We have previously reported on the NAIC’s strategy of assisting the states in the implementation of the Covered Agreement through revisions to the Credit for Reinsurance Model Law and the Credit for Reinsurance Model Regulation (“the Models”). The Reinsurance Task Force of the Financial (E) Committee exposed drafts of proposed revisions to the Models on June 21. By the NAIC’s Summer National Meeting in Boston early this month, the Reinsurance Task Force had received eighteen comment letters on the exposure drafts from regulators, trade associations, insurance/reinsurance companies, and other interested parties. The meeting package for the Task Force’s August meeting included pertinent written materials. The Task Force heard limited oral statements at its meeting and proceeded to move the Model exposure drafts to the next step. According to the summary of this meeting, revised exposure drafts are anticipated in mid-September, with another comment period, followed by possible final consideration at the NAIC’s Fall National Meeting in November of this year.
The written comments did not contain significant opposition to the Model revisions, but did contain some constructive suggestions for changes to the exposure drafts at both conceptual and detailed wording levels. The major themes of the written comments include:
Perhaps the most interesting issue in discussion is whether and the extent to which to permit individual state insurance commissioners discretion in the implementation of the revised Models, in particular in determining the requirements for finding a particular jurisdiction to be a Reciprocal Jurisdiction. While it is customary, given the state-based system of insurance regulation, to afford individual state commissioners discretion in the implementation of Model Laws and Model Regulations, there appears to be a strong desire, if not a need, for more strict uniformity in the implementation of the Covered Agreement, and in the regulation of reinsurance activity throughout the broader market. It will be interesting to see how these somewhat competing interests are resolved.
Overall, it appears that this process is “on track” compared to the expectations of the NAIC stated earlier this year, with very good consensus emerging as to not only the broad lines of the amendments to the Models, but also of the wording of such amendments.