regulation, and specifically cites to the Florida regulation. Meanwhile, the New York Insurance Department has published a Notice of Proposed Rulemaking for proposed amendments to New York’s reinsurance collateral requirements. A summary and impact statement for the proposed New York amendment have been published. It appears that rather than promoting uniform collateral reform, the NAIC will be permitting state-by-state variations with some form of guidance.
On another front, at its 2010 Summer Meeting last month, the NAIC’s Executive Committee formed a special task force to consider the issues relating to surplus lines premium taxes raised by the DFA.
As the Office of National Insurance Office 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. The SEC has issued a press release concerning its comment process and the CFTC and the SEC have published their comment topic lists and schedules. In addition, the CFTC is holding a swap roundtable.