The Reinsurance Task Force voted unanimously to amend the United States’ current approach by adopting a “framework memorandum” containing these three general concepts:
* Mutual recognition of non-U.S. jurisdictions with comparable regulatory effectiveness, as determined by a new NAIC entity called the Reinsurance Supervision Review Department.
* A single state U.S. regulator for a U.S. reinsurer so it may access the U.S. market “upon certification by its state of domicile or another appropriate U.S. regulator.”
* A single state U.S. regulator for a non-U.S. reinsurer from an RSRD-approved jurisdiction so it could be certified to access the U.S. market through one jurisdiction known as the “port of entry.”
Uniform minimum standards would apply to both such jurisdictions, although there were no additional details.
The years-long debate focuses on the requirement for non-U.S. reinsurers to post collateral that matches their exposures to U.S. risks. Many U.S. insurers and reinsurers have opposed any relaxation, citing financial service concerns. Overseas companies, most notably those in London, have pushed for a relaxation of the regulations, arguing that their companies offer security that is comparable to, or better than, many of their U.S. competitors.
“To the extent that the framework memorandum indicates a commitment to change the system, that’s positive. But there is no hiding the fact that concrete progress has been missing,” said Bill Marcoux, a London-based attorney with Dewey & LeBoeuf L.L.P. who represents the London-based International Underwriting Assn. and some other European reinsurers.
However, the collegial atmosphere at the meeting emphasized a new spirit of cooperation among regulators, several observers said. For example, among the task force members voting for the framework memorandum were representatives of New York and Florida insurance departments, which are each pursuing individual collateral-reduction programs.
The NAIC’s full membership is expected to consider adopting the memorandum during a conference call sometime in December after the meeting, regulators said.