Written by Teresa Zink
Keeping track of the changing regulatory requirements of the various jurisdictions in which an insurance or reinsurance company does business can certainly cause insurance company lawyers to lose some sleep.
In recent years, the trend in both the U.S. and overseas has been toward less regulation and more consistency in the regulations that are in place, according to former Farmers’ Group General Counsel Jason Katz. However, he cautions, “Looking at what has happened in the banking sector I would have to say that the move toward less and less regulation may not be the wisest thing right now.” Nor may it be realistic.
At a time when the regulatory landscape in the U.S. and abroad is changing, General Counsels of insurance and reinsurance companies need to take an active role in the process and be certain they are part of the discussion, according to Katz.
The European Union is ahead of the U.S. in developing a regulatory framework that allows E.U. companies to be regulated by one member country while providing reinsurance in the other countries without being subject to the vagaries of each local regulatory regime, according to Katz.
Recent moves in the U.S., including the NAIC’s Reinsurance Regulatory Modernization Framework, reflect efforts to establish similar uniformity in this country. “I think where people may be getting a little off track or a little ambitious is when they propose to drop requirements for collateralization,” Katz says.
Jason Katz recently retired as Executive Vice President and General Counsel at Farmers Group, Inc. in Los Angeles. He participated in a General Counsels’ Roundtable Discussion titled “What Keeps Us Awake at Night?” at Mealey’s Litigation Conference’s Global Reinsurance Forum held Oct. 6 and 7 in Boston. Mr. Katz spoke to Ms. Zink for an article in the upcoming first issue of The Reinsurance Roundtable Continuum, a monthly report based on the outstanding speakers at the various reinsurance programs run by Mealey’s Litigation Conferences. This is an excerpt from that article.