Connecticut House Bill HB06392

Connecticut 2021 Regular Session

• Introduced: 2/4/21
• Refer: 2/4/21
• Report Pass: 3/22/21
• Refer: 4/1/21
• Report Pass: 4/8/21

Caption

An Act Concerning The Insurance Department's Recommendations Regarding Credit For Reinsurance.

Impact

The enactment of HB 6392 is expected to have significant implications for the insurance landscape in Connecticut. By clarifying and tightening the rules around credit for reinsurance, the bill seeks to minimize financial risk and enhance the stability of domestic ceding insurers. In particular, it addresses compliance matters for insurers not licensed in the state but operating under acceptable terms, thereby aiming to maintain the integrity and solvency of the insurance market. The legislation encourages more stringent oversight, pushing for better management of reinsurance recoverables by requiring domestic ceding insurers to notify the commissioner if certain thresholds are breached.

Summary

House Bill 6392 addresses modifications to the standards regarding credit for reinsurance in the state. It aims to redefine how domestic insurers recognize and manage reinsurance agreements, particularly concerning the credit they can take for reinsurance ceded to assuming insurers. The bill stipulates clear guidelines for the approval and oversight of such insurers and establishes requirements for minimum capital and surplus, ensuring that assuming insurers are adequately regulated for the protection of policyholders and ceding insurers. These modifications primarily impact the regulatory framework governing insurance practices within Connecticut, enhancing risk management and financial safeguarding measures.

Sentiment

The sentiment surrounding HB 6392 appears generally positive among industry stakeholders who see the need for enhanced regulation as vital for maintaining market stability and protecting consumers. Supporters advocate for a reformed approach to reinsurance that ensures transparency and accountability. However, some members of the insurance community may view the increased regulatory requirements and oversight measures as a potential burden, arguing that they could hinder operational flexibility and add additional layers of compliance costs.

Contention

While there are broad agreements on enhancing regulatory standards for reinsurance, some points of contention arise regarding the potential impact on smaller or less-capitalized insurers. Critics fear that the stringent requirements could place undue stress on these entities, limiting their capacity to engage in reinsurance practices or comply efficiently. Moreover, there are concerns about whether the increased oversight might lead to an exodus of reinsurers from the state, affecting competition and market dynamics.