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Committee advances reinsurance credit update to align with NAIC model law
Summary
House Bill 1240, which updates Arkansas law on credit for reinsurance to reflect NAIC revisions and ease collateral and presence requirements for qualified reciprocal jurisdictions, received a 'Do Pass' recommendation from the committee.
The Senate Insurance & Commerce Committee advanced House Bill 1240, a lengthy bill the Arkansas Insurance Department described as an update to the state's credit-for-reinsurance law to reflect National Association of Insurance Commissioners (NAIC) revisions adopted in June 2019.
Mel Anderson of the Arkansas Insurance Department told the committee the change establishes standards for reciprocal jurisdictions to recognize each other’s reinsurance credit. Anderson said the update "provides for a new method that can be used for credit for reinsurance by establishing standards for reciprocal jurisdictions," and that the change "levels the playing field for US reinsurers operating in the EU and non-US reinsurers operating in the US." He explained that qualifying non-U.S. reinsurers could receive relief from collateral and local presence requirements if they meet specified financial standards, and that a U.S. reinsurer could similarly receive relief for doing business in qualifying foreign jurisdictions.
Anderson noted NAIC accreditation requires inclusion of this requirement beginning in September 2022. Committee members moved and seconded a 'Do pass' recommendation and the chair recorded 'The ayes have it.' The transcript does not include a roll-call tally.
Proponents said the update could reduce costs associated with reinsurance arrangements for Arkansas insurers by reducing collateral burdens for qualifying reinsurers, but no fiscal figures were provided in the recorded testimony.
