b'Insurance Regulatory | US/NAIC | States Begin Revising Credit for Reinsurance Lawswere expected to be adopted in December of 2018,2020, legislative attention in most states was but adoption was delayed because the Treasury hadpreoccupied with the pandemic. However, it is expressed concerns about certain provisions thathoped that a significant number of states will granted state insurance regulators discretion thatadopt the amendments to the NAIC models could result in reinsurance collateral requirementsduring 2021. The NAIC Reinsurance (E) Task Force that were inconsistent with the Coveredhas been tracking the progress of state adoption Agreements. Accordingly, in early 2019, the NAICof the amendments at its web page.Reinsurance (E) Task Force made revisions to theNotably, the five-year deadlines imposed by the proposed amendments to address the TreasurysCovered Agreements remain in force. The Director concerns, and the revised text of the amendmentsof the Federal Insurance Office (FIO) will begin was adopted in June 2019. evaluating US state insurance laws and regulations One of the most important features of the 2019for possible federal preemption by March 1, 2021, amendments to the NAIC Models is the concept of amaking those states with the highest volume of reciprocal jurisdiction. The 2019 amendmentsgross ceded reinsurance a priority. The FIO Director define three categories of reciprocal jurisdictions: will complete any necessary preemption determina- Jurisdictions with which the US has entered into ations by September 1, 2022. Under the shadow of covered agreement (currently the EU and the UK);that deadline, the amended NAIC Models have been designated as NAIC state accreditation standardsUS jurisdictions that meet the requirements foreffective September 1, 2022. As a result, states that accreditation under the NAIC financial standardsfail to amend their laws and regulations by January and accreditation program; and1, 2023, to comport with the amended NAIC ModelsQualified non-US jurisdictions that have agreed towill risk losing their NAIC accreditation.mutual recognition and reciprocity conditions thatWhile it is likely that this prospect, together with the mirror those in the Covered Agreement (currentlypossibility of federal preemption, will motivate states Bermuda, Japan and Switzerland).to take the necessary steps to adopt the amended Under the 2019 amendments, the benefits of theNAIC Models, the continuing impact of the pan-Covered Agreements are extended to all reinsurersdemic, together with crowded state legislative domiciled in a reciprocal jurisdictionnot just to EUagendas, may make actually achieving that goal and UK reinsurersprovided that the reinsurersdifficult to achieve. gmeet the capital and other standards required by the Covered Agreements and the NAIC Models.Unfortunately, the COVID-19 pandemic has slowed the process of enacting the 2019 amendments across the states. While a modest number of state legislatures adopted the amendments during 56 GLOBAL INSURANCE INDUSTRY|YEAR IN REVIEW 2020'