The summary of the meetings of the NAIC's Reinsurance Task Force on December 9, 2006 and December 11, 2006 at the 2006 Winter Meeting has been posted on the NAIC's Internet site. It provides a brief description of the action taken on the proposed creation of the Reinsurance Evaluation Office to rate the financial strength of reinsurers as a basis for a collateral requirement, stating that the proposal should be “further refined” by the NAIC's Financial Condition (E) Committee no later than September 2007.
Court holds that policies covering WTC provided for replacement only
A District Court has held that policies providing property coverage for the World Trade Center (“WTC”) complex , which provided “replacement cost” coverage, provided coverage limited to what it would cost to replace the covered buildings as they stood immediately prior to their destruction, and did not cover additional amounts to make the re-built WTC safe, modern and politically palatable. SR International Business Ins. Co. v. World Trade Center Properties LLC, Case No. 01-9291 (USDC SDNY Oct. 31, 2006).
Connecticut Task Force recommends run-off regulation for solvent insurers
A Task Force appointed by the Connecticut Insurance Commissioner has issued a report proposing the adoption of statutes and regulations to oversee the run-off of solvent companies. Such oversight would be exercised by the Department of Insurance. The report notes the experience of the UK in this area and moves to provide a similar mechanism in several states in the US.
Connecticut issues two regulatory pronouncements
The Connecticut Insurance Department has issued a Bulletin (Number FS-4AR-06) relating to 2006 and 2007 financial filing requirements by accredited reinsurers, and a notice of intention to amend its regulations to delete a provision that relates to the disposition of the assets of a single beneficiary trust on the insolvency of the reinsurer/grantor.
NAIC Task Force report on reinsurance collateral adopted
Although there are not yet any minutes or summary posted on the NAIC's Internet site, news reports indicate that the NAIC's Reinsurance Task Force, by a vote of 15-5, has adopted the latest draft proposal to change the collateral rules for reinsurance. Additional information will be posted here as it becomes available. Read the news story. The proposal should now go to the NAIC's Financial Condition Committee.