Image: International Equivalence

Global Regulatory Convergence
Last Updated 04/11/2014

The U.S. state-based insurance regulatory system has a strong track record of protecting consumers and solvency oversight, especially during the recent global financial crisis when the insurance sector remained relatively stable compared to other financial sectors. Comprehensive data collection and analysis, rigorous hands-on supervision, and transparency for consumers and investors are the hallmarks of the U.S. system.

The NAIC accreditation accreditation process has resulted in strong uniform national standards for solvency and other rules across the U.S. insurance regulatory system. Effective regulation is not a static process; our regulatory framework is monitored and updated continuously through the NAIC process. We constantly seek to refine our risk-based solvency system, and the NAIC’s Solvency Modernization Initiative (SMI) represents our current effort to maintain the highest standards of insurance regulation. Through the SMI, we have reviewed our existing system, while building on its strengths and incorporating best practices, including those from the international supervisory community and newly proposed insurance regulatory standards. We believe in the long-term objective of global regulatory convergence or alignment on an outcomes basis that protects consumers and promotes industry stability.

The U.S./EU Mutual Regulatory Understanding Project
In order to modernize its existing insurance solvency regulation, the European Union (EU) has been undertaking a fundamental review of the capital adequacy regime for the European insurance industry and developing the details of Solvency II with the goal of implementing a regime that is more risk-based in nature and adjusted to economic realities. U.S. insurance supervisors are supportive of the ongoing work of our transatlantic colleagues to implement Solvency II within Europe.

U.S. and EU insurance regulators have been engaging in regulatory dialogues over the last 10 years on issues of mutual regulatory concern and in January 2012 embarked on the EU-U.S. Mutual Regulatory Understanding Dialogue Project with the objective of further enhancing understanding and cooperation between the two systems for the benefit of insurance consumers, business opportunity and effective supervision. With the involvement of technical experts in both jurisdictions, the Project produced a factual Report on commonalities and differences between the jurisdictions in key areas of supervision. A detailed project plan was developed in early 2013 and will be updated periodically as certain common objectives and initiatives are pursued over the next five years.

The Dialogue participants are currently working on implementing various objectives outlined in a mutual way forward document. As part of the public dialogue, there was an open forum preceding the Fall 2013 NAIC national meeting which focused on best practices in supervisory colleges featuring regulators and company officials from both sides of the Atlantic with significant amount of experience both hosting and attending supervisory colleges.

Committees Active on This Topic
International Insurance Relations (G) Committee
Solvency Modernization Initiative (E) Task Force
News Releases
NAIC Updates Congress on International Insurance Supervision Issues
6/13/13
U.S.-EU Insurance Dialogue Outlines a Way Forward
12/21/12
Public Hearing to Advance U.S.-EU Insurance Regulatory Cooperation
09/28/12
U.S. and EU Regulators Advance International Supervisory Cooperation in Washington, D.C.
04/20/12
US Delegation Advances Insurance Dialogue Abroad
09/01/2011
State Insurance Regulators Engage in Transatlantic Dialogue
03/04/2011
Regulators Scout SMI "Road Map"
03/28/2010
Testimony and Speeches
Testimony Before the Subcommittee on Housing and Insurance: The Impact of International Regulatory Standards on the Competitiveness of U.S. Insurers
Senator Ben Nelson, NAIC CEO
06/13/13

Testimony Before the Subcommittee on Securities, Insurance, and Investment Committee on Banking, Housing, and Urban Affairs regarding Emerging Issues in Insurance Regulation
Therese M. Vaughan, Ph.D.
09/14/2011
Speech: Supervising Internationally Active Insurance Groups
Therese M. Vaughan, Ph.D.
2/17/2011
Speech: Solvency II from a Transatlantic Perspective
Alessandro Luppa
11/14/2006
Additional Resources
GAO Report: Insurance Markets - Impacts of and Regulatory Response to the 2007-2009 Financial Crisis
June 2013
EU-U.S. Dialogue Project: The Way Forward, Objectives and Initiatives for the Future
December 2012

U.S. Insurance Financial Regulatory Oversight and the Role of Capital Requirements
January 2012, CIPR Newsletter

Policy Brief: The Implications of Solvency II for U.S. Insurance Regulation
Therese M. Vaughan, Ph.D.
04/15/10
CIPR Topic: Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame)
Distinguished Scholar Study: Solvency II Calibration
The United States Insurance Financial Solvency Framework
Contacts

CIPR Staff
CIPRNews@naic.org

Media queries should be directed to the NAIC Communications Division at 816-783-8909 or news@naic.org.