A lack of consensus among state regulators on captive insurance companies and reserves is creating an uncertain environment for the US life insurance industry, according to a new Fitch Ratings report.
Earlier this year the New York State Department of Financial Services published critical commentary on ‘shadow insurance’ transactions in the state and the oversight provided by the National Association of Insurance Commissioners (NAIC).
The department concluded that the reserve transfers related to the shadow insurance transactions have ‘artificially’ inflated capital. It also asserted that certain other states may be ‘racing to the bottom’ in governing such transactions, while concurrently making information on their captive unavailable to other state regulators.
The new Fitch report entitled, New York Insurance Regulatory Criticisms, provides an analysis of the conflicting regulatory treatments of these issues.
Fitch believes that—as a matter of transparency—insurers should be required to publicly disclose key information in a systemic and consistent basis, and accelerate efforts already underway.
The full report is available on the Fitch Ratings website .
