A growing number of US state regulators and lawmakers also believe there is a need for reform. In November 2004, a group of leading US regulators wrote to the US industry trade associations advising them that “the current rules on collateralisation need to be changed” with new rules applying “to all reinsurers.”
More recently, at the 2006 NAIC Winter Meeting, the Reinsurance Task Force voted to develop the ‘Reinsurance Evaluation Office’ proposal into a risk based evaluation process by September 2007.
The way forward
The solution must be to modernise the law and for it to apply to all reinsurers, irrespective of where they come from. New regulations that recognise the relative strength of reinsurers and apply appropriate collateral requirements would help give US insurers the widest choice in a free global market.
International reinsurers prefer a system that takes account of the financial strength of all reinsurers doing business in the US, irrespective of the reinsurer’s country of domicile. The amount of collateral posted by each reinsurer would depend on the assessment it receives.
If such a regime were implemented, it would result in consistently high regulatory and financial standards for all reinsurers - both US and non-US.
