During a recent discussion about standards being developed by the International Association of Insurance Supervisors, Basel, Switzerland, Rob Esson of the National Association of Insurance Commissioners, Kansas City, Mo., sent out an SOS. It wasn’t the kind of message that you put in a bottle and it eventually washes up onshore.
There are real consequences and a tight deadline, Esson explained to regulators and a lot of industry folks. The IAIS has set May 8 as a deadline for comments to its technical committee on capital and solvency standards. The technical committee is scheduled to meet in Taipei in June.
These standards could eventually be used by the International Monetary Fund and the World Bank, both in Washington, when these organizations evaluate countries. If approved, the standards will bind U.S. regulators and the companies that they regulate. “This changes the emphasis [of the discussion.] It takes it up a notch,” Esson told regulators and industry representatives.
Esson says that there are 3 possible responses: offer comment on the proposed standards and how they will be used to assess the U.S. regulatory system, actively support the proposal or oppose it. There is still time to weigh in and influence the discussion, said Esson. But he also noted that “it is difficult to make an argument that these standards should not be used in assessing the U.S. insurance system.
Industry participants offered their input.
Steve Broadie of the Property Casualty Insurers Association of America, Des Plaines, Ill., said that PCI generally supports moving together on standards. However, he added, there is concern about mandatory adherence to such standards.
That sentiment was also expressed by Bill Boyd of the National Association of Mutual Insurance Companies, Indianapolis, and the American Council of Life Insurers, Washington. A careful, comprehensive approach by the NAIC was urged.
Doug Barnert, executive director of the Group of North American Insurance Enterprises, New York, said that GNAIE will develop comments on the issue. While the proposed standards would probably not be an issue for GNAIE members, for smaller companies, it could impose additional work and cost to determine solvency assessments that it could make without the additional standards, he added.
He also noted that 19 of the 20 G20 members have an “ultimate regulator” but the U.S. has 50 regulators. So, how does one commissioner weigh in with G20 members? He asked. And, how can a viewpoint be created that will represent all insurance commissioners, Barnert asked.