Important Issues for Consumers, Insurers and Insurance
March 2018, CIPR Newsletter
Media queries should be directed to the NAIC Communications Division at 816-783-8909 or email@example.com
Director, Government Relations
Lead Manager, IAIS Policy & Coordination
Last Updated 1/15/2019
Issue: International organizations, including the Financial Stability Board (FSB) and the International Association of Insurance Supervisors (IAIS), are working to develop global standards. In some cases, the global standards may be ineffective or inconsistent with current U.S. policy, the U.S. state-based system of insurance regulation, and the best interests of U.S. consumers and U.S. insurance industry.
The NAIC has a long history of engagement with our international regulatory counterparts. The NAIC is a founding member of the IAIS and initially served as its secretariat. The IAIS represents insurance regulators and supervisors of more than 200 jurisdictions constituting 97% of the world's insurance premiums. It 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. The IAIS has no regulatory power or legal authority, but it influences national and regional regulators by publishing supervisory material, offering training and support, and advancing the latest developments in international regulation.
Congress recognizes state insurance regulators oversee 100% of the U.S. private insurance market and are engaged in international leadership roles as group-wide supervisors who coordinate the oversight of large complex U.S. insurance groups operating across many jurisdictional borders. U.S. membership of the IAIS includes the NAIC and its 56 members, as well as the FIO and the Federal Reserve, who have their own objectives, more narrow authorities and more limited insurance experience. The FIO and the Federal Reserve are also members of the FSB, which excludes state insurance regulators and the NAIC.
In October 2011, the IAIS adopted 26 revised Insurance Core Principles (ICPs), creating an updated set of expectations for insurance supervisory systems. The ICPs provide a globally accepted framework for the regulation and supervision of the insurance sector—they apply to insurance supervision in all jurisdictions regardless of the level of development. They are also utilized within the Financial Sector Assessment Program (FSAP) by the World Bank and the International Monetary Fund (IMF). Certain ICPs have been subsequently updated.
Status: U.S. state insurance regulators and the NAIC are active in the IAIS development of its Common Framework for the Supervision of International Active Insurance Groups (ComFrame). ComFrame aims to improve group supervision of internationally active insurance groups (IAIGs).
The IAIS has been conducting annual field testing of ComFrame, including its risk-based global insurance capital standard (ICS). A version 2.0 of the ICS is scheduled to be finalized in 2019 and will move into a five-year monitoring period starting in 2020. Under a recently enacted law, Treasury and the Federal Reserve are required to complete a study regarding the ICS before they can consent to its adoption.
Additionally, the IAIS has been working on a holistic framework for systemic risk assessment. This includes the development of an activities-based approach. It is also considering implications for the entities-based approach and potential policy measures. The IAIS plans to finalize this framework in 2019.
The NAIC believes it is important international standards, such as those for global group capital, not discourage long-term investment and insurance product breadth. There should be mutual recognition of each other's regulatory frameworks. The NAIC also advocates for federal objectives to better align with the state-based regulatory system.