The New York Insurance Department has proposed a new regulation that moves from collateral-based security for reinsurance agreements to “principles-based” regulation based in large part on the financial rating of reinsurers, regardless of their domicile. A press release from the department provides a good summary of the reasons behind the change, as well as a summary of the new regulation, and touts the revised regulation as a substantial accomplishment, seemingly portraying it as an accomplished fact. A redlined version of the proposed regulation was also released, which will be published for comment. The target date for the effectiveness of the new regulation is July 1, 2008.
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