New York state is unlikely to fall into line with the National Association of Insurance Commissioners' position that weather derivatives should be regulated as insurance contracts. Michael Moriarty, director in capital markets at the New York Insurance Department, told a NAIC meeting that the commissioners' conclusions appear to contradict the position of New York state toward insurance.
In a meeting of the NAIC's Insurance Securitization Working Group in December, Moriarty said the NAIC's position--outlined in a recent white paper--seems contrary to that of New York "in that the derivatives did not contain an indemnification feature, and consequently the department had taken the position that the derivatives were capital markets products." William Latza, partner at Stroock & Stroock & Lavan, agreed that it is legally accepted that the notion of indemnity distinguishes insurance from other contracts dealing with risk, such as derivatives.
