Florida was the first state to allow a foreign reinsurer to post reduced collateral as long as it is highly rated and financially sound. U.S reinsurers post no collateral.

New Jersey's "Reinsurance and Surplus Lines Stimulus and Enhancement Act" also amends current law to permit surplus lines insurers domiciled in New Jersey to write surplus lines insurance in the state.

Tom Considine, commissioner of the New Jersey Dept. of Banking and Insurance, says the legislation completes a "pro-growth insurance package of laws" which includes one signed in February by Gov. Chris Christie to license and regulate captive insurance companies.

The legislation will "bring jobs and economic opportunities to the states," Considine adds.

At its recent meeting in Austin, Texas, the National Association of Insurance Commissioners' (NAIC) Reinsurance Task Force proposed amendments to its reinsurance model law related to collateral for reinsurance.

The proposal requires foreign reinsurers to possess $250 million in surplus, with reductions in collateral to be based on financial strength ratings.

New Jersey's legislation requires the same amount of surplus. However, Florida requires $100 million.

Florida Insurance Commissioner Kevin McCarty says the surplus requirement could be changed this legislative session to match the NAIC proposal and it should be "no problem" for the foreign reinsurance companies approved in Florida to meet the $250 million surplus requirement.

Other reinsurers are "in the queue" to join the Florida marketplace, including the London market, he says.

The Property Casualty Insurers Association of America (PCI) testified in Austin before the NAIC Reinsurance Task Force and outlined its concerns about the proposal.

Among them, PCI would like to continue to see foreign reinsurers post 100 percent collateral if they are rated below "A-minus." In addition, the trade association wants some provisions in place to assess slow-paying reinsurers.