SPECIAL SECTION: Dodd Frank Financial Reform Legislation &
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Dodd-Frank Financial Services Regulatory Reform: NAIC Initiatives

Non-admitted and Reinsurance Reform Act of 2010 (NRRA):

Reinsurance

Through its Reinsurance (E) Task Force, the NAIC is addressing reinsurance provisions contained within the Nonadmitted and Reinsurance Reform Act (NRRA), included in The Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203). Effective in July, 2011 the act prohibits a state from denying credit for reinsurance if the domiciliary state of the ceding insurer recognizes such credit and is an NAIC-accredited state. The NRRA preempts the extraterritorial application of state credit for reinsurance law, and would permit states to proceed forward with reinsurance collateral reforms on an individual basis if they are accredited.

Under the current Credit for Reinsurance Model Law & Regulation, in order for U.S. ceding companies to receive reinsurance credit, the reinsurance must either be ceded to U.S. licensed reinsurers or secured by collateral representing 100% of U.S. liabilities for which the credit is recorded. These collateral requirements for non-U.S. licensed reinsurers have been a frequent subject of debate over the last few years among regulators.

The NAIC adopted the Reinsurance Regulatory Modernization Framework Proposal at its Winter 2008 National Meeting, which would reduce the collateral requirements for reinsurers meeting certain requirements for financial strength and business practices that are domiciled in jurisdictions that have been approved based on the effectiveness of their reinsurance supervision. The Government Relations Leadership Council adopted the Reinsurance Regulatory Modernization Act of 2009 (RRMA) on September 23, 2009, which was intended to implement the Reinsurance Framework, but the NAIC has been unable to find a sponsor for this proposed federal legislation in Congress.