U.S. state insurance regulators need to work with colleagues overseas to monitor insurer solvency, but they need to fight off international standards that could cause problems for U.S. insurers.
Julie Mix McPeak, the president of the National Association of Insurance Commissioners, delivered that message today during the official opening session at the NAIC’s spring national meeting, in Milwaukee.
The meeting formally started today and is set to end Tuesday. Regulators have been holding meetings for working groups, task forces and other panels in Milwaukee since Wednesday.
The NAIC is a group for insurance regulators the 50 U.S. states, the District of Columbia, and U.S. territories. It cannot normally change state insurance laws and regulations directly, but state insurance regulators work through it to coordinate their activities. States often arrange to implement some types of NAIC measures, such as technical changes in insurance accounting rules, automatically,
McPeak, the Tennessee insurance commissioner, talked during her kick-off speech about the NAIC’s new priorities, such as learning about how insurers are using, or might use, “big data” data analysis efforts, and about threats to insurers’ data security.
In Europe, the Basel, Switzerland-based Financial Stability Board (FSB) has been trying to find ways to keep the kinds of problems that caused the Great Recession from coming again. Another group based in Basel, the International Association of Insurance Supervisors (IAIS), has been trying to do for member countries’ insurance regulators what the NAIC has done for state insurance regulators.
Some U.S. insurers and state insurance regulators have objected to an Obama administration decision to let a “covered agreement” with the European Union, on regulation of reinsurers’ resources, start a process that could override state reinsurance oversight rules.
McPeak said during her speech that, under the federal covered agreement rules, states will have to find a way to implement the agreement within five years or else face the possibility that the agreement could preempt state rules.
Any changes in the NAIC’s own rules for reinsurers “will be considered through an open and transparent process,” McPeak said, according to a written version of her speech posted on the NAIC website. “Interested parties will have additional opportunities to weigh in, including at this meeting.”
McPeak also talked more generally about U.S. insurance regulators’ efforts to work with financial services regulators at the FSB, the IAIS and elsewhere.
“Much time and effort has been focused on developing global standards that may be well-intentioned, but too often may be inconsistent with current U.S. policy, the state-based system of insurance regulation and the best interests of U.S. consumers and industry,” McPeak said.
Some of those global standards could make U.S. insurers less competitive, McPeak said.
“A strong Team USA has been critical in recent negotiations in pushing back against standards that will not work for the U.S. market, and worse yet, have possibly unintended consequences for markets and consumers,” McPeak said.