Tuesday August 25, 2009

The NAIC has been working since early 2007 on a framework for modernizing its rules and regulations for reinsurance companies.  The current working concept is called the Reinsurance Regulatory Modernization Framework.  The model is attempt to reduce the regulatory burden on reinsurance companies operating within the US, so that they are not subject to regulatory oversight by multiple state insurance departments.

As envisioned, there are two classes of reinsurers that qualify under the framework, national reinsurers and POE reinsurers, or non-US domiciled reinsurers that use a state as a "point of entry or POE."  The framework creates a single state regulator for reinsurers writing assumed reinsurance in the US, if the state is able to demonstrate that it has sufficient regulatory capacity.  In order to qualify national or POE reinsurers must have minimum capital and surplus of $250 million.

While this is certainly a welcome change to being subject to 50 perspective regulators, for a specialty reinsurer such as GEM, the capital requirements are too steep.  Although the framework continues to progress a number of significant hurdles were raised at the Summer NAIC meeting that suggest this idea is still a ways away from be coming a reality.

» Posted by John M. Foehl, Jr. at 9:40 AM