Prudential Financial Inc., Newark, N.J., told the Federal Insurance Office’s (FIO) that we all must get along, or at least work together, for the common goal of promoting and defining U.S. interests in the insurance arena.
Prudential now derives roughly half of its earnings from international insurance, with the vast majority of this business being Japanese yen-based.
Responding to the FIO’s request for public input on its January 2012 report to Congress regarding the modernization and improvement of insurance regulation, Prudential said that it looks forward to the new insurance office taking the point on U.S. national interests on insurance on the international stage, filling a void at the G-20 and the Financial Stability Board.
But, “in order to present a unified U.S. “voice” on international insurance issues, the states and the NAIC must work collaboratively and constructively with the FIO,” to get the FIO’s status elevated and heard on the world stage, Prudential warned in its letter, as penned by Prudential Vice President Rex B. Wackerle. Later in the letter, Wackerle told the FIO that the NAIC and state regulatory bodies must get up to snuff on market conduct.
“It is critical for the FIO to actively engage at the International Association of Insurance Supervisors (IAIS), especially on key issues like IAIS financial stability systemic risk deliberations (G-SIFI talks) and efforts to enhance insurance group supervision (e.g. ComFrame). To that end, we would encourage U.S. state regulators and the NAIC to support the need for the FIO to be granted a seat on the IAIS Executive Committee,” Wackerle wrote.
A unified voice “would benefit U.S. insurers and regulators in many international settings ….such coordination would also assist in ensuring that their U.S. companies are not disadvantaged when operating in foreign markets, either as a result of foreign law or because of inconsistent U.S. based regulation,” Wackerle told the FIO Director Michael McRaith.
“Dodd Frank’s creation of the FIO finally offers the U.S. insurance sector the opportunity for ongoing, direct engagement with the G-20, FSB, International Monetary Fund (IMF), World Bank and all of their relevant working groups,” The Prudential stated through its executive.
Armed with the expertise of various state insurance regulators, the G-20 and FASB could then defend the U.S. solvency regime, which has “proven itself to be resilient and successful in meeting its central mandates of protecting policyholders and promoting market stability
Like others, Prudential called upon the FIO to beef up its staff. See: http://www.lifehealthpro.com/2011/12/16/commenters-find-fault-with-state-regulation-look-t
FIO “must have sufficient levels of staff and funding appropriate to facilitate the strongest possible partnership between U.S. state insurance regulators, U.S. federal financial services supervisors and the Treasury Department’s Office of International Affairs in order to fully represent the U.S. national interest,” Wackerle said.
Wackerle also noted Prudential had helped draft comments by the American Council of Life Insurers (ACLI) and the Insured Retirement Institute (IRI) sent last week, as well. See: The IRI said the FIO should tell consumers they are at the risk of outliving their assets and provide them some education on the financial strategies that can provide guaranteed lifetime income, in its letter.
The ACLI’s response to the FIO included a study with a survey of CEOs, and identified areas for improving state regulation by increasing uniformity and comity among state regulators and regulatory requirements. See: http://www.lifehealthpro.com/2011/12/14/acli-finds-same-state-regulatory-problems-more-tha
One area of particular interest to Prudential, Wackerle said, is market conduct reform, coincidentally a huge area of concern and subject of a concerted effort now from the NAIC, according to the NAIC’s comments to the FIO, and the announcement of a new initiative yesterday, which begins with an NAIC survey to states and may end in a more comprehensive collection of market conduct data. See: http://www.lifehealthpro.com/2011/12/20/naic-pursues-comprehensive-market-conduct-assessme