Source: https://expertinsurancewitness.com/reinsurance-arbitrator-expert/
Timestamp: 2018-08-16 00:50:08
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Reinsurance Expert, Reinsurance Arbitrator, and Arbitration Disputes
Reinsurance Arbitrator and Expert
A. Overall Reinsurance Expertise
Generally. My background includes extensive exposure to the various reinsurance mechanisms and relationships. Set out below is further detail relating to this experience, and more information is available at my insurance arbitration website www.insurance-metrics.com.
Reinsurance Arbitrator. I am certified by AIDA Reinsurance and Insurance Arbitration Society, United States (“ARIAS-U.S.”) as an arbitrator for reinsurance and insurance matters. Today, there are about 300 individuals so certified by ARIAS in the United States.
ARIAS-U.S. certifies knowledgeable and reputable professionals for service as panel members in reinsurance and insurance arbitration matters. The organization’s criteria for certification is as follows:
B. Reinsurance – Regulatory
Oversight Over Insurance Companies / Reinsurance. I was also responsible for the regulatory oversight of all insurance companies’ agents and brokers authorized to conduct business in the state of Iowa. My Department was responsible for solvency oversight, insurance company examinations, financial and accounting matters of insurance companies, including their related reinsurance relationships, consumer protection, agent licensing, and oversight of the property casualty and life and health insurance industries. In addition, I oversaw state regulation of the securities industry with Iowa’s Superintendent of Securities reporting directly to me.
Examination of Insurance Companies. As Insurance Commissioner, I directed and oversaw the examination of all insurance companies authorized to do business in the State of Iowa. Those examinations included focus on both financial matters (so called triennial examinations of insurers – of which well over 100 such examinations were conducted while I was Commissioner) and examinations of specific complaints about insurers (so called Market Conduct Examinations – well over 50 such exams were conducted while I was Commissioner).
Examinations / Reinsurance. The triennial examination included rigorous focus on all aspects of the reinsurance mechanism. During the examination process, examiners review all of the reinsurance contracts entered into since the last examination. In so doing, examiners confirm balances due, particularly due the direct insurer. These balances due are generally an asset of the insurer. Because these balances due are often significant dollar amounts, they are subject to inordinate scrutiny, including review of the financial status of the reinsurer and that reinsurer’s admission status in the state.
Life Health. For example, see the NAIC Annual Statement Blanks for Life and Accident and Health Insurers: Exhibit 1 – Part 2; see also Schedules S, Part 1 (Reinsurance Assumed), Part 2 (Reinsurance Recoverable), Part 3 (Reinsurance Ceded), Part 4 (Reinsurance Ceded – Unauthorized) and Part 5 (Reinsurance Ceded, 5-Year Exhibit).
Property Casualty. See also the comparable exhibits and schedules for Property Casualty Insurers, specifically Schedule F which includes (as above) exhibits on reinsurance assumed, reinsurance recoverables, reinsurance ceded, reinsurance ceded – unauthorized and reinsurance ceded within a five-year exhibit. These exhibits and the documents they reflect are the subject of extensive regulatory scrutiny both during annual statement review and during Financial and Market Conduct Examination reviews.In addition “reinsurance recoverables” are an asset and listed on the Annual Statement Blank asset exhibit (page 2). Along those same lines, where a direct insurer has reinsurance with an unauthorized reinsurer (non-admitted) that insurer can take credit for the reinsurance to the extent that the reinsurer has filed an appropriate (a) letter of credit; (b) trust agreement; or (c) has agreed to having funds withheld.
Admission of Reinsurers to do Business in the State. Reinsurers, like insurers, apply for admission to do business in every state in which they conduct business. They become licensed through the same process as ordinary insurers. In addition, at the option of the reinsurer, they can become “accredited” to do business in the state upon the validation of at least $20 million in surplus.
Approval of Reinsurance Transactions. Additionally, the Insurance Code of Iowa required review, scrutiny and – as appropriate – approval of substantive reinsurer transactions relating to domestic insurers (e.g., bulk reinsurance etc.). As Commissioner, it was my duty to review such transactions on a regular basis and pass judgment on the proposed transactions.
Validation of Risk Transfer. Reinsurance transactions are required to transfer sufficient risk from the insurer to the reinsurer in order to be accounted for as reinsurance. During triennial examinations the terms of each contract are examined to ensure that actual “risk transfer” took place rather than an implicit “borrowing of surplus” by the insurer.
Department Reinsurance Expertise. Each insurance department (including the Iowa Department that I headed) is required to possess reinsurance expertise. That expertise – on a front line basis – is embedded in the Examiners in Charge (EIC). Supporting that expertise was “in house” reinsurance expertise as applied to the financial statements. Indeed, as a condition precedent to receiving NAIC recognition as an accredited regulatory state, Iowa was required to possess reinsurance expertise.
Reinsurance Regulations. Reinsurance is a stabilizing force from a regulatory – solvency standpoint. On the property casualty side, the “Kenny Rule” of thumb 3 to 1 (that is, for every $1 of surplus, $3 of premium can be written) is actually enforced in a real world fashion by reinsurers who generally insist on the adherence of this and other ratios by the underlying insurers.
2. National Association of Insurance Commissioners (NAIC), 1986 – 1990. Concurrent with my service as Iowa Insurance Commissioner, I served as a member of the NAIC. The NAIC is an organization of the Insurance Commissioners of all 50 states and meets quarterly in locations throughout the U.S. to consider and evaluate national insurance and reinsurance issues. Further, the organization is professionally staffed with more then one hundred personnel. The organization is based in Kansas City, Missouri. The NAIC considers all major insurance and reinsurance issues and then promulgates model insurance laws and regulations, which are then routinely (but optionally) adopted at the individual state level.
NAIC Chairmanships – Chairman of the Midwest Zone. I was elected by my fellow Insurance Commissioners from the Midwest Zone (composed of the Midwest states, constituting about one quarter of all the states) to provide leadership and representation of the Midwest before the balance of the states. This position included a position on the Executive Committee of the NAIC as well as major responsibilities relating to the assignment of states (and their related examiners) to specific examinations, both triennial and Market Conduct.
Member, Commercial Lines Committee. In addition, I served as a member of the NAIC Commercial Lines Committee. This committee considered all issues relating to commercial lines policies, including reinsurance matters.In addition, my service on the following NAIC Committees has also been helpful experience:- Member, the Blanks Committee (including related reinsurance reporting)
– Member, Guarantee Fund Committee
– Member, Rehabilitator and Liquidators Committee
– Member, Casualty Actuarial Committee
– Member, Commercial Lines Committee
– Member, Valuation of Securities Committee
– Member, International Insurance Relations Committee
– Member, Accounting Practices and Procedures Committee, and
– Member, State and Federal Legislative Committee.
Other NAIC Chairmanships – Chair of the Life Insurance Committee; Chair of the Universal Life Insurance Task Force; and Chair of the Life Insurance Product Development Task Force. As a member of the NAIC, I served as both Vice Chairman and Chairman of the NAIC Life Insurance Committee, Chair of the Universal Life Insurance Task Force and Chair of the Life Insurance Product Development Task Force.
3. First Deputy Iowa Insurance Commissioner, 1976 – 1978. As First Deputy Insurance Commissioner, I had oversight responsibility over all facets of insurance regulation, including oversight of the property casualty division, the life health division, agent licensing and consumer complaints. As First Deputy Commissioner, the functions of overseeing all aspects of insurance companies and their various reinsurance relationships reported to me.
Approval of Reinsurance Transactions. The Insurance Code of Iowa required review, scrutiny and – as appropriate – approval of substantive reinsurer transactions relating to domestic insurers (e.g., bulk reinsurance etc.). Similar to duties I conducted as Commissioner, as Deputy Commissioner, it was likewise my duty from time to time to review such transactions on a regular basis and pass judgment on the proposed transactions.
4. Iowa Assistant Attorney General Assigned to the Insurance Department, 1975-1976; serving as the Department’s General Counsel. As Assistant Attorney General, I had departmental prosecutorial responsibilities for violations of the Insurance Code under the state’s APA act. The Attorney General responsibility also included issuing Attorney General Opinions as to the construction of insurance and reinsurance matters.
6. Elected Member of the Florida House of Representatives. I serve as a Member and Vice Chairman of the Insurance Committee (among other committees), which has legislative liaison duties to the Florida Office of Insurance Regulation (“FL OIR”), whose own duties include rate making, rate approval, and policy language oversight.
C. Reinsurance – Industry
7. President and Chief Executive Office of the National Council on Compensation Insurance (NCCI; Boca Raton, Florida), 1990 – 1998. NCCI is one of the larger and more pervasive insurance organizations. During my tenure as President and CEO, NCCI had (and continues to have) responsibility to accurately price and file pricing for some $12 – $15 billion of workers compensation insurance in 39 states throughout the U.S. NCCI prepared proposed premium filings for regulators to approve by extracting key data from its 600 member insurance companies and then used that data to project necessary premium changes. NCCI accomplished this mission through some 1,000 employees of which approximately 600 were professionals, and had an annual revenues of $140 million.
Rate Filing Activity – As part of our annual review of rates in the 39 states for which NCCI functioned as the rating bureau, we regularly surveyed our member companies as to the reinsurance environment in each such state. Our surveys typically encompassed availability, affordability and breadth of coverage issues. Whenever conditions warranted, information from these surveys were considered in our rate change recommendations.
“Table M” Product. This product consisted of a table of factors that are the expected losses for a portfolio of insurance policies above a specific attachment point. The factors are used by reinsurers pricing aggregate portfolio reinsurance. These factors are calculated for a range of portfolio sizes from the tens of thousands to the hundreds of millions of dollars.
8. General Counsel and Director of Government Relations to the American Academy of Actuaries (Washington D.C.), 1980 – 1983. I served as General Counsel and Director of Government Relations for the American Academy of Actuaries, including advising on admissions, discipline, federal antitrust and general corporate law. I represented the 10,000 member professional organization before Congress (e.g., Senate Committees on Banking, Commerce, Finance and Labor, and House committees on Education, Labor, Energy, and Ways and Means) and the various federal regulatory agencies.
The Academy is the professional organization of actuaries and includes qualified actuaries from all disciplines and all forms of insurers. Academy members included affiliation with virtually every reinsurer in the World. The Academy’s Board of Directors was likewise made up in part of leading reinsurance company executives. Further, actuaries establish the premiums and validate risk transfer relating to most reinsurance products. I worked side by side with such actuaries as they developed standard methodologies for such premium calculations (e.g., see Pronouncements of the Actuarial Standards Board).
9. Risk Metrics Corporation. I co-founded this information company in 1998. Risk Metrics (including Datalister, Inc.) gathers, normalizes and sells public data relating to workers compensation to a wide range of insurance oriented customers, including insurance agents. I sold my interest in this company several years ago.
10. Attorney in Private Practice. As an attorney in private practice, I represented a number of insurer and reinsurance interests and became familiar with regulatory and industry standards of practice relating to reinsurance transactions. Those interests included the position of:
11. Experience Applicable State to State. There is little if any difference between regulatory and industry standards of care provisions that come to bear on insurers and reinsurers among the various states. This is because insurance and reinsurance today is conducted on a national and international basis and can be so conducted because the laws and standard of practice of the various states have a high degree of inter-related uniformity.