Last weekend’s Spring NAIC meeting heard the first public progress report of the implementation of the US reinsurance regulatory framework. Whilst there were no papers available, they are promised within 10 days, Commissioner Goldman (NJ) detailed the “roadmap” for this year.
It appears that Congress is exerting pressure, meaning that the draft language to implement the framework via federal enabling legislation, has to be ready in a matter of weeks. This timetable gives industry very little time to comment and regulators little time to respond before the final language is delivered to Congress.
The roadmap confirmed that the vehicle in the House of Representatives will be the existing and resubmitted Surplus Lines Bill although the actual implementation will be first seen via a Senate Version of this Bill. This is a necessary process, indeed both House & Senate will confer down the line, but the Senate first needs to find a sponsor and introduce a Bill.
However, not surprisingly the priority of Congress is whether there will be a systemic risk regulator. Specific reinsurance reform is not on the radar and yet the opportunity to do both remains viable. As I sit writing this blog in an airport lounge the TV screens are dominated by commentary on how to respond to the financial crisis. Whilst this is mainly banking focused, insurance gets regular mentions normally with AIG in the same sentence.
In summary, there appears to be progress in drafting a Bill to implement the new reinsurance framework but this is only an introductory step with much work ahead of us. Congress is clearly interested in systematic risk but are they willing to enact other specific reform? I think this is less clear for 2009 at the moment.
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