Congress is taking one of its first steps toward oversight of Federal Insurance Office (FIO) activities by questioning the FIO’s stance on key international insurance regulatory proposals.
Chairman of the House Financial Services Subcommittee on Housing and Insurance, Rep. Randy Neugebauer, told FIO Director Michael McRaith that current international standard-setting proposals could impose unnecessary costs on insurance consumers and hurt the competitive U.S. marketplace.
Specifically, Neugebauer wrote to McRaith, who also heads the influential technical committee of the International Association of Insurance Supervisors (IAIS), stating that two major IAIS initiatives — ComFrame and standards for systemically risky insurers — are, as currently crafted, bad for the U.S. economy and consumers.
Neugebauer’s letter, dated March 26, reflects the concern of many in the U.S. state regulatory and industry communities.
The current draft of ComFrame, says Neugebauer, “includes an onerous group-wide capital-assessment process that would require U.S.-based international insurers to hold more capital on a discriminatory basis than similarly-situated insurance groups that operate entirely within the U.S. or other major jurisdictions.”
ComFrame does not have its own legal authority, nor does the IAIS, which is based in Basel, but there will be enormous pressure on the U.S. to implement it.
Neugebauer wrote that he will not welcome a “one-size-fits-all” regime to be placed over U.S. insurance companies solely because they are internationally active, and he wants McRaith to stand up to such an imposition.
The Congressman also expressed concern regarding IAIS’ proposals to name U.S. insurers as global systemically important insurers, or G-SIIs.