Like us already reported a year ago, the National Association of Insurance Commissioners (NAIC) has adopted amendments to the Model Reinsurance Credit Law (No. 785) and Model Reinsurance Credit Rules (No. 786) to implement certain international agreements to eliminate collateral requirements for eligible reinsurers. . The Models created a new class of reinsurers, called “reciprocal reinsurers,” who may qualify to provide reinsurance to US ceding companies without providing collateral for the reinsurance credit.
To date, approximately 48 US jurisdictions have enacted reciprocal reinsurer legislation and 38 of those jurisdictions have adopted or proposed the enabling regulations. Many of these states are now accepting applications.
The NAIC Reinsurance Task Force is asking states that have not yet passed legislation and regulations to do so by July 1, 2022 and no later than September 1, 2022, to avoid preemption federal laws that are inconsistent with international law. Agreements.
The benefits of reciprocal reinsurer legislation extend to all EU countries, the UK and other “qualified” jurisdictions, such as Bermuda, Japan and Switzerland. In addition, the possibility of obtaining reciprocal reinsurer status also extends to US reinsurers. who are domiciled in NAIC-accredited states – currently, all 50 states, the District of Columbia and the US Virgin Islands.
Similar to the “certified reinsurer” application process, reinsurers first apply for “reciprocal reinsurer” status in a “lead” state and, once approved by that state and the NAIC ReFAWG (Reciprocal Reinsurer Working Group). financial analysis of reinsurance), can “passport” their approval to other states using a streamlined application process. Other states are encouraged to rely on pilot state approval.
We continue to monitor and report on these developments.