NMI insurance firms incur $6.8M in direct losses

Insurance firms incurred $6.8 million in direct losses but wrote $20.1 million in direct premiums for property and casualty in 2007, Insurance Commissioner Michael J. Ada said in a Jan. 8, 2009, report to Gov. Benigno R. Fitial and the Legislature.

Ada, who is also the Commerce secretary, said 2007 marked the fourth year in which surety companies issuing labor bonds are required to retain a certain percentage of premiums collected from the sale of labor bonds into an established escrow account.

The retention rate that year was 20 percent, and a total of $206,929 was retained that period.

In the 32-page report, Ada noted a 20-percent drop in direct premiums written—from 25.3 million in 2006 to $20.1 million in 2007.

Insurance companies also saw a 24-percent decrease in direct losses, from $8.9 million to $6.8 million in 2007.

Of the five alien insurers, Dongbu Insurance Co. Ltd. wrote the biggest direct premiums at $2.035 million and incurred $1.142 million in direct losses.

Among domestic insurers, Century Insurance Co. Ltd. posted the most in direct premiums written at $6.616 million and $2.6 million in direct losses incurred.

2007 was also the year when American International Assurance Company (Bermuda) Limited withdrew as an alien insurer, and no certificate of authorization was granted to any alien insurer.

300 percent raise in capitalization

The 20th annual report of the insurance commissioner pointed out that no action had been taken on two of its previous legislative recommendations – an increase in capitalization and reinsurance.

“It is the intent of the insurance commissioner to renew legislative interests and initiative in this re-submission,” Ada said.

The insurance commissioner wants the minimum capitalization to transact a class of insurance to be increased from the current $25,000 to $100,000 “to ensure that sufficient and adequate reserves are maintained by an insurer in the event substantial losses are experienced early in its operations.”

Ada also seeks to be granted further authority to require reinsurers to file reinsurance treaties and to be able to review and approve such filings. The Commonwealth Insurance Act’s current provisions only provide for the admission or approval of reinsurers in the CNMI prior to engaging in business.

The Office of the Insurance Commissioner, which is under the Department of Commerce, licensed and regulated five alien carriers including AIOI Insurance Co. Ltd., MSIG Insurance (Singapore) Pte. Ltd., Dongbu Insurance Co. Ltd., The Mitsui Sumitomo Insurance Co.. Ltd., and The Tokio Marine & Nichido Fire Insurance Co. Ltd.

It also licensed and regulated 16 domestic carriers – including Century Insurance Co. Ltd., Equitable Insurance Co. Inc., Island Insurance & Surety Corp., Marianas Insurance Co. Ltd., Oceania Insurance Corp. and Traders Insurance Co.—and 40 foreign carriers in 2007.

The 40 foreign insurers included Aetna Life & Casualty (Bermuda) Ltd., Centurion Casualty Co., Federal Insurance Co., Fidelity & Deposit Co. of Maryland, First Net Insurance Co., Liberty Insurance Corp., Lincoln National Life Insurance Co., Pacific Indemnity Insurance Co., and TakeCare Insurance Co. Inc.