FIO ISSUES REPORT ON GLOBAL REINSURANCE MARKET AND ITS IMPORTANCE TO THE U.S. INSURANCE INDUSTRY
On December 31, 2014, the Federal Insurance Office (FIO) issued a report entitled “The Breadth and Scope of the Global Reinsurance Market and the Critical Role Such Market Plays in Supporting Insurance in the United States.” The report was prepared pursuant to the Dodd-Frank Act. It provides an overview of the history, forms, and purposes of reinsurance, the U.S. regulatory framework governing reinsurance, and the global reinsurance market. The report analyzes the important role that global reinsurers play to U.S. insurance industry generally. It does not, however, purport “to analyze the extent to which reinsurance or any particular reinsurer could be systemically important.”
The report discussed two roles of the federal government in the reinsurance market. First, it mentions that the Dodd-Frank Act contains several provisions relating to the oversight of reinsurance. It is noted that the approach of those provisions is “to enhance uniformity in the state-based insolvency regulation of insurers and reinsurers by increasing deference to the state in which the reinsurer is domiciled or licensed.”
Second, it discusses some of the history of credit for reinsurance collateral reform, and mentions that efforts by the NAIC to achieve uniformity with respect to this area through a Model Act have not been successful. The report states that the Treasury Department and the United States Trade Representative are considering exercising their authority to enter into an international agreement concerning this issue, which would preempt inconsistent state laws.
This post written by Michael Wolgin.
