News Release

New Jersey Department of
Banking and Insurance

Commissioner Tom Considine

For Immediate Release:
April 26, 2011

For Further Information:
Ed Rogan or Marshall McKnight (609) 292-5064

TRENTON –New Jersey is strengthening its role in an increasingly globalized insurance market through a recently signed agreement between the New Jersey Department of Banking and Insurance (DOBI) and the United Kingdom’s Financial Services Authority (FSA), which regulates the insurance industry in that country. The two regulators have signed a Memorandum of Understanding (MOU) to provide a formal basis for cooperation and coordination, including sharing information and assisting with investigations of individuals or companies in the insurance business.

“New Jersey is becoming a national leader in the financial services industry, thanks to the recent enactment of laws that allow the formation of captive insurance companies and the expansion of financially sound reinsurers and surplus lines insurers,” said DOBI Commissioner Tom Considine. “As the State’s insurance market becomes more international, it becomes more necessary to cooperate and share information with regulators in other nations. We can better monitor international activities of insurance companies with this agreement so we can better leverage opportunities for growth in New Jersey and protect consumers more efficiently.”

Under the MOU, each regulating authority will use reasonable efforts to assist the other; including providing confidential information, as allowed by law, confirming or verifying information and assisting in obtaining information from specified individuals or entities.

This marks the second cooperative pact between DOBI and a foreign country’s regulator. The Department signed a similar MOU with Bundesanstalt fur Finanzdienstleistungsaufischt (BaFin), which supervises banks, insurance companies and financial services in Germany, in 2009.

The MOU between DOBI and the FSA does not supersede any laws or regulatory requirements in force, or applying to, the State of New Jersey or the United Kingdom. The authorities will promptly respond to requests from one another regarding the safety, soundness, financial condition or insurance activities of a regulated entity or person.

Lieutenant Governor Kim Guadagno, who is leading the Administration’s efforts to make New Jersey more business-friendly and cut excessive regulations and red tape, said this type of international collaboration helps to position New Jersey in the global marketplace and grow the State’s economy.

“The State’s rising exports and imports combined with memorandums of understanding such as this one help maintain New Jersey’s status as a home for economic growth,” said Lt. Gov. Guadagno. “Whether it is through international trade or domestic expansion, New Jersey is moving in the right direction.”

New Jersey companies long have been active in the global marketplace. The state’s exports were up about 18 percent in 2010 to $32.2 billion, the most in four years. Imports were also up from $100.8 billion in 2009 to $121 billion last year.

As exports and imports grow, this agreement joins an expanding list of similar MOUs signed by New Jersey. The Garden State has some 20 similar agreements with such countries as Argentina, Canada, Israel and Korea.

The MOU between New Jersey and the United Kingdom follows Governor Chris Christie’s signing of two bills earlier this year that will expand the State’s insurance market, grow the economy and create jobs in New Jersey.

P.L. 2011, c.25, signed in February, allows the formation of captive insurance companies in New Jersey. Captive insurance companies are insurance companies established with the specific objective of financing risks emanating from their parent group or groups. Previously, the law did not allow captive insurance companies in the State, causing major New Jersey employers to secure coverage from captive insurers established in other locations. 

The Reinsurance and Surplus Lines Stimulus and Enhancement Act (P.L. 2011, c.39), signed in March, provides incentives to financially sound reinsurers and surplus lines insurance companies to do more business in New Jersey. The law affords reinsurers more flexibility in how they deploy their capital, thus putting downward pressure on rates, and removes a restriction on New Jersey domesticated surplus lines insurers that prevented these companies from writing business in the state.

Reinsurance is insurance that is purchased by an insurance company, the primary insurer, from another insurance company, the reinsurer, as a way for a primary insurer to protect against unforeseen or extraordinary losses. Surplus lines products provide insurance coverage for certain risks not typically written in the admitted market.

Commissioner Considine, who serves as the Chairman of the Reinsurance Task Force for the National Association of Insurance Commissioners (NAIC), said he expects agreements between regulators in the U.S. and other nations will become more commonplace and more necessary.

“Just as it is important for State insurance regulators to work together and look at issues nationally through collaboration in the NAIC, it is becoming crucial that regulators cooperate across national and international boundaries,” he said. “In just the area of reinsurance for example, the issues are almost all global ones and cooperation between regulators in the U.S. and those in other nations is absolutely essential.”