Regulators have been hard at work creating rules to implement the Dodd-Frank Act (DFA). Much of the activity of interest to the reinsurance industry concerns the surplus lines provisions of the DFA, which focus on the collection and allocation of premium tax revenues and other regulatory issues. On December 16, 2010, the NAI C adopted a suggested model act limited in scope, for the most part, to the premium tax issues. The National Conference of Insurance Legislators, however, has adopted and advocates a broader proposal covering premium taxes, eligibility, and streamlined regulation of brokers and placement activities. The Council of State Governments has endorsed NCOIL’s proposal. Some are beginning to question whether the July 2011 effective date for the DFA’s reinsurance and surplus lines subtitle is realistic.
Among other notable events, the Financial Stability Oversight Council initiated rulemaking to determine the process and factors to be used to determine which nonbank financial companies may be designated for enhanced prudential supervision by the Federal Reserve. The Council also issued a report on the implementation of the Volcker Rule relating to investments in hedge funds and private equity funds. The report suggests some “accommodations” for insurance companies to permit them to hedge risks without excessive regulation. In addition, just prior to his retirement from the House, Rep. Dennis Moore introduced in December 2010 a bill providing for a federal licensing scheme for national reinsurers. This bill is supported by the Reinsurance Association of America, but its prospects are unknown.
These matters are tracked on Jorden Burt’s reinsurance blog at www.ReinsuranceFocus.com.