A specific international agreement, the covered agreement was negotiated jointly by the U.S. Department of the Treasury's Federal Insurance Office (FIO) and the U.S. Trade Representative (USTR) with the EU. The document, signed on Sept. 22, 2017, contains provisions eliminating reinsurance collateral requirements for EU reinsurers that meet certain criteria.
"State insurance regulators and the NAIC requested public comments to determine the best approach to operationalize the covered agreement's provisions," said Julie Mix McPeak, NAIC President and Tennessee Commissioner of Commerce and Insurance. "We brought together regulators and interested parties to keep the focus on maintaining the protections insurance consumers expect and deserve."
The public hearing provided attendees the opportunity to hear discussions on how the NAIC and the states can address the challenge of refining the current solvency system. The event also focused on the need to protect the financial interests of policyholders and ceding insurers within the covered agreement's boundaries.
"There are a variety of paths states could follow in order to conform with this agreement," said Maria T. Vullo, Superintendent of the New York State Department of Financial Services and NAIC Reinsurance (E) Task Force chair. "It is certainly our hope that we will agree to an approach and that all states will take action to preserve their authority in this area."
The NAIC will consider the written comments received from interested parties along with the presentations delivered by stakeholders at the public hearing to determine how to proceed with any necessary reinsurance collateral reform. Any resulting revisions to the NAIC credit for reinsurance models will be done through an open and transparent process, and interested parties will have additional opportunities to comment and discuss these changes at various points in the process.