On March 29, the New York State Insurance Department issued a directive requiring the chief executives of the insurance companies it regulates to take an oath certifying that certain insurance transactions were conducted for legitimate economic reasons rather than for the purpose of manipulating financial reports.  The requirement applies to finite reinsurance, which is used to manage expensive claims over time and is the focus of investigations by federal and state regulators, who expressed concerns about the products being used to improve the appearance of a company's financial reports. 

Howard Mills, the acting superintendent of insurance for New York, said that the department wants to make certain that insurers are using proper accounting.  Noncompliance can result in monetary penalties or the suspending of licenses, which could be revoked in the worst cases.

NY DOI Press Release on Finite Reinsurance Reporting Rules (3/29/05)

April 5, 2005