As the state legislative session nears an end, there continues to be activity in the following three areas: (1) reinsurance, (2) captive insurers, and (2) catastrophe funds. There is also continuing interest in a proposed federal bill.
Reinsurance. Oregon House Bill No. 2755 was introduced to require the Department of Consumer and Business Services to conduct a study of reinsurance alternatives for individual and small employer group health insurance markets and submit proposals to the Legislative Assembly by October 1, 2010. Two work sessions regarding the bill were held on April 10 and 24, 2009. Massachusetts Senate Bill No. 495 was also introduced to establish a reinsurance program to protect consumers of small group health insurance.
Captive Insurers. Missouri House Bill No. 577 was introduced to modify various provisions of Missouri’s captive insurance company law and permit an association captive insurance company or an industrial insured captive insurance company to be organized as a reciprocal insurer. Two companion bills (SB 269 and SB 464) to HB 577 were introduced in the Missouri Senate. There is also a bill (SB 323) pending in the South Carolina Senate that would make several changes to the state’s captive insurance company law relating to incorporation, licensing, capitalization and other requirements.
Catastrophe Funds. The New York Consumers Catastrophe Preparedness and Protection Act (SB 4188) was introduced in the New York Senate. This Act would establish the New York state catastrophe fund and an advisory council, comprised of experts from many professions related to disaster preparedness and mitigation, that is specifically charged with developing disaster prevention and mitigation standards and developing a consumer education program. A companion bill (AB 7781) to SB 4188 was introduced in the New York State Assembly. A bill (SB 295) was also introduced in the Louisiana Senate, which would create a Louisiana state catastrophe fund and implement the Louisiana Consumers Catastrophe Preparedness and Protection Act.
Federal legislation. On December 29, 2008, we posted about a proposed bill relating to the tax treatment of related party reinsurance premiums which was exposed for comment by the Senate Committee on Finance. As of this date, the bill has not been introduced, and over 50 comments have been submitted to the Committee and posted to its Web site. The comments come from individuals, law firms, trade associations, companies, Germany, Switzerland and the European Union. One interesting comment submitted by the Risk and Insurance Management Society is a study by The Brattle Group, prepared on behalf of foreign reinsurers, titled The Impact on the US Insurance Market of a Tax on Offshore Affiliate Reinsurance: An Economic Analysis. While this post does not take a position as to the appropriateness or desirability of this proposed bill, this document contains an interesting description of the US reinsurance market, which is interesting reading independently of the proposed bill.
This post written by Karen Benson.