STATE OF CONNECTICUT
Thomas B. Leonardi
Commissioner Leonardi: New Insurance Legislation Strengthens
State’s Global Oversight of Industry
Governor Dannel P. Malloy and Connecticut Insurance Commissioner Thomas B. Leonardi are joined in the Governor’s State Capitol office on June 4, 2012 by U.S. and international insurance regulators for the bill-signing of SB 411, An Act Concerning the Insurance Holding Company System Regulatory Act and HB 5484, An Act Concerning Credit Allowed a Domestic Ceding Insurer for Reinsurance. From left, Therese M. Vaughan, Chief Executive Officer of the National Association of Insurance Commissioners, Peter Braumuller, Executive Committee Chairman of the International Association of Insurance Supervisors (IAIS), Governor Malloy, IAIS Secretary General Yoshihiro Kawai, Commissioner Leonardi.
Connecticut Insurance Commissioner Thomas B. Leonardi today praised passage of two new laws that give the state greater financial oversight of large, globally active insurance companies and makes Connecticut a more attractive place for international reinsurers to do business.
“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,” Commissioner Leonardi said. “I thank the Legislature for passage and Governor Malloy for his solid support of this legislation.”
Governor Malloy signed the bills into law June 4 and was joined in his office by Commissioner Leonardi and a group of international insurance regulators, who were participating in a two-day meeting in Hartford of the International Association of Insurance Supervisors (IAIS). In February, Connecticut became the first U.S. jurisdiction to join an international agreement established by the IAIS for the purpose of sharing financial data with regulators around the globe.
“Connecticut’s leadership has been essential in our efforts to promote effective and globally consistent supervision of the insurance industry and contribute to global financial stability,” said IAIS Secretary General Yoshihiro Kawai. “These new laws are certainly evident of Connecticut’s commitment to strong regulation, particularly of an industry with great global reach.”
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.