The International Association of Insurance Supervisors (IAIS) announced it has updated its core insurance principles at its annual meeting in Seoul last week, and U.S. regulators in attendance promoted the strength of the U.S. system in open discussions with supervisors from other nations.

The adoption of revisions to the  principles, or ICP for “Insurance Core Principles, Standards, Guidance and Assessment Methodology” reflect globally-accepted framework to evaluate supervising authority under FSAP, the Financial Sector Assessment Program sponsored by the World Bank and the International Monetary Fund.  

South Korean markets, courtesy AP

The update was a major objective of the IAIS as the new set of ICPS is based on developments in insurance markets and in supervision, and was last revised in 2003.

The principles update “takes into account experience gained from the FSAP assessments as well as recommendations issued by the G20 Finance Ministers and Central Bank Governors and the Financial Stability Board,” stated Peter Braumüller, chairman of the IAIS Executive Committee.

The IAIS ICPs, set out the fundamentals of effective insurance supervision, and are the basis of the FSAP program. Assessments are done on a rolling basis, and the United States’ system of insurance regulation was most recently assessed in 2010, according to the NAIC.

The principle statements are the highest level in the hierarchy of the IAIS’ supervisory material, with standards at the next level and guidance below that.

The NAIC has been active in the IAIS, for some time, especially now in the wake of the financial crisis as solvency modernization efforts are underway. It participates as a founding member in the IAIS, which was established in 1994. As new international supervisory schemes are developed aborad, some stateside regulators, like Commissioner Thomas B. Leonardi of Connecticut, wonder if the European solvency modernization approach works for U.S. insurers and insured, or could weaken protections for consumers.

U.S. regulators and many insurers think the U.S. can learn a lot but don’t want to cloak the domestic insurance reguatlory system with a blanket international system.

Among those from the U.S. insurance regulatory arena at the conference was NAIC President Susan Voss, Iowa Insurance Commissioner, who told National Underwriter that she thinks “meeting went very well for the states and for the U.S. I think we made a lot of of points about the US system and what we’re doing, ..and the importance of our system and that one size doesn’t fit all.”

“The NAIC commends the adoption of the revised International Association of Insurance Supervisors Insurance Core Principles, Standards, Guidance and Assessment Methodology at the IAIS Annual General Meeting in Seoul on Oct. 1, 2011,” Voss stated.

 Voss pointed to the strength of the U.S. system, stating that in the 2010 FSAP assessment, the IMF “found that U.S. insurance regulators observed or largely observed 25 of the 28 international standards, and noted the overall resilience of the insurance sector through the financial crisis.”

“There are a variety of ways to regulate companies for solvency and we’ve made a good start,“ Voss said to NU.