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You are here: Home / Archives for Reinsurance Regulation

Reinsurance Regulation

Nebraska Adopts Reinsurance Credit Amendments to Insurance Law Based on NAIC Model

May 16, 2018 by Rob DiUbaldo

On April 11, 2018 Nebraska Gov. Pete Ricketts (R) signed Legislative Bill 815 into law, joining the surge of states amending their insurance laws regarding when ceding insurers may claim credit for reinsurance. The introducer’s “Statement of Intent” indicates the bill’s intent to “adopt the latest updates to the credit for reinsurance model law” published by the National Association of Insurance Commissioners. The bulk of the amendments provide additional authority to the state Director of Insurance to regulate the circumstances and requirements for authorizing credit for reinsurance. Specifically, the bill authorizes the Director to promulgate rules and regulations relating to the valuation of assets or reserve credits, amount and form of security backing reinsurance agreements, or the circumstances surrounding reduction or elimination of credit. It also grants the Director the authority to promulgate specialized rules and regulations applicable only to reinsurance relating to specialized term and universal life insurance policies, variable annuities, and long-term care policies.

This post written by Thaddeus Ewald .

See our disclaimer.

Filed Under: Accounting for Reinsurance, Reinsurance Regulation

Kansas Enacts Captive Insurance Act

May 9, 2018 by Michael Wolgin

On April 12, 2018, Kansas Governor Jeff Colyer signed into law SB 410– a bill establishing the Captive Insurance Act, which creates two new types of captives – branch and special purpose – and specifies the regulatory structure for each. The bill also raises the minimum capital and surplus requirements a pure captive insurance company must possess and maintain from $100,000 to $250,000.

The bill also creates the Captive Insurance Regulatory and Supervision Fund within the State Treasury and amends current insurance laws relating to companies subject to premium taxes by specifying the tax rate for direct premiums and assumed reinsurance premiums, as well as the maximum tax for each year, and requiring the tax to be calculated annually unless prorated for multi-year policies or contracts.

The bill also permits the insurance commissioner to adopt rules and regulations establishing standards for pure captives. KS SB 410 (April 12, 2018) (regulation and legislative analysis).

This post written by Gail Jankowski.

See our disclaimer.

Filed Under: Reinsurance Regulation

Virginia To License Domestic Insurers To Sell Surplus Lines Insurance

April 26, 2018 by Rob DiUbaldo

Virginia has amended its insurance law to allow the licensing of domestic insurers (i.e., insurers incorporated or organized under Virginia law) as “domestic surplus lines insurers” eligible to sell surplus lines insurance within the state.

In order to qualify for such a license, insurers must have a policyholder surplus of $15 million, and their board of directors must pass a resolution seeking this license. The law also provides that “a domestic surplus lines insurer shall be considered a nonadmitted insurer” as the term “nonadmitted insurer” is used in the Nonadmitted and Reinsurance Reform Act of 2010 (15 U.S.C. § 8201 et seq.). When issuing insurance to insureds whose home state is Virginia, such domestic surplus lines insurers will be subject to the same taxes and maintenance assessments as nonadmitted insurers from other states who sell such insurance within the state. They will also be exempt from laws regarding insurance rating plans, policy forms, policy cancellation and nonrenewal, and premium charged to the insured to the same extent as such nonadmitted insurers.

These changes will go into effect July 1, 2018.

2018 Virginia Senate Bill No. 542, Virginia 2018 Regular Session

This post written by Jason Brost.

See our disclaimer.

Filed Under: Reinsurance Regulation

Michigan Amends Reinsurance Credit Statute To Conform To NAIC Model Law

April 25, 2018 by Rob DiUbaldo

On April 10, 2018 Michigan Governor Rick Snyder (R) signed Michigan Senate Bill 638 into law to amend the state’s insurance code to conform to the National Association of Insurance Commissioner (“NAIC”)’s model law on reinsurance regarding when ceding insurers may claim credit for reinsurance. The Michigan legislative staff has published an analysis of the bill. The Michigan Insurance Code previously authorized reinsurance credit where the reinsurance is ceded to a reinsurer authorized in Michigan or met one of three different sets of requirements. Senate Bill 638 amends those three requirements as follows:

  • Where the Code allows reinsurance credit if the reinsurer is accredited as a Michigan reinsurer, the bill removes a prohibition on receiving credit where the reinsurer’s accreditation was revoked, requires the reinsurer to bear the expense of the state’s examination of its books and records to gain accreditation, removes the specific surplus requirement of $20 million required for accreditation, and institutes instead a requirement that the reinsurer satisfy the state that it has “adequate financial capacity” to meet its reinsurance obligations.
  • Where the Code allows reinsurance credit if the reinsurer maintains a qualified trust fund for reinsurance claims payments, the bill adds provisions regarding single assuming insurers that permanently discontinue writing new business secured by the trust, changes the dates for various criteria of the trusts maintained by groups of underwriters, and adds requirements for groups of unincorporated underwriters under common administration.
  • The bill maintains the Code’s provisions for reinsurance credit if the insured risks are located in jurisdictions where reinsurance is required under local laws and regulations.

The bill also adds two new scenarios that qualify for reinsurance credit:

  • Where the reinsurer is domiciled in or entered through a state that employs standards regarding reinsurance credit “substantially similar” to Michigan’s standards, provided that the reinsurer maintains a surplus of $20 million and submits to Michigan’s books and records examination authority and bears the expense thereof.
  • Where the reinsurer has been certified as a certified reinsurer in Michigan and secures its obligations as provided in the bill and the Code, provided that it meets certain certification requirements.

Additionally, the bill adds provisions governing the suspension and revocation of accreditation and certification under the Code, requiring ceding insurers to manage reinsured assets in proportion to its business and diversify their reinsurance programs, and granting the state Director of Insurance and Financial Services authority to promulgate reinsurance regulations under the Administrative Procedure Act.

The bill takes effect July 9, 2018.

This post written by Thaddeus Ewald .

See our disclaimer.

Filed Under: Accounting for Reinsurance, Reinsurance Regulation

West Virginia Amends Credit For Reinsurance Statute To Conform To NAIC Model, Effective January 1, 2019

April 18, 2018 by Michael Wolgin

West Virginia House Bill 4230, approved by Governor Justice on March 27, amends the statutory requirements relating to when an insurer may claim credit for reinsurance to conform to the NAIC model law. The bill establishes requirements for:

  • Domestic insurers to be allowed credit;
  • Reinsurers to meet in order for credit to be granted to ceding insurers;
  • The location where assets that provide security to fund United States obligations must be maintained by a non-United States insurer or reinsurer;
  • The filing and valuation of claims; and
  • Provision of an asset or reduction from liability for reinsurance ceded by a domestic insurer.

The bill also provides for the distribution of assets of an insolvent non-United States insurer or reinsurer, in addition to providing the Insurance Commissioner with authority to promulgate related legislative and emergency rules.

The bill takes effect January 1, 2019 and applies to all cessions under reinsurance agreements that have an inception, anniversary, or renewal date on or after that date.

This post written by Benjamin E. Stearns.
See our disclaimer.

Filed Under: Accounting for Reinsurance, Reinsurance Regulation

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