The years of discussion lobbying and debate over the perceived inequality of the US reinsurance regulations could be set to come to an end as the National Association of Insurance Commissioners (NAIC) look set to endorse its far-reaching reorganisation plans next month.

For the international community at the heart of the reforms are changes in the licensing arrangements for foreign reinsurers to operate across the US and a new scheme which will redraw the levels of collateral reinsurers are expected to hold in the US  compared to the levels of the business they underwrite.

Both Lloyd’s and the International Underwriting Association have been at the forefront of the lobbying for change and IUA Chief Executive  David Matcham, believes while the new changes are a major step forward there is still room for future improvement.

Under the proposals overseas reinsurers will in future be able to choose one Point of Entry state in the US and once they have been authorised by the state they will be able to operate across the country and not have to apply for individual licences state to state as per the current regulations.

Secondly there will be a new system of financial strength levels which will determine just how much collateral an international reinsurer will have to place in a US trust find compared as a percentage of the level of business they will underwrite.

Mr Matcham says: “The NAIC Reinsurance task force has put forward the final draft of the proposals for consultation and we are pleased to see the draft contains some changes which have been asked for by the international reinsurance community.”

He adds that the timetable of progress for the proposals was now looking to have been established.

“We are very hopeful  that the NAIC will ratify the draft proposals at the meeting in the week beginning September 21 and then it will be a case of which act they will seek to attach the proposals to as they seek to get it passed into law.”

Mr Matcham said at present the consensus was that the proposals would form part of the Office of National Insurance Bill which has been proposed by the Obama administration and will come before Congress by the end of the year.

“The expectation is that if there are no unforeseen developments the proposals will go through by December, although nothing is ever certain,” he adds.

The one stumbling block may well be with the Port of Entry proposals which Mr Matcham says would means that for some states to be able to act as a Port of Entry state they would need to change their own state laws to accommodate the new regulatory powers.

“The draft comes at the end of many years of discussion and debate between the NAIC and the international reinsurance community,” he explains. “I don’t think that anyone will say that it is perfect but it a good foundation for long term change.”