LLoyds of London

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Insurance News

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July 8, 2008

By Julie Armstrong

Lloyds of London Type Insurance Being Revitalized in New York

The New York Insurance Exchange could be leading toward restructuring as a federal marketplace, if it is able to win wider support from other state regulators. Eric Dinallo, Superintendent of the New York Insurance Exchange is examining the possibility of what can be seen as a Lloyds of London type shift. The New York Insurance Exchange was founded in 1980 and was hit by market changes in the late 1980s causing the doors to close.

The laws permitting the exchange are still on the state's books. The Exchange would allow underwriters to form syndicates to reinsure and insure unusual or very large exposures, just as Lloyds of London does throughout 30 countries.

The New York Insurance Exchange, which ran for seven years, created a central marketplace for insurance. U.S. insurers are regulated by each of the states they do business in, but there is impetus from the industry, which has gained some support on Capitol Hill, to create a federal insurance regulator.

Many issues have yet to be ironed out and the revival is not without resistance. Donald Kramer, who is now chief executive of Bermuda reinsurer Ariel Holdings Ltd. Has informed Dinallo that there is more business for this type of insurance than twenty years ago.

For one, there are now more participants that would likely sign up, said Kramer, with a foreign reinsurance market having sprung up in the years since that could be eager to have greater access to U.S. business.

The National Association of Insurance Commissioners (NAIC), a body that represents state insurance regulators, has not been positive on the proposal, concerned that federal oversight could erode consumer rights.

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