Regulating "Collateral Damage": New York Finalizes Changes To Reg 20
December 28, 2010
With the promulgation in late November 2010 of the Tenth Amendment to 11 NYCRR 125 (Regulation 20), New York became the second U.S. state (following Florida) to enact a ratings-based framework allowing ceding insurers to take full statutory financial statement credit for reinsurance ceded to certain unauthorized reinsurers without the reinsurers posting commensurate collateral. The amended regulation becomes effective January 1, 2011.
Some industry participants, especially those outside the United States, consider this development overdue implementation of fairer reinsurance collateral requirements essential for an efficient global reinsurance market. On the other side of the longstanding debate, detractors continue to question …