The US regulator debuted its proposal to modernise reinsurance regulation
The National Association of Insurance Commissioners (NAIC) today debuted to its international insurance regulatory counterparts a proposal to comprehensively modernise reinsurance regulation in the United States.
The proposal was shared at the 14th Annual Conference of the International Association of Insurance Supervisors (IAIS) during a panel titled, “Reinsurance: The Avenue Towards Mutual Recognition.” The panel was hosted by New Jersey Insurance Commissioner Steven Goldman, who serves as chair of the IAIS Reinsurance and Other Forms of Risk Transfer Subcommittee.
“As regulators of the world’s largest insurance market, NAIC members are committed to ensuring that our standards remain compatible with supervisory practices worldwide,” Goldman said. “Our objective with this proposal is to align US reinsurance regulation more closely with international standards, while allowing for the flexibility that our nation’s financial services marketplace requires.”
Developed by a subgroup of the NAIC’s Reinsurance Task Force, the proposal calls for amending the existing regulatory framework to allow for single-state licensing of US reinsurers, and encourages the NAIC to develop a Reinsurance Supervision Review Department (RSRD).
This would assist in the evaluation of the extent to which non-US jurisdictions apply regulatory oversight that is “functionally equivalent” to US regulation. Under the proposal, non-US reinsurers domiciled in “functionally equivalent” jurisdictions would be allowed to access the entire US market through a single port of entry state.
“We hope to facilitate cross-border transactions and enhance competition within the U.S. market, while ensuring that insurers and policyholders are adequately protected from a solvency perspective,” Goldman added. “By working closely with insurance supervisors from around the world, we hope to move closer to our ultimate goals of mutual recognition and global financial stability.”
The NAIC’s Reinsurance Task Force will discuss this proposal further during a meeting 7-8 November, held in conjunction with the NAIC Financial Summit in Atlanta.