New York Brokers Compensation
On January 29, 2009 the New York Insurance Department proposed a regulation requiring that prior to the renewal or issuance of an insurance contract, the insurance producer selling the insurance contract must give the purchaser a prominent written disclosure that includes:
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a description of the nature and amount of compensation to be received by the producer in connection with the sale;
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a description of any material ownership interest the insurance producer has in the insurer issuing the insurance contract;
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a description of any material ownership interest the insurer issuing the insurance contract has in the insurance producer
The text of the proposed regulation can be found here.
This regulation comes out of the public hearings held on this issue by the New York State Insurance Department and Attorney General in July of 2008. RIMS testified in the hearings that all contingent fees should be banned, but in the absence of that prohibition that full disclosure should be mandatory. RIMS issued a press release calling for the Insurance Department to take action on January 15, 2009. That release can be found here.
Contract Certainty
On October 16th, 2008, NY Superintendent Eric Dinallo released a circular letter calling for all property/casualty insurance policies and all reinsurance contracts be finalized within thirty days of their inception. Licensees are called to strive for contract certainty in at least ninety percent of policies.
RIMS is supportive of Superintendent Dinallo's efforts. RIMS believes that contract certainty is an issue at the heart of customer service deficiencies on the part of brokers and insurers. RIMS looks forward to working with regulators and industry groups in coming to a consensus on this issue so that similar regulations can be taken up in other states. The National Association of Insurance Commissioners has agreed to make this issue a topic of discussion in 2009.
RIMS press release endorsing Superintendent Dinallo's circular letter can be found here.
NAIC Reinsurance Collateral Proposal
On December 7, 2008, the National Association of Insurance Commissioners fully adopted its Reinsurance Regulatory Modernization Framework proposal. Key elements of this proposal include:
- Establishment in the NAIC of a Reinsurance Supervision Review Department (RSRD)
- The RSRD's functions would include determination of jurisdictions eligible to be recognized as "port of entry" states.
- U.S. supervising jurisdictions for a national reinsurer or POE reinsurer would assign the reinsurer a rating which would then determine the collateral requirements on a sliding scale.
- Within two years after the first full year of operation of the new collateral requirements, the RSRD is required to reexamine the collateral requirements.
Both New York and Florida, who had proposed their own regulations, have agreed to adopt the NAIC language. The NAIC is now looking to the federal government to grant them authority to move forward with this proposal.
RIMS is hopeful that this modified regulatory framework, when fully implemented, will result in additional capacity and the equitable and efficient regulation of the reinsurance industry in a manner that meets the needs of commercial policyholders. RIMS press release on this issue can be found here.