...An Ongoing Controversy: For several months now, a controversy over the use of captive life reinsurers for life insurance reserve financing has been simmering. Some key states, most notably New York, have deep concerns with the use of captive insurers for this purpose. The National Association of Insurance Commissioners (NAIC) and the Federal Insurance Office (FIO) have also become involved in the debate. Proposed Change in Accreditation Standards: The NAIC recently proposed new accreditation standards, which would require certain captives to comply with the accounting and disclosure rules for traditional insurance companies. This addresses a core concern voiced by critics, which is lack of transparency and consistency in the regulation of captives. However, read literally, the NAIC proposal would apply not only to captive life reinsurers, but also potentially to other captives including traditional corporate-sponsored captives. Regulatory Intent Is Not Clear: Fitch Ratings finds it difficult...
