Proposed changes could over-rule state foreign insurer rules
Swiss Re, Ace and Lloyd’s believe Senator Christopher Dodd’s proposal to overhaul US financial regulations will make it easier for foreign reinsurers to win US business, Bloomberg reports.
The provision would help the companies pre-empt state rules that govern reinsurers by creating a US Treasury Department office to negotiate international regulations.
Non-U.S. reinsurers without state licenses mist post higher collateral than domestic reinusrers competing in the $63bn US market.
Trust
“This is an additional layer of money that is basically an issue of trust,” Don Preston, senior regulatory officer for Zurich-based Swiss Re, said. “Does the US trust that a foreign-owned company like Swiss Re is going to pay its obligations to US clients?”
The Dodd measure would let the office override state rules that discriminate against foreign insurers or don’t match deals the Treasury negotiates. The American Insurance Associationis also fighting for the provision, saying it would help open markets in Europe or Asia.
State commissioners opposed
The National Association of Insurance Commissioners, which represents state regulators, opposing interference in their regimes.
“We believe that collateral should be based on the financial strength of a reinsurer, not its place of domicile,” Ace Chief Executive Officer Evan Greenberg said.
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