New NAIC proposals rattle foreign reinsurers

Proposals to charge US domestic reinsurers collateral based on their financial strength on the same basis as foreign reinsurers accepting business in the US have been abandoned, while the minimum percentages of collateral required from foreign reinsurers has been raised.

When the National Association of Insurance Commissioners (NAIC) instructed its Reinsurance Task Force to pursue a different approach to its reinsurance supervision – long criticised by foreign reinsurers having to put up 100% of their gross liabilities written in the US as collateral – it seemed particularly keen to level the playing field between foreign and US domestic reinsurers: “The Reinsurance (E) Task Force is directed to develop alternatives to the current reinsurance regulatory framework, including the use of collateral within the US and abroad. Consider approaches that account for a reinsurer’s financial strength regardless of domicile, ie, state or country”, it told the task force.