Five international reinsurance supervisory authorities have been recommended by the National Association of Insurance Commissioners (NAIC) Qualified Jurisdiction Working Group for approval under the Process for Developing and Maintaining the NAIC List of Qualified Jurisdictions.
Recommendations include the Bermuda Monetary Authority; the German Federal Financial Supervisory Authority; the French Autorité de Contrôle Prudentiel et de Résolution; the Central Bank of Ireland; and the UK's Prudential Regulation Authority of the Bank of England.
If approved by the full NAIC membership, the jurisdictions would be placed on the NAIC List of Qualified Jurisdictions effective 1 January 2015.
Adopted by the NAIC in August 2013, the process was developed to evaluate the reinsurance supervisory systems of non-US jurisdictions for reinsurance collateral reduction purposes.
Reinsurers licensed and domiciled in these five jurisdictions are eligible to be certified for reduced reinsurance collateral requirements under the NAIC's Credit for Reinsurance Model Law.
To date, 23 states have adopted reinsurance collateral legislation reform, which represents approximately 60 percent of the primary insurance premium in the US. There is a goal to add five more states in 2015, which would bring the total to more than 80 percent of the premium.
“Reinsurance collateral reform continues to play a prominent role in discussions with federal and international authorities. This move toward adding jurisdictions enhances the NAIC's position on this issue,” said Adam Hamm, NAIC president and North Dakota Insurance Commissioner.
“We appreciate the cooperative efforts of these five authorities in working with state regulators.”
The recommendations will be posted for a two-week public comment period and then submitted to the Reinsurance Task Force for review.
Upon approval by the task force, the recommendations will be submitted to the NAIC Executive Committee and NAIC Plenary for a vote prior to the end of the year.
Once approved, a Qualified Jurisdiction is subject to re-evaluation every five years, unless there is a material change in circumstances.
The Qualified Jurisdiction Working Group is also currently evaluating the Swiss Financial Market Supervisory Authority and the Financial Services Agency of Japan, and expects to complete these reviews before the end of the year for consideration by the NAIC.
