The International Underwriting Association (IUA) has welcomed moves to reform US reinsurance regulation.
The National Association of Insurance Commissioners (NAIC) has voted in favour of re-evaluating the way that insurance risk is measured, including collateral requirements.
The changes would mean that collateral requirements would be based in the rating of individual state regulators. They are designed to safeguard solvency and enable the freeflow of capital.
The IUA has hailed the proposed reform as a fairer method of regulating reinsurers on the basis of financial strength rather than country of domicile.
Dave Matcham, IUA chief executive, said: “The NAIC's decision in San Antonio represents a real breakthrough in the discussions to introduce a more efficient system of regulating reinsurance business in the US.
“For some time now there has been widespread recognition that the 100% collateral burden imposes unnecessary costs on the industry as a whole and should be reformed. Any collateral requirement needs to be based on principles of financial strength rather than geographic location.
"We look forward to the NAIC concluding its due process as soon as possible. I would like to acknowledge and thank the association's Reinsurance Task Force for its leadership and vision in stating that the current system needs to be changed. The group's forward thinking approach recognises the global nature of the industry and the value of other regulatory platforms.
"Discussions will certainly continue on the detailed proposals, but the NAIC has undoubtedly taken a huge step forward in approving the reform proposal.”
