Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

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Reinsurance Regulation

Law review articles relating to reinsurance

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Three articles were recently published in law reviews and journals relating to reinsurance:

  • Health care reform – In The Present and Future of Government-Funded Reinsurance, 51 St. Louis U. L. J. 369 (Winter 2007), John Jacobi, a professor at Seton Hall Law School, contends that government-funded reinsurance could play a valuable role in incremental health care reform.
  • Reinsurance intermediaries – In Reinsurance Intermediaries: law and litigation, 29 U. Haw. L. Rev. 59 (Winter 2006), Douglas Richmond, a Senior Vice President with Aon Risk Services, analyzes the duties and potential liabilities of reinsurance intermediaries using fairly traditional agency concepts.
  • Hedge funds – In The Utility of Hedge Funds: an alternative to traditional reinsurance, 49 For The Defense 32 (April 2007), practitioners James Somers and Katie Lewis Bordeau offer a general description of the participation of hedge funds in the reinsurance market. Although the title of the article describes hedge funds as an “alternative” to reinsurance, the text really describes hedge funds as a source of capital for vehicles such as side cars.

Survey on US run-off operations

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PriceWaterhouse Coopers has published an interesting report on a survey that it conducted relating to US run-off operations. The report covers various aspects of run-off operations and strategies. Especially combined with the recent Lloyd’s report on capitalization and operation of Lloyd’s run-off syndicates, which was the subject of a post on this blog on May 28, this makes interesting reading.

SPECIAL FOCUS: Captive wars – PART TWO

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Other states are taking less substantial steps, only changing the regulatory requirements for their captives. The Vermont Insurance Department adopted a new captive regulation, effective April 1, 2007, which changes the reporting requirements for Vermont-domiciled captives that reinsure life insurance policies. Meanwhile, the Utah Department of Insurance has amendments to its captive rules under consideration, which would mainly address reporting and fee requirements. The New York Insurance Department has a separate web site area touting the advantages and benefits of a New York-domiciled captive.

SPECIAL FOCUS: Captive wars – PART ONE

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This week we present a two-part posting on changes regarding captive insurer regulation. The competition is on among the states for hosting captives. The competition consists of simpler regulation and lower capital requirements. On May 10, the Governor of Montana was presented with a new captive bill for signature which reduces capital requirements for protected cell captives 50%, from $1 million to $500,000, with a captial requirement of $250,000 for protected cell captives with 10 or fewer homogenous cells. The capital requirement for captives that reinsure admitted insurers issuing policies is also to be reduced by 50%. Other regulatory simplification is included in the bill. An article about this bill appears in the May 21 issue of Business Insurance. Meanwhile, the Arizona Governor recently signed a new bill which lowers the capital requirements for Arizona-domiciled protected cell captive insurers from $1 million to $500,000, and makes many changes to simplify regulation and reduce the burdens of regulation. A summary of the Arizona bill is also available.