‘Certified reinsurers’ bill passes the House

As part of a larger national effort to modernize insurance risk-sharing programs, the House on Thursday passed a bill that would create a new classification of reinsurers.

Approved on a 121-0 vote, HF3622, sponsored by Rep. Joe Hoppe (R-Chaska), would create a “certified reinsurer” classification, joining other distinctions like “licensed reinsurer” and “accredited reinsurer.” A certified reinsurer wouldn’t need to be licensed in Minnesota, but would still have to meet certain bookkeeping and financial strength requirements.

The bill now goes to the Senate where Sen. Gary Dahms (R-Redwood Falls) is the sponsor.

Under the bill, the Department of Commerce would be required to receive public input on certified reinsurer applications and publish a list of certified reinsurers with their ratings. The bill outlines financial strength ratings from ratings agencies like S&P or Moody’s.

Organizations not licensed in Minnesota would be able to use the new classification of reinsurers, giving the Commerce Department authority over out-of-state companies that want to work as certified reinsurers in the state.

Hoppe told the House that the bill looks much like similar legislation 42 other states have passed.

Reinsurance is a way for insurance companies to share risk and offset liabilities. Last session, the Legislature passed a $542 million state-run reinsurance program intended to tackle rising premiums and stabilize the individual insurance market.