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You are here: Home / Archives for Reinsurance Regulation

Reinsurance Regulation

Update On Amendments To State Captive Insurance Laws

June 20, 2018 by Michael Wolgin

South Carolina

South Carolina passed new legislation making numerous and streamlining changes to its captive insurance law. Included in the changes are: modified capital and surplus requirements, a new definition of a captive’s principal place of business, and new oversight, reporting, and examination rules and requirements. (S.C. H.B. 4675 eff. May 18, 2018).

Vermont

Last year Vermont passed House Bill 85, authorizing the formation of agency captive insurers owned by insurance agencies, among other changes. Effective March 8, 2018, Vermont enacted House Bill 694, making various amendments to the captive insurance laws, including standardizing the due dates for annual reporting and premium taxes, designating the Commissioner of Financial Regulation as the agent for service of process for branch captive insurers, and further amending the governance standards for risk retention groups. (VT H.B. 85 eff. May 1, 2017) & (VT H.B. 694 eff. March 8, 2018).

Connecticut

Connecticut passed Senate Bill 377 joining Vermont in authorizing the formation of agency captive insurers owned or controlled by licensed insurance agents or producers. (CT S.B. 377 eff. July 1, 2018).

This post written by Michael Wolgin.

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Filed Under: Reinsurance Regulation

Implications of U.S. Withdrawal from Iran Nuclear Deal on (Re)insurance Industry

June 11, 2018 by John Pitblado

On May 8, 2018, President Donald Trump issued a Presidential Memorandum announcing his decision to withdraw the United States from its participation in the Joint Comprehensive Plan of Action (JCPOA), the agreement under which Iran committed to limiting its nuclear activities in exchange for sanctions relief from the U.S. and others. The Presidential Memorandum directed the Secretary of State and the Secretary of the Treasury to immediately re-impose all nuclear-related sanctions that were suspended when the JCPOA was implemented in January 2016.

The JCPOA significantly impacted the insurance and reinsurance industry. By lifting sanctions once applicable to vast sectors of the Iranian economy, the JCPOA facilitated opportunities for insurers and reinsurers that were previously unable to transact business in or with Iran, or that were required to sacrifice lucrative dealings with U.S. companies in order to do so. Recognizing Iran was ripe for new insurance and reinsurance products, global companies quickly entered the Iranian market. The President’s recent decision to withdraw the U.S. from the JCPOA raises concerns as to the continued viability of those transactions. For instance, upon re-imposition of the National Defense Authorization Act for Fiscal Year 2012 (NDAA), U.S. and non-U.S. entities may be restrained from providing insurance, reinsurance or underwriting services relating to any Iranian activity for which certain other sanctions are also being re-imposed. The NDAA will also require compliance with restrictions on the underwriting of insurance and reinsurance risks to or for any person or entity on the List of Specially Designated Nationals and Blocked Persons. Underwriting, insurance and reinsurance services have also been specifically called out by the U.S. Department of the Treasury as areas in which sanctions are being re-imposed.  (See Question 1.3 v.)

Restrictions impacting underwriting, insurance and reinsurance services are expected to take effect after a 180-day “wind-down” period scheduled to end of November 4, 2018. At that time, they will have immediate, far-reaching implications on the ability of non-U.S. companies that transact business in or with Iran to continue such business in the U.S. and with U.S. companies. All companies, insurers and reinsurers in particular, are advised to reevaluate their business risks in light of the Presidential Memorandum, and to take care not to enter any foreign transactions without ensuring compliance with all applicable sanctions.

We are continuing to monitor JCPOA-related developments and will update this post when there is more clarity.

This post written by Alex Silverman.
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Filed Under: Reinsurance Regulation, Week's Best Posts

Georgia Joins Growing List Of States That Allow For Domestic Surplus Lines Insurers

June 1, 2018 by Michael Wolgin

Earlier this month, Georgia enacted SB 381, which provides that a non-admitted insurer domiciled in Georgia is deemed a domestic surplus lines insurer, if all qualifications are met, and can sell surplus line products in Georgia. Georgia joins a growing list of states, including Arizona, Arkansas, Delaware, Illinois, Louisiana, Missouri, North Dakota, New Hampshire, New Jersey, Oklahoma, Texas, and Wisconsin that have passed similar legislation. Among the criteria are (1) that the insurer possesses a policyholder surplus of at least $15 million, (2) that the insurer is an eligible surplus lines insurer in at least one jurisdiction other than Georgia, (3) that the insurer’s board of directors has passed a resolution seeking to be a domestic surplus lines insurer in Georgia, and (4) that the insurance commissioner has issued a certificate of authority or other written approval of the same. The bill also states that all financial and solvency requirements imposed on Georgia’s domestic admitted insurers shall apply to domestic surplus lines insurers unless otherwise specifically exempted. GA SB 381 (signed 5/8/2018).

This post written by Gail Jankowski.

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Filed Under: Reinsurance Regulation

Minnesota Implements The 2011 Naic Credit For Reinsurance Model Law And Regulations

May 31, 2018 by Michael Wolgin

On May 8, 2018, the governor of Minnesota signed H.F. 3622, a bill implementing the 2011 NAIC Credit for Reinsurance Model Law and Regulations. The bill creates a new classification of reinsurer: the “certified reinsurer.” A certified reinsurer does not need to be licensed as an insurer in Minnesota or any other state. However, it must hold assets between 0 and 100% of its reinsurance obligations, depending on its financial stability, and meet recordkeeping and other requirements provided in the bill. The bill allows a domestic ceding insurer to receive credit for risk transferred to a certified reinsurer. The bill takes effect on January 1, 2019, and will apply to reinsurance contracts entered into or renewed on or after that date. Minnesota H.F. 3622 (signed 5/8/2018) (legislative analysis).

This post written by Benjamin E. Stearns.

See our disclaimer.

Filed Under: Accounting for Reinsurance, Reinsurance Regulation

Kentucky Adopts 2016 Amendments to NAIC Credit for Reinsurance Model Law

May 17, 2018 by Rob DiUbaldo

On April 26, 2018, Governor Matt Bevin of Kentucky signed House Bill No. 464, adding Kentucky to a growing list of states to have amended their Insurance Codes to conform with the 2016 amendments to the NAIC Credit for Reinsurance Model Law. These changes to Kentucky law include, among others:

  • allowing the commissioner to authorize reductions in the required surplus for single assuming insurers who have discontinued underwriting new business for three years;
  • making numerous changes to the trusts and surpluses required;
  • providing criteria by which the commissioner may certify reinsurers, including allowing the commissioner to defer to the certifications of other NAIC-accredited jurisdictions;
  • allowing certified reinsurers to maintain their certifications on inactive status after ceasing to assume new business;
  • requiring the commissioner to assign ratings to each certified reinsurer based on their financial strength and to publish such ratings;
  • specifically granting the commissioner the authority to promulgate regulations regarding reinsurance of certain types of life insurance, variable annuities, long-term care insurance, and other life and health insurance and annuity products for which the NAIC adopts model regulations related to reinsurance.

The amendments will take effect on January 1, 2019.

This post written by Jason Brost.

See our disclaimer.

Filed Under: Accounting for Reinsurance, Reinsurance Regulation

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