by Hilary Johnson
Are the states up to the task of effectively regulating reinsurers?
That is one of the questions that remain following a highly anticipated report last week from the Federal Insurance Office, an entity formed under the Dodd-Frank Act.
FIO, tasked with deciding what changes are in order for insurance regulation, called in the report for greater cooperation among states and federal regulators.
“In the short term, the U.S. system of insurance regulation can be modernized and improved by a combination of steps by the states and certain actions by the federal government,” the report stated.
The report’s recommendations also included that “states should develop a uniform and transparent solvency oversight regime for the transfer of risk to reinsurance captives,” and that to help achieve consistent regulation of reinsurers across states “Treasury and the United States Trade Representative [should] pursue a covered agreement for reinsurance collateral requirements.” But, the report noted, this agreement would be based on a model law hammered out by the association of state regulators, the National Association of Insurance Commissioners.