The bill was developed to provide the insurance regulator discretion in working with mortgage insurers that fall below the required MPP
The PMI Mortgage Insurance has announced the legislation that could provide regulatory relief to PMI and other mortgage insurers by granting Arizona’s Department of Insurance (DOI) discretionary authority over mortgage insurance companies.
The regulation is applicable if they do not meet the state’s required minimum policyholder position (MPP) to write new business. The regulatory reform is effective November 2009. PMI is domiciled in Arizona and regulated by the Arizona Department of Insurance.
The bill, which garnered support including the Arizona DOI, was developed to provide the insurance regulator discretion in working with mortgage insurers that fall below the required MPP. Legislators and the DOI recognised that MPP is one factor, but should not be the sole determinant in evaluating mortgage insurers’ ability to write new business.
The reform can provide necessary relief as mortgage insurers pursue restructuring of portfolios and rebuilding capital levels. Presently, 16 states have mortgage insurance statutes or regulations that prescribe either a maximum risk-to-capital ratio or MPP. The remaining 34 states do not have explicit minimum capital requirements.