On both the federal and international levels, 2012 will be a profoundly important year in the realm of insurance regulation.
Few people are likely more cognizant of this than Ben McKay, SVP of federal government relations for the Property Casualty Insurers Association of America (PCI). One of the primary battles McKay and other insurance industry advocates will fight is the ongoing implementation of the Dodd-Frank Act. The Financial Stability Oversight Council’s (FSOC) work to finalize its rules regarding non-bank systemically important financial institutions (SIFIs) is of special concern to the industry.
“Going into 2012, PCI remains engaged in the Dodd-Frank Act implementation process,” McKay says. “Our goal is to preserve the many legislative victories achieved in the Dodd-Frank Act as it appropriately distinguishes insurance as very different from other sectors of the financial services industry and recognizes the strong consumer protections provided by the state regulatory system.”
Yet, U.S. regulators are not alone in their efforts to staunch systemic risk. The International Association of Insurance Supervisors (IAIS) is currently crafting its rules that will designate global systemically important financial institution (G-SIFI). IAIS is also working on the ComFrame project that will determine how internationally active insurance groups are regulated. Another reason U.S.-based insurers need to stay engaged on the international front is that the National Association of Insurance Commissioners is crafting its Own Risk and Solvency Assessment (ORSA) largely to reconcile with the Solvency II imitative underway in the European Union.
“PCI is highly engaged in international developments because U.S. federal and state regulators have committed to adopting international standards on regulatory issues such as accounting, risk management and corporate governance,” McKay adds. “International issues are increasingly setting the agenda for the National Association of Insurance Commissioners and could increase regulatory burdens for all companies, regardless of size or location.
Elsewhere, McKay and company will be taking on the seemingly Sisyphean task of securing funding for the troubled National Flood Insurance Program (NFIP).
“We are pleased that Congress averted a lapse in the NFIP and passed a six-month program extension through May 31, 2012,” he says. “In 2012, as Americans face an anemic economic recovery, PCI will aggressively advocate for greater certainty and stability for the NFIP, including a long-term reauthorization and balanced reforms.”
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