Reinsurance Focus

FEDERAL LEGISLATIVE UPDATE

Congress has recently introduced two bills relevant to reinsurance or catastrophe funds. These bills are as follows:

• On November 4, 2009, the Guaranteed Access to Health Insurance Act of 2009 (H.R. 4020) was introduced in the U.S. House of Representatives. The bill proposes to enable states to establish reinsurance programs or high risk pools to ensure that high risk individuals are able to access health insurance. The bill was referred to the House Committee on Energy and Commerce on the same day.
• The same day, the Catastrophe Obligation Guarantee Act of 2009 (H.R. 4014) was introduced in the U.S. House of Representatives. The bill proposes to establish a program to provide guarantees for debt issued by state catastrophe insurance programs to assist in the financial recovery from natural catastrophes. The bill was referred to the House Committee on Financial Services on the same day.

STATE REGULATORY UPDATE

State regulatory developments relevant to reinsurance include the following:

• The Office of the General Counsel of the New York Insurance Department issued an opinion dated September 30, 2009, No. 09-09-06, which addressed whether the requirements in New York Insurance Law Section 1401(b) apply to investments of insurance companies deposited under a reinsurance trust pursuant to New York Regulation 114 (11 NYCRR § 126). The OGC responded in the affirmative stating that Section 1401(b) requires any financial requirement (such as the rating of a given security) to be measured as of the date of the acquisition of the security, absent any express legal or regulatory authorization to the contrary. Because nothing in Regulation 114 or elsewhere in New York Insurance Law specifies otherwise, the OGC concluded that any assets contributed to a Regulation 114 trust must meet any applicable statutory rating requirement as of the asset’s acquisition date.
• On October 5, 2009, the Washington Office of Insurance Commissioner proposed rulemaking aimed at clarifying when licensed reinsurance intermediaries must report changes to the information contained in their original application for licensing and what changes must be reported. If adopted, proposed rule, WAC 284-13-715, would require a licensed reinsurance intermediary to notify the Commissioner within 15 business days after occurrence of material changes to the information that was included in the application for licensing (such as changes to the reinsurance intermediary’s legal name, registered address, formation documents if it is a business entity, etc.). Also, proposed rules, WAC 284-13-750 and 284-13-760, would require a licensed reinsurance intermediary, or a pending applicant, to notify the Commissioner within 15 business days of disciplinary action taken by another governmental jurisdiction and conviction of certain felonies, respectively. The comment period for the proposed rulemaking expired on November 9, 2009, and a hearing was held on November 10, 2009.

This post written by Karen Benson.