The NAIC has issued a news release with respect to action taken today by the NAIC's Financial Condition (E) Committee at the NAIC's Spring National Meeting, which is currently underway in New York City. The news release reports that the Committee has directed the Reinsurance Task Force to continue to work on technical details within the Reinsurance Evaluation Office Proposal, and to consider the design of a revised US reinsurance regulatory framework. For details, see the news release on the NAIC's Internet site.
Reinsurance Regulation
Surplus lines/reinsurance bill reintroduced in Congress
Last fall, the Nonadmitted and Reinsurance Reform Act passed the house 417-0, but was not considered by the Senate due to its late passage in the House. A substantially similar bill has been introduced in the House, H.R. 1065. The bill subjects nonadmitted insurers to the premium tax laws of the policyholder's home state, and makes reinsurers subject to the solvency laws of their state of domicile under most circumstances. Due to an amendment to the definition of “qualified risk manager,” the new bill has the support of the Risk & Insurance Management Society, which did not support the bill last year.
Zurich companies settle insurance bid-rigging claims
A group of companies has settled civil and regulatory issues relating to alleged bid rigging in the sale of insurance. A District Court has approved a settlement whereby Zurich Financial Services, Zurich American Insurance Company, Steadfast Insurance Company, Fidelity and Deposit of Maryland, Empire Fire and Marine Insurance Company, American Guarantee and Liability Insurance Company, Empire Indemnity Insurance Company and Assurance Company of America have settled all claims in a pending MDL action, and also settled with numerous state attorneys general and insurance departments. In re: Insurance Brokerage Antitrust Litigation, Case No. 04-5184/MDL No. 1663 (USDC D.N.J. Feb. 16, 2007). Details of the settlement, which will cost the companies over $200 million, may be found in a Memorandum In Support of a motion seeking approval of the settlement.
Cat risk legislative update
There are three recent items of interest in pending legislation regarding cat risks:
- a Bill has been introducted in the United States Senate (S. 292) to establish a bi-partisan Commission on Catastrophic Disaster Risk and Insurance, to assess the condition of the property and casualty insurance and reinsurance markets in the aftermath of the recent hurricanes, and the ongoing exposure of the United States to various cat risks, and recommend any necessary legislative and regulatory changes to improve the financial health and competitiveness of such markets and assure consumers of the availability of adequate insurance coverage at competitive prices;
- a Bill has been introduced in the Missouri Senate (SB 518 – bill text and bill summary) to establish the Missouri Catastrophe Fund to help protect property and casualty insurers against insolvencies caused by certain natural disasters.
- two Bills have been introduced in the New York Senate to establish a state cat fund (S. 1883 and S. 2520).
SEC settles sham reinsurance allegations with Renaissance Re
The SEC has settled allegations that Renaissance Re entered into a sham reinsurance transaction that had no economic substance and no purpose other than to smooth and defer $26.2 million of Renaissance Re's earnings from 2001 to 2002 and 2003. To effectuate the settlement, the SEC filed a Complaint against Renaissance Re in US District Court and simultaneously announced a settlement of the allegations. The settlement required Rennaisance Re to pay a $15 million civil penalty, which Renaissance Re had offered to pay last summer, as reported in an August 25, 2006 posting in this blog.