THE GENERAL INSURANCE ASSOCIATION OF JAPAN by liwenting

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									                THE GENERAL INSURANCE ASSOCIATION OF JAPAN
               Non-Life Insurance Building, 9 Kanda Awajicho 2-Chome, Chiyoda-Ku, Tokyo 101-8335, Japan
                     Tel: +81-3-3255-1703    Fax: +81-3-3255-1234    E-mail: kokusai@sonpo.or.jp


                                                                                                     14 October 2010

Director Scott Richardson
Insurance Department, State of South Carolina
Chair, NAIC Reinsurance Task Force


          GIAJ Comments on "Reinsurance Collateral Reduction and Accreditation Recommendations"
                                  released on Sep. 23, 2010 by the NAIC


Dear Commissioner Richardson and Members of the Reinsurance Task Force:

     The General Insurance Association of Japan, the GIAJ, is an industry organization whose 26 member
companies account for about 95 percent of the total general insurance premiums in Japan.

      First of all, we would like to express our appreciation to the NAIC Reinsurance Task Force (RTF) for giving
us this opportunity to submit our comments on the Exposure Draft "Reinsurance Collateral Reduction and
Accreditation Recommendations" (ED) as follows.

In General

         While we strongly believe that any collateral requirement (as well as any other preconditions and
  prerequisites) should be removed ultimately in light of global characteristics of reinsurance, we commend the
  progress of discussion in the NAIC toward reinsurance regulatory modernization including collateral reduction,
  given the fact that the reinsurance business is "B to B" transaction between sophisticated and professional
  parties.

         We recognize that the NAIC has shifted to seek reinsurance regulatory modernization through amending
  the existing model laws, based on the Reinsurance Regulatory Modernization Act of 2009 (RRMA), which was
  adopted by the NAIC. Based on this understanding, we are deeply concerned that this ED does not require all
  the states to introduce the modernization initiative as agreed in the RRMA, including reduction of collateral
  requirements..

State Commissioners' Discretion

        We recognize that some states have taken steps to modernize their reinsurance regulations as was the case
  with the State of Florida. However, we are concerned about possible discretion to be given to state
  commissioners as mentioned in the first paragraph of Page 2,, "Laws and Regulations" of the ED, because this
  might allow certain states discretion to adopt their own standards, thus preventing them from proceeding with
  the anticipated modernization of reinsurance regulation. We hope that the NAIC will ensure all the insurance
  commissioners put forward their reinsurance regulatory reforms in a prompt and consistent manner, along with
  the NAIC's policy and the spirit of the RRMA.

        We believe the essences of the requirements and outcomes of evaluation, which are referred to in "1.
  Requirements for Eligible Assuming Insurers" of Page 2 and "2. Evaluation of Non-U.S. Jurisdictions" of Page
  3, should have comprehensive effect and should not be different between states. In addition, discretion given to

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  commissioners in the point c. in Page 2 should be granted in only exceptional cases.
        To ensure these points, certain functions/mechanism involving the Federal Insurance Office should be
  developed to seek harmonization between states.

Scope of this proposal

         With respect to the words and terms such as "approved reinsurers" and "approved non-U.S. jurisdictions"
  as referred in the ED, it seems unclear which reinsurers and which jurisdictions will be under the scope of this
  ED. We believe that a clearer description is needed to make it clearer that reinsurers "domiciled in U.S.
  (Foreign)" and "domiciled in non-U.S. jurisdiction (Alien)" are all included in the "Eligible Assuming Insurers"
  in this ED, in order to ensure that this ED is not discriminatory against non-U.S. reinsurers.

Financial Statements and Reporting

        The requirements of submitted financial statements and reports proposed in point d. and e. of Page 2 to 3
  seem to exceed what we believe is needed in the context of reinsurance regulation/supervision. We are concern
  ed that the requirements will place a large burden especially on non-U.S. insurers due to differences in
  languages and forms. Given a non-U.S. jurisdiction is evaluated and recognized as a qualified jurisdiction in
  accordance with "2. Evaluation of Non-U.S. Jurisdictions" of Page 3 in this ED, the supervisory tools used by
  the qualified jurisdiction should be automatically recognized as eligible to be filed in the U.S. We expect further
  consideration will be made in this matter.

Evaluation of Non-U. S. Jurisdictions

        We commend the point a. in Page 3 as it pays attention to international standards and reciprocal approach.
        In this context, we strongly hope that evaluation of Non-U.S. jurisdictions will be carried out reciprocally
  between supervisors in the U.S. and those in Non-U.S. jurisdictions in line with the international (re)insurance
  regulatory/supervisory trends discussed in the IAIS.




      We would eagerly look into the reinsurance modernization discussions taking place in the RTF, and truly
expect that both "Credit for Reinsurance Model Law" and "Credit for Reinsurance Model Regulation" will
continue to be amended in a consistent manner with the RRMA, thus bringing about effective results to the
NAIC's initiative this time.

      Thank you for your consideration of these comments.

Sincerely,




                                                           Takashi Okuma
                                                           General Manager
                                                           General Insurance Association of Japan




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