The barriers for Bermuda reinsurers doing business in the US are set to be lowered after regulators recommended a reduction of collateral requirements.The National Association of Insurance Commissioners (NAIC) approved the change that will significantly reduce the amount reinsurers have to put up as collateral against their US liabilities.The new model law and regulation still has to be approved by individual states, since insurance is regulated at state level in the US rather than at federal level.Several states have already introduced similar reduced collateral requirements, including Florida and New York, which have each approved a number of Bermuda reinsurers.The news was welcomed by Bradley Kading, President of the Association of Bermuda Insurers and Reinsurers, who said: “This model language, if implemented, will recognise the important contribution made to US consumers by financially strong international reinsurers regulated under Bermuda’s internationally recognised regulatory regime.“Because it recognises the value of global risk spreading, the states should move to adopt this model law as part of their solvency modernisation efforts.”Under the current NAIC Credit for Reinsurance Model Law & Regulation, in order for US ceding companies to receive reinsurance credit, the reinsurance must either be ceded to US licensed reinsurers or secured by collateral representing 100 percent of US liabilities for which the credit is recorded.The revisions, approved unanimously on Sunday during the NAIC’s fall meeting at National Harbor, Maryland, would reduce these reinsurance collateral requirements for non-US licensed reinsurers domiciled in qualified jurisdictions.Under the model law, a state would evaluate each reinsurer that applies for certification and assign a rating based on the evaluation.A certified reinsurer would be required to post collateral in an amount that corresponds with its assigned rating zero percent, ten percent, 20 percent, 50 percent, 75 percent or 100 percent in order for a US ceding insurer to be allowed full credit for the reinsurance ceded.Each state would have the authority to certify reinsurers, or a commissioner would have the authority to recognise the certification issued by another NAIC-accredited state. The NAIC would publish a list of qualified non-US jurisdictions.Franklin Nutter, President of the Reinsurance Association of America, said: “The RAA commends the NAIC for unanimously passing the credit for reinsurance model law changes. Modernisation of reinsurance regulation, including collateral reform, is necessary and we applaud the NAIC for taking this important step.”Dave Matcham, chief executive International Underwriting Association, said: “The IUA is very pleased that the NAIC has taken this important step in modernising US reinsurance regulation.“The unanimous vote shows the breadth of support for these important improvements in US credit for reinsurance rules and for rationalising the collateral requirements applicable to non-US reinsurers who support the US market. We hope individual states will now act promptly to implement these new provisions.”