Office of Insurance Regulation Addresses Reinsurance Reporting
The Office of Insurance Regulation has issued a letter to insurers providing guidance on annual statement reporting for reinsurance contracts with reinsurers subject to reduced collateral requirements. The OIR has adopted an administrative rule allowing insurers to take credit for reinsurance with certain highly-rated reinsurers even when those reinsurers do not meet the full collateralization requirements that otherwise would apply. Several large, well capitalized reinsurers have availed themselves of the flexibility provided by the OIR rule.
The OIR’s letter points out that Schedule F of the NAIC annual statement reporting form does not properly take into account the reduced collateral requirements resulting from state rules such as the Florida rule. The OIR is working with the NAIC toward having future versions of the reporting form reflect reduced collateral requirements. In the meantime, insurers are advised to report the difference in the collateral required by NAIC guidelines and the collateral required by the Florida rule on the reporting line labeled “Other Allowed Offset Item” on Schedule F – Part 5.