FOR IMMEDIATE RELEASE

NAIC MODERNIZING REINSURANCE REGULATION
Proposes Mutual Recognition,
“Functional Equivalence” of Non-U.S. Reinsurance Regulation

WASHINGTON, D.C. (Sept. 30, 2007) — The National Association of Insurance Commissioners (NAIC) is drafting a proposal to comprehensively modernize reinsurance regulation in the United States.

The proposal — developed by a subgroup of the NAIC’s Reinsurance Task Force — calls for amending the existing regulatory framework to allow for single-state licensing of U.S. reinsurers, and encourages the NAIC to develop a Reinsurance Supervision Review Department (RSRD).

“As state insurance regulators look at enhancements to reinsurance regulation in the United States,” said NAIC President and Alabama Insurance Commissioner Walter Bell, “we are encouraged by supervisory developments in non-U.S. jurisdictions where robust regulation of reinsurance has recently been introduced.”

In the European Union, for example, member states are in the process of implementing a new reinsurance directive. The NAIC’s reinsurance proposal could ultimately provide a framework for mutual recognition between the U.S. and non-U.S. jurisdictions.

The RSRD would assist in the evaluation of the extent to which non-U.S. jurisdictions apply regulatory oversight that is “functionally equivalent” to U.S. regulation. Under the proposal, non-U.S. reinsurers domiciled in “functionally equivalent” jurisdictions would be allowed to access the entire U.S. market through a single port of entry state.

“U.S. regulators believe that a reinsurance regulatory framework also must be sufficiently flexible to accommodate the rapidly changing reinsurance environment, while providing for appropriate levels of financial stability, solvency and predictability that are critical to a vigorous market, consumer protection and a strong and secure insurance regulatory system,” Bell added.

The Task Force will discuss this propsal further during a meeting Nov. 7-8, 2007, held in conjunction with the NAIC Financial Summit in Atlanta. For more information, visit www.naic.org/committees_e_reinsurance.htm.

About the NAIC

Headquartered in Kansas City, Missouri, the National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and the five U.S. territories. The NAIC’s overriding objective is to assist state insurance regulators in protecting consumers and helping maintain the financial stability of the insurance industry by offering financial, actuarial, legal, computer, research, market conduct and economic expertise. Formed in 1871, the NAIC is the oldest association of state officials. For more than 135 years, state-based insurance supervision has served the needs of consumers, industry and the business of insurance at-large by ensuring hands-on, frontline protection for consumers, while providing insurers the uniform platforms and coordinated systems they need to compete effectively in an ever-changing marketplace. For more information, visit NAIC on the Web at: http://www.naic.org/press_home.htm.

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