NAIC’s multi-state reinsurer definition not good enough for captives
JLT Insurance Management has joined with CICA and the captive industry in requesting for the NAIC to reconsider its proposed definition of "multi-state reinsurer."
While the proposal is designed to address supposed issues with life insurer-owned reinsurance captives used for XXX reinsurance, it will snare in its net any captive insuring non-domiciliary risks in any state other than its own domicile.
CICA encourages captives and onshore captive associations to send a template letter to state regulators that says, in part, “the NAIC policy statement on multi-state domestic insurers currently excludes captives (insurers `that are licensed... in only their state of domicile but assuming business from insurers writing that business that is directly written in a different state’).”
The proposed definition could easily—intentionally or unintentionally—include all captives.
“For years, state insurance departments have done a good job regulating captives,” says Len Crouse, a JLTIM principal for US operations and former Vermont captive regulator. He continues, “I don’t see the need for additional regulation, but this proposed definition could unnecessarily burden captives.”
Proponents of the proposed definition argue that it only addresses multi-state reinsurance captives. However, others insist that the definition could easily include all captives, bringing an unmanageable and costly layer of additional regulation.