The New York Department of Financial Services (“DFS”) adopted final rule, 11 NYCRR 82.1,4,5, and 6 (Insurance Regulation 203)(the “Amendments”), authorizing the Superintendent to act as the Group-Wide Supervisor (“GWS”) for an Internationally Active Insurance Group (“IAIG”) having a nexus to New York, effective June 3, 2020.
The Amendments, proposed by DFS in February, are based on the NAIC model Insurance Holding Company System Act (the “Model Act”), which was amended in 2014. The Model Act imbues an insurance commissioner with the authority to act as a GWS for an IAIG and to acknowledge another regulatory official as a GWS. Pursuant to the Amendments, a GWS and an IAIG are defined as:
(e) Group-wide supervisor means the regulatory official authorized to engage in conducting and coordinating group-wide supervision activities; and
(i) Internationally active insurance group or IAIG means a holding company system, Article 16 system [New York domiciled property-casualty insurer and its subsidiaries], or Article 17 system [New York domiciled life insurer and its subsidiaries] that includes an insurer registered under Insurance Law sections 1503, 1604, or 1717 and meets the following criteria: (1) has premiums written in at least three countries; (2) the percentage of gross premiums written outside the United States is at least ten percent of the holding company system’s, Article 16 system’s, or Article 17 system’s total gross written premiums; and (3) based on a three-year rolling average, the total assets of the holding company system, Article 16 system, or Article 17 system are at least $50 billion or the total gross written premiums of the holding company system, Article 16 system, or Article 17 system are at least $10 billion dollars.
As a GWS, the Superintendent would be authorized to: (1) assess the enterprise risks within an IAIG; (2) request, from any member of an IAIG subject to the Superintendent’s supervision, information necessary and appropriate to assess enterprise risk; (3) coordinate and, through the authority of the regulatory officials of the jurisdictions where members of the IAIG are domiciled, compel development and implementation of reasonable measures designed to ensure that the IAIG is able timely to recognize and mitigate enterprise risks to members of the IAIG that are engaged in the business of insurance; (4) communicate with other state, federal, and international regulatory agencies for members of the IAIG and share relevant information; (5) enter into agreements with or obtain documentation from any registered insurer, any member of the IAIG, and any other state, federal, and international regulatory agencies for members of the IAIG; and (6) engage in other group-wide supervision activities as necessary.
At any time, the Superintendent may determine that they are the appropriate GWS for an IAIG that conducts substantial insurance operations in New York. When making a determination of this nature, the Superintendent is required to consider the following factors: (1) the place of domicile of the insurers within the IAIG that hold the largest share of the IAIG’s written premiums, assets, or liabilities; (2) the place of domicile of the top-tiered insurer or insurers in the IAIG’s holding company system, Article 16 system, or Article 17 system; (3) the location of the executive offices or largest operational offices of the IAIG; (4) whether another regulatory official is acting or seeking to act as the GWS under a regulatory system that the superintendent determines to be substantially similar to the system of regulation provided under the laws of New York, or otherwise sufficient in terms of providing for group-wide supervision, enterprise risk analysis, and cooperation with other regulatory officials; and (5) whether another regulatory official acting or seeking to act as the GWS provides the superintendent with reasonably reciprocal recognition and cooperation.
However, if an IAIG has not conducted substantial insurance operations in New York, the Superintendent may still determine that she is the GWS for the IAIG in the event of a material change in the IAIG that results in: (1) the IAIG’s insurers domiciled in New York holding the largest share of the IAIG’s premiums, assets, or liabilities; or (2) New York being the place of domicile of the top-tiered insurer or insurers in the holding company system, Article 16 system, or Article 17 system.
The Amendments may be viewed here.