The National Association of Insurance Commissioners’s (NAIC) lead regulators on international supervisory issues expressed growing frustration with the actions of the G-20’s Financial Stability Board (FSB), venting the opinion that FSB is now basically puppeteering the International Association of Insurance Supervisors (IAIS) and inflicting its own bank-centric standards on insurers.
Regulators complained in an open session, at the NAIC summer meeting in Indianapolis, that the FSB is intruding on the ComFrame process and telling IAIS what to do, and have tossed in (without discussion among the IAIS) a requirement for a new quantitative capital standard for internationally active insurance groups (IAIGs).
A representative from the IAIS, its Deputy Secretary General George Brady, also a former NAIC official, was called to the International Insurance Relations (G) Committee to answer questions from former colleagues on what the FSB was up to and what the IAIS plans were in regard to these requests.
Brady demurred on all questions. “I have no answer to that,” he responded more than once.
The IAIS has been told to come up with a work plan by the FSB for this new quantitative standard by October. Before the directive, discussion was to take place by the IAIS members and industry observers on whether a standard was even necessary. The July 18 FSB release on global systemically important insurers (G-SIIs) made it clear one was going forward.
A draft of the work-plan released in the past week or so is circulating now but is not available to anyone but the IAIS executive committee.
“I think the IAIS runs a great risk of losing its stature,” and becoming an “afterthought,” said G Committee Chair and Connecticut Insurance Commissioner Tom Leonardi (right), a member of the executive committee with NAIC immediate past president Kevin McCarty, Florida’s insurance commissioner.
“We are running the risk of potentially losing control over our standard-setting,” McCarty said at the committee session. McCarty stressed that the IAIS needs to remain independent, and not be dictated to by the FSB.
“I fear,” said Leonardi, that the “IAIS is losing its gravitas.” ComFrame, the Common Framework for the Supervision of IAIGs, project began in earnest in 2010, and FSB members are looking at regulation — insurance and banking, under the same agency in many countries — through a financial stability prism.
Still, NAIC members were not happy.
In a general NAIC press conference, NAIC President Jim Donelon called the FSB’s actions an “end-run” around insurance supervision standard setting.