Round one of the renewed debate over collateral requirements for alien reinsurers is set for the opening session Saturday of the National Association of Insurance Commissioners summer meeting in Washington.
The Reinsurance Task Force has set a tentative deadline of December for coming to some agreement on a possible relaxation of the 100 percent collateral requirements alien reinsurers must post to do business in the United States.
The domestic primary and secondary property-casualty industry is expected to continue their opposition to any such relaxation, although there have been indications that new pressure may force task force members to reach some compromise.
Michael Koziol, assistant vice president for the Property Casualty Insurers Association of America (PCI), said “those changes most likely to occur will be those not perceived as placing the ceding company in a reduced security position.”
Such a compromise could include deferral funding of trusts such as what took place with Lloyd's after the 9/11 attacks.
Alien reinsurers are expected to play the fair trade card.
Lloyd's Chairman Peter Levene, a British lord, put it bluntly in a recent speech. “In the 21st century, many reinsurers find it difficult to interpret the current rules as anything other than sheer protectionism,” he said.
But the domestic reinsurers still have plenty of fight left.
David Snyder, assistant vice president of the American Insurance Association, wondered why there was a great rush to change the system.
“Nothing is broken, and the collateral posting requirement is one of the few things about state regulation that really works,” he said.
He fears that while NAIC meetings are public, they draw little interest from outside the insurance industry. “This threat to U.S. consumers is proceeding well under the radar of public scrutiny.”
Article revised June 6, 7:46 p.m.
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