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NAIC Pivotal in IAIS Formation
February 2015, CIPR Newsletter

Emerging Regulatory Issues in 2015 (By Monica Lindeen)
February 2015, CIPR Newsletter

International Regulatory Developments on Group Capital Standards
April 2014, CIPR Newsletter

Emerging Regulatory Issues in 2014 (by Adam Hamm)
January 2014, CIPR Newsletter

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International Insurance Supervision / IAIS

Last Updated 4/17/17

Issue: The day-to-day supervision of insurance in the U.S. requires extensive coordination among regulators. The NAIC has a long history of coordination, with embedded systems of peer review into our processes to promote consistent oversight. Similar efforts to coordinate at the international level are evolving, so U.S. regulators along with their international counterparts are redoubling efforts to strengthen supervision. The NAIC engages in recurring regulator-to-regulator dialogues with representatives from the European Union, North America, China, Japan, Switzerland, and other jurisdictions around the world. By joining with our international counterparts, our global engagement will continue to expand to strengthen insurance markets in the U.S. and abroad.

Overview: Formed in 1994, the International Association of Insurance Supervisors (IAIS) represents insurance regulators and supervisors of more than 200 jurisdictions in over 140 counties, constituting 97% of the world's insurance premiums. The IAIS is the principal international organization of insurance supervisors, engaged in creating international standards and guidelines on insurance supervision, and implementing the standards in the member jurisdictions. Since its inception, the IAIS has worked to promote effective and globally consistent supervision of the insurance industry and has strived to contribute to global financial stability. The IAIS has no regulatory power or legal authority, but it influences national and regional regulators by publishing supervisory principles, offering training and support, and advancing the latest developments in international regulation.

In October 2011, the IAIS adopted 26 revised Insurance Core Principles (ICPs), creating a new set of expectations for insurance supervisory systems. The ICPs provide a globally accepted framework for the regulation and supervision of the insurance sector and are utilized within the Financial Sector Assessment Program (FSAP) by the World Bank and the International Monetary Fund (IMF). The FSAP review of the U.S. financial sector is currently underway and is expected to be completed in 2015.The NAIC conducted a self-assessment using these ICPs in August 2014.

The IAIS continues to refine its work in a number of areas of insurance supervision highlighted by the 2008 global financial crisis. The IAIS is working to create a Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame). ComFrame has the goal of establishing a comprehensive framework for supervisors to address group-wide activities and risks of internationally active insurance groups (IAIGs) and also lay the groundwork for better supervisory cooperation and coordination. The IAIS initiated ComFrame to build on individual member efforts to improve group supervision and provide better insights to regulators on how IAIGs operate. U.S. state regulators and the NAIC are active in the development of ComFrame. After a three-year development phase and a third public consultation period that ended in December 2013, ComFrame has a target adoption date  of 2019.

In addition, there is significant activity currently underway at the IAIS in the area of capital developments for the application of global systemically important insurers (G-SII's) and in conjunction with its work on ComFrame. The Financial Stability Board (FSB) directed the IAIS to develop for the purposes of the higher loss absorption (HLA) capacity G-SII policy measure, "straightforward, backstop capital requirements to apply to all group activities, including non-insurance subsidiaries." The IAIS is also currently developing a risk-based global insurance capital standard (ICS). An initial Version 1.0 of the ICS is due to be developed by mid-2017. A final Version 2.0 of the ICS is scheduled to be adopted, along with rest of ComFrame, by the end of 2019

Status: The NAIC International team supports the work of the IAIS by participating in Executive, Technical and other relevant Committee meetings, and by drafting and commenting on papers that deal with international solvency supervision, accounting standards, reinsurance regulation and other issues of regulation of the business of insurance. Members of the Committee also attend the IAIS annual conference and interim meetings, and present information on relevant topics at regional training programs.