Captive managers, auditors and actuaries authorised in Delaware to have been invited to submit comments to the National Association of Insurance Commissioners (NAIC) Reinsurance Task Force about proposals to change the Credit for Reinsurance Model Act.
If adopted, the proposed change may have a negative effect on captive reinsurance transactions using fronting companies, according to the Delaware Insurance Department. This is because it may make some captive reinsurance arrangements financially less attractive for the fronting companies, as they may lose the credit for reinsurance on their balance sheets for ceding risk to a captive reinsurance company.
Karen Weldin Stewart, the insurance commissioner for the state of Delaware, sent a memorandum inform these captive experts about their chance to comment. The memo has also been sent to all members of the Delaware Captive Insurance Association.
Even though the comment period for this proposal ended on November 11, Stewart has informed NAIC staff that the Delaware Captive Insurance Association (DCIA) and the Delaware Department of Insurance would not be able to address this matter until after the DCIA’s fall forum on November 12.
She has also informed NAIC staff that additional comments would be forthcoming after the deadline date.
All comments must be submitted no later than 5pm EST on 18 November.
The Credit for Reinsurance Model Act, also known as MDL-785, is an NAIC-developed model law adopted in every state, the District of Columbia, and some US territories. The Model Act allows an insurer to take a credit on its accounting balance sheet for the risk transferred to a reinsurer.
NAIC, Delaware Captive Insurance Association, Delaware Department of Insurance, Karen Weldin, North America