In October, www.insurereinsure.com reported on a regulation being proposed by New York Superintendent of Insurance Eric Dinallo that would eliminate the existing collateral requirements imposed on foreign and alien reinsurers operating in New York (click here to view prior post). Under the current law, reinsurers not authorized or accredited to conduct business in New York are required to post collateral in an amount equal to 100% of their share of policyholder claims. Last Thursday, Superintendent Dinallo further addressed this issue, stating that the current regulations “tie up too much capital” and that, under the proposed law, foreign and alien reinsurers will still be required to post collateral, though the amount of such collateral will likely be far less than the current requirements. Previously, it was reported that under the proposed regulation, reinsurers with S&P, AAA or AM Best A++ ratings would not be required to post collateral, while lower rated reinsurers would, the amount of which would depend on their financial stability. New York Governor David Patterson expressed his support for the proposed regulation, stating that “New York is regulating itself out of the global market, being overtaken by India and China.”
Superintendent Dinallo further stated that he believed the National Association of Insurance Commissioners might follow New York’s lead with respect to the proposed regulation, noting that Florida is already using New York’s collateral proposal as a model.
