Connecticut, home to The Hartford and other multinational companies, became the first U.S. regulator of any kind to join an international agreement of the joint signatory of the International Association of Insurance Supervisors (IAIS) through signing its “Multilateral Memorandum of Understanding (MMoU), both parties announced today.
The agreement was signed earlier in the week when Leonardi was in Basel, Switzerland, where the IAIS is headquartered.
Connecticut is already a member of the IAIS, as is the NAIC, but this action means that the Connecticut has signed on to a binding agreement – the MMOU – organized by the IAIS, providing a framework among several jurisdictions for sharing of confidential information.
To be part of this MMoU, a signatory needs to pass a rigorous review process, according to and Peter Braumüller, chairman of the executive committee of the IAIS.
What Your Peers Are Reading
Other states can also apply and join,but a response from IAIS was pending on whether any other U.S. entities have applied and the NAIC was staying mum on the subject.
“We are honored to join our regulatory colleagues from around the world to help assure market stability – the ultimate consumer protection…We have the expertise to help monitor an increasingly complex and global industry,” Leonardi stated.
The MMoU will continue on in duration and is not “renewable,” according to a Connecticut Insurance Department spokeswoman. “There is no impact when the head of an agency leaves office. However, a jurisdiction must remain in compliance with the standards required to become a signatory to the MMoU. If a jurisdiction’s laws or policy change governing the sharing of information, etc., it could cause the jurisdiction to be excluded from the MMoU.”
The commissioner is also vice chair of the International Committee of the NAIC and a member of the IAIS Financial Stability Committee, as well a an advisory member to the Federal Insurance Office (FIO) at Treasury.
“We support the sharing of necessary information among global insurance regulators. The instrument that was signed would provide for that as well as contain some very important confidentiality protections which are necessary because of the sensitivity that will be shared,” said David Snyder, vice president and associate general counsel at the American Insurance Association in a call from Basel.
“Increasing the sharing of information across borders is an important part of the emerging global regulatory framework,” Snyder noted. “Because insurance regulation in the U.S. is at the state level, it’s important that our regulators have the ability to share information but do so in the context of the utmost confidentiality protection and that is provided for under the instrument Connecticut signed.”
International insurance industry oversight has become increasingly critical since the collapse of AIG after its credit default swap house of cards fell in the U.K. in 2008, and oversight internationally is expected to be a very delivately worded part of the FIO report, now overdue to Congress.