The National Association of Independent Insurers (NAII) raised concerns about the ability to enforce judgments in foreign countries for reinsurance collateral reduction, as discussed by the National Association of Insurance Commissioners (NAIC) during its winter meeting in Anaheim this week.
“NAII appreciates that the NAIC’s Reinsurance Task Force has moved with prudent deliberation on the issue of collateral reduction. The chairman’s trip to the Hague and reporting on the complexities of enforceability of judgments abroad shows his serious resolve in studying this issue,” said Michael Koziol, NAII senior counsel, commercial insurance. “However, task force discussions about the possibility of standards with which to judge a country’s enforcement of U.S judgments clearly needs to consider situations where the NAIC might agree that a country met the standards. The task force should realize that there would have to be continuous review of judgments in that country should some court in that land suddenly decide not to honor an action by a state regulator or a liquidator. Technically, ceding companies might no longer receive credit for uncollateralized reinsurance—and that situation would jeopardize the solvency of any such carrier.”
Koziol said the task force would continue its discussions and study of collateral reduction for foreign reinsurers at the March 2004 NAIC Meeting in New York.
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