Publications

FIO Focus, Issue No. 22

Comments Submitted Regarding the Global Reinsurance Report
09.25.12

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Devoted to exploring the progress of the modernization of the insurance industry, FIO Focus provides information and insights about the organizations and issues that are driving change and influencing the future of the industry.

Comments Submitted Regarding the Global Reinsurance Report

As reported in prior issues of FIO Focus, the Federal Insurance Office (FIO) requested that interested parties submit comments relating to its upcoming report on the U.S. and global reinsurance market. Issues 20 and 21 of FIO Focus provided an overview of the comments submitted to the FIO prior to September 11, 2012. The summary below provides comments made available on regulations.gov after that date.

  • International reinsurers provide pricing and underwriting advice that assists insurers in introducing products that are successful abroad.
  • International regulatory developments such as the International Association of Insurance Supervisors’ (IAIS) process for identifying companies that are systemically important to the global economy and Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame) may not be appropriate.
  • Opposition to reductions in reinsurance collateral requirements.
  • Collateral requirements provide protection for insurance companies and ultimately consumers. The FIO should monitor the implementation of the National Association of Insurance Commissioners (NAIC) Credit for Reinsurance Model Law to ensure that it does not hinder the ability of U.S. insurers to access or recover reinsurance payments.
  • The FIO should evaluate U.S. tax policies to determine if they dissuade the formation of reinsurers in the U.S.
  • The FIO should work with state regulators to streamline reinsurance licensing procedures.

General Accountability Office Report Released

On September 11, 2012, the General Accountability Office released the report “Financial Stability: New Council and Research Office Should Strengthen the Accountability and Transparency of Their Decisions.” This report provides recommendations to the Financial Stability Oversight Council (FSOC) and Office of Financial Research (OFR) for process improvements. The report is available here.

Risk Management and Own Risk and Solvency Assessment Model Act Adopted

On September 12, 2012, the NAIC adopted a Risk Management and Own Risk and Solvency Assessment (RMORSA) Model Act.

The RMORSA Model Act requires insurers to maintain a risk management framework capable of identifying, assessing and managing risk. Insurers must quantify identified risks to determine their potential impact on business plans. Under the Model Act, insurers will be required to submit an annual summary report to their primary regulator.

RMORSA is based on Solvency II’s Own Risk and Solvency Assessment (ORSA) requirement. An ORSA-like process is also a key component of the IAIS’ Insurance Core Principle (ICP) 16 – enterprise risk management.

The RMORSA is under consideration by the NAIC Financial Standards and Accreditation (F) Committee as an addition to Part A accreditation standards. Part A accreditation standards are laws determined by the NAIC membership to be essential for sound insurance regulation. Regulators plan to implement RMORSA reporting in 2015.