The International Association of Insurance Supervisors has started formal work on a project that could have a big effect on insurers that do business in two or more countries.

The IAIS, Basel, Switzerland, a group for insurance regulators from around the world, began developing a Common Framework for the Supervision of Internationally Active Insurance Groups Thursday.

The IAIS executive committee approved an outline for work on the “ComFrame” project in January.

An IAIS task force chaired by Monica M?chler of the Swiss Financial Market Supervisory Authority created the outline and will manage the ComFrame project, officials say.

The IAIS wants the ComFrame team to complete a concept paper by mid-2011 and have all elements of the framework completed by July 1, 2013.

The ComFrame task force is supposed to come up with methods for supervising insurers that do business in two or more countries; establish a “comprehensive framework for supervisors to address group-wide activities and risks and also set grounds for better supervisory cooperation”; and “foster global convergence of regulatory and supervisory measures and approaches.”

If the task force succeeds, then regulators in home countries and other countries where an insurer does business will provide better-aligned, more consistent supervision, officials say.

The ComFrame task force will not directly address “systemic risk,” or the danger that problems at a company could threaten stability of the world financial system.

“However, it is the belief of the IAIS that when ComFrame is implemented and functional, supervisors will have improved tools and means to address, and where possible, mitigate risk that may affect insurers,” officials say.

“Industry experts will be regularly consulted as the work progresses to ensure the approaches developed in ComFrame are reflective of actual business practices and group structures,” officials say.