Connecticut insurance regulator extends reach around the globe
The Connecticut Insurance Department is now able to peer into the financial activities of insurance holding companies to look for potential issues that could raise premiums and jeopardize services.
Commissioner Thomas B. Leonardi heralded the passage of two new laws that provide his department with greater financial oversight of large, globally active insurance companies and a law that he hopes will make the state more attractive to international reinsurers.
“These new laws give the Department significant supervisory tools that allow us to better understand the risks of insurance conglomerates and help prevent a repeat of the financial crisis from which we are still recovering. We also now have the ability to level the playing field for foreign reinsurers and that could result in lower costs to consumers in the long run,” Leonardi said in a press release Tuesday. “I thank the Legislature for passage and Governor Malloy for his solid support of this legislation.”
Here’s a description of the laws, according to the CID:
The holding company law (Public Act 103) allows the Insurance Commissioner to establish “supervisory colleges,” consortiums of domestic and international regulators who conduct financial examinations of an insurer that is part of an internationally active holding company. The Department will gain an overview of the whole group and have the ability to peer through the window of the holding company to gauge the impact of certain financial activities on a domestic insurer. The state sought this enhanced authority as a result of the financial crisis of 2008.
The reinsurance law (Public Act 139) grants the Insurance Department authority to evaluate and review the financial strength of a foreign reinsurer and the U.S. insurance company that buys the reinsurance. The law reduces collateral requirements on a sliding scale for those foreign reinsurers who meet the Department’s financial requirements and who are regulated by credible insurance supervisors in their own country. This would allow those reinsurers to free up capital and write more business in Connecticut and elsewhere.
Governor Malloy signed the bills into law June 4.