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CNMI accepted to national insurance group
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Posted on May 14 2005
The CNMI has been accepted as a member of the National Association of Insurance Commissioners, allowing it to link with all insurance companies in the U.S.
“We are now part of an association that comprises the insurance commissioners of the 50 states and territories,” said Commerce Secretary Andrew Salas in a report last week.
As a member, he said, the CNMI would have access to NAIC’s extensive insurance database and computer network linkup with all insurance companies.
Salas, who is also the CNMI’s insurance commissioner, also reported as an accomplishment this year the amendment of the insurance rules and regulations.
The amendment requires each bonding company to retain 10 percent of premiums written and deposit the amount in an established savings/escrow account.
The initial rate shall be raised incrementally over the next three years to ultimately require 25 percent retained premiums.
This developed as local authorities expressed worry that insurance bonding companies in the CNMI might not be able to handle their obligations in case of mass repatriation of displaced workers.
Salas earlier noted that, with only $25,000 capital, a company can start an insurance business. With $100,000, a company can offer all lines of insurance products, including labor bonds.
Salas earlier said that bonding companies would go bankrupt if they are asked to fulfill their bonding obligations all at once.
Under the rules, bonding companies are required to shoulder any unpaid salary or repatriation costs for nonresident workers if their employers fail in their obligations.
The garment industry alone, which is undergoing a significant downsizing due to the lifting of worldwide trade quotas, consists of over 15,000 workers.
At least three factories have shut down and others have cut down operations, resulting in the displacement of some 1,500 workers.
Meantime, insurance administrator Jesse Palacios said the commission aims to push for amendments to the law to raise the $15,000 requirement to $100,000 per class or line of insurance.
