On December 24, 2008, the New York State Insurance Department (“NYSID”) released Proposed Tenth Amendment to Regulation No. 20 (11 NYCRR 125) Credit for Reinsurance from Unauthorized Reinsurers (the “Proposal”). The Proposal, if adopted, would significantly liberalize existing reinsurance regulation by allowing ceding insurers to take statutory credit for reinsurance assumed by unauthorized, unaccredited reinsurers without requiring as much, or in some cases, any collateral if certain conditions are satisfied. However, one of the conditions of the Proposal is that the parties to the reinsurance contract agree to resolve any disputes relating to or arising out of the transaction in the courts of the United States either in New York or in the domiciliary state of the cedent. This language effectively precludes arbitration, and is controversial as arbitration is overwhelmingly the preferred forum for dispute resolution in reinsurance disputes.
Click here to read a Client Advisory by Edwards Angell Palmer & Dodge LLP about the Proposal.