The finish line is in sight for Lloyd’s and the rest of Europe in the marathon battle with regulators over the need to post collateral to operate as a reinsurer in the US.
The National Association of Insurance Commissioners (NAIC) has confirmed it will meet to consider the proposal to end collateral requirements before the end of this month.
Confidence was high among the attendees of this year’s Monte Carlo Rendez-Vous of an imminent change in the current regulatory structure that requires non-US reinsurers to post collateral of 100% of potential liabilities that may arise from any business they write in the US.
Lloyd’s has been at the forefront of the past decade’s lobbying for change.
Speaking in June at the Lloyd’s New York City Dinner, Lloyd’s Chairman Lord Levene said the US and Europe shouldn’t be pitted in competition. “One of the issues that European reinsurers complain about is US reinsurance regulation, which discriminates according to geography rather than financial strength,” he said.
Towards the end of last year New York and Florida took their own steps towards a relaxation of collateral requirements.
Sean McGovern, Director, General Counsel at Lloyd’s, says:
“All well regulated reinsurers should be treated equally, whether domiciled in the US or in other countries, and shouldn’t be required by regulators to put up collateral for the reinsurance they write.
“We welcome the NAIC's continued work on its Reinsurance Framework proposal. This is a significant step in the right direction: towards the total abolition of collateral requirements, which we favour.
“It’s also encouraging that they are recommending federal involvement to help them implement the proposals across all States.”
A spokesman for the NAIC confirmed that regulators had presented a draft proposal which they will discuss on September 22.
