International standard-developing bodies have been turning a studied eye towards insurance regulator standards this summer, with the latest move coming from the G-20’s Financial Stability Board (FSB) involving standards for unwinding failing insurers.
One insurance representative said these global agencies’ draft measures “calls into questions who will be regulating insurers in the future.”
The FSB, which is a bank-heavy international organization in which the U.S. Treasury, the Federal Reserve Board and the Securities and Exchange Commission (SEC) have seats, is seeking comments on a document for non-bank financial institutions — like insurers — that could be systemically significant or “critical in failure.”
The consultative document, released Aug. 13, which was developed by the FSB in conjunction with relevant standard setters, is called Key Attributes of Effective Resolution Regimes for Financial Institutions.
The FSB identified its first round of global systemically important insurers (G-SIIs) July 18, including U.S. behemoths Prudential Insurance, MetLife and AIG, but appears to be expanding criteria to other insurers who may not be systemic, although their failures would be “critical.”
“The US has a comprehensive resolution process as do other jurisdictions,” noted Dave Snyder, vice president, international policy, Property Casualty Insurers Association of America (PCI), expressing concern about what he called the latest in a series of “major intrusions” into the U.S. insurance regulatory system this summer.
Each state already has a full resolution statute and the courts provide a due process element, he explained, adding that all states have a policyholder protection scheme.
When the International Association of Insurance Supervisors (IAIS) released its specific policy measures for G-SIIs July 18, it added that it is preparing a workplan by October “to develop a comprehensive, group-wide supervisory and regulatory framework for internationally active insurance groups (IAIGs), including a quantitative capital standard.”