The Property Casualty Insurers Association of America (PCI) has applauded a decision this week by regulators that will reportedly protect the security and solvency of U.S. insurance companies.
The Reinsurance Task Force of the National Association of Insurance Commissioners (NAIC) voted unanimously to table consideration of an approved list of alien reinsurers. PCI believes that a dangerous situation would have been created by allowing primary insurers to receive credit for reinsurance from alien reinsurers (with less than 100 percent collateral) to be placed on this “special list.”
In recent months alien or foreign reinsurers have pushed for a less than 100 percent collateral rule for their liabilities and also asked the NAIC to create a list of qualified foreign reinsurers that would be permitted to have less than 100 percent collateral when reinsuring primary companies. PCI opposed lowering the collateral limit for alien reinsurers and the creation of any special list of reinsurers as a threat to the solvency of U.S. companies.
“PCI believes that the NAIC took the high ground with its decision to table this ‘approved list’ that could have had a very negative impact on the solvency of U.S. primary insurers and would have added significant costs to the guaranty fund system,” said Michael Koziol, PCI assistant vice president, regulatory and industry affairs. “PCI wants to work with interested parties to find ways that alien reinsurers with less than 100 percent collateral can work without reducing the solvency and security of the primary insurer. At issue here is the assurance that reinsurance will be collectable in cases where a company becomes insolvent and claims need to be paid. The importance of this issue cannot be understated. PCI applauds the NAIC for its stand on this issue.”
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