Florida Office of Insurance Regulation Issues Subpoenas
Florida Insurance Regulation Commissioner Kevin McCarty issued investigative subpoenas last week requesting information related to finite reinsurance activities in the insurance industry.
Finite reinsurance is a form of reinsurance that through the use of various provisions limits the amount of risk, if any, actually being transferred from the ceding insurance company to the reinsurance company. The improper use of finite reinsurance can hinder the ability of insurance regulators and the public to ascertain and assess the true financial condition of an insurer.
Commissioner McCarty addressed the action as a clarification of financial questions that have arisen related to reinsurance transactions. Commissioner McCarty stated “consumers and regulators must be secure in the knowledge of an insurance company’s solvency.”
Finite reinsurance that does not transfer risk has contributed to the failure of several insurance companies in Florida and the United States.