Overseas regulatory bodies are increasingly guiding the work of their U.S. counterparts. And on a number of fronts, the International Association of Insurance Supervisors (IAIS) is leading the charge.
These were among the chief takeaways of a panel discussion held in New York City on Tuesday at the 2013 Annual Executive Conference. Hosted by National Underwriter Professional Network and sponsored by EY (formerly Ernst & Young), the session brought together executives of the IAIS, the Association of Bermuda Insurer and A.M. Best Company to explore trends in the global regulatory landscape.
IAIS Deputy Secretary General George Brady said the growing influence of the IAIS with national regulators in both developed and emerging markets stems from the varied initiatives the organization is spearing to “bring global solutions to global issues.”
A voluntary membership-driven organization of insurance supervisors and regulators from more than 190 jurisdictions in more than 140 countries, the IAIS is a standard-setting body that promotes globally consistent supervision of the insurance industry and global financial stability. Among other initiatives, the organization has developed methodology for identifying systemically important financial institutions (SIFIs) that operate worldwide.
“If you’re active internationally or active as a group, IAIS has established a common framework for supervision of internationally active insurers,” he said. “The aim is to establish a common framework that can be applicable globally for supervising insurance groups.”
Brady added the IAIS also is behind a multinational memorandum of understanding that enables insurers’ supervisors to exchange information confidentially via a Web portal. The organization also conducts peer reviews of jurisdictions to assess their degree of compliance with IAIS standards, as well as training and education to promote compliance.
IAIS also backs Solvency II, a European Union directive that codifies and harmonizes EU insurance regulation. A pillar of the initiative is a capital reserve requirement that aims to reduce the risk of insolvency. Brady said that Solvency II is having an impact internationally, as jurisdictions outside the EU are adopting it in modified form.
He pointed to Mexico, where the Insurance and Surety National Commission (CNSF) has introduced a regulatory and supervisory scheme based on Solvency II. In respect to the U.S., he noted the National Association of Insurance Commissioners (NAIC) has also embarked on a Solvency II-like modernization initiative to keep pace with global regulatory standards.
“Every country is assessed by the World Bank and IMF on their observance of international regulatory standards,” he said. “Their report, like FIO’s, will identify weaknesses.