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Assistant Secretary for Financial Institutions David Nason gave an overview on how public policy makers are evaluating and thinking about the regulatory structure of the insurance industry. On the efforts to modernize the treatment of reinsurance collateral requirements, Nason said that “the new proposal envisions a regulatory system for U.S.-licensed reinsurers where one state would be solely responsible for their
Under the current state-based insurance system, a non-U.S. reinsurer can do business in the U.S. by subjecting itself to state-solvency regulation by becoming licensed or creating and licensing a U.S. affiliate or branch in each state it does business; or, by posting 100 percent collateral on its gross U.S. obligations.
“The NAIC plans to continue its work on the proposal, but as with other recent efforts on reinsurance collateral it remains unclear as to whether it can achieve a solution or if the current state-based regulatory system can be effectively integrated into the global insurance marketplace. While this is a very technical issue, it is helpful to show the impact that regulatory structure has on an industry's ability to remain competitive in a global marketplace.”
Nason Remarks on Insurance Regulation