In a speech last week, Federal Reserve Chairman Ben Bernanke suggested that global insurance system — and financial — oversight is a priority of the United States.
“…No country can effectively implement the financial reforms I have described in isolation,” Bernanke said, immediately after discussing what he terms the “shadow banking” system, to include insurers.
In his speech on Jan. 3, he noted that oversight of the shadow banking system also has been strengthened and used recent actions on insurers as examples.
Bernanke, who is stepping down later this month to be replaced by the just-confirmed Janet Yellen, referenced the nonbank systemically important financial institutions (SIFI) designated this year by the Financial Stability Oversight Council (FSOC). These include U.S. insurers Prudential Financial and AIG, and GE Capital.
Bernanke also mentioned other reforms underway, such as those in the tri-party repo market, but with regard to the internationalization of reform, he mentioned international bodies that are overseeing major insurance policy globally.
These bodies are the Basel Committee and the G-20’s Financial Stability Board (FSB), which is directing much of the policy direction for the Basel-based International Association of Insurance Supervisors (IAIS.)
The IAIS is tasked with now developing an international capital standard to apply to internationally active insurance groups (IAIG), as well as higher loss absorbency standards for those insurers and reinsurers it deems systemically important.