The American Insurance Association (AIA) today restated its emphasis on “non-duplicative guidelines” and an “international regulatory framework that allows U.S. insurers to operate competitively in the global insurance marketplace,” as it headed into the National Association of Insurance Commissioners’ Summer National Meeting in Atlanta.
The AIA will focus attention on three work streams of the NAIC's Solvency Modernization Initiative: development of an Own Risk and Solvency Assessment (ORSA) requirement by the Group Solvency Issues Working Group; new regulatory proposals of the Corporate Governance Working Group; and the NAIC response to ComFrame, a revised draft of which has been exposed by the International Association of Insurance Supervisors (IAIS) for public consultation, according to the statement.
"AIA opposes inefficient, duplicative and over-burdensome regulatory measures that will hinder growth and access to a stable insurance marketplace,” said Stephen Zielezienski, AIA SVP and general counsel. “Regulatory reform discussions do not always need to end with the application of additional proscriptive standards."
Zielezienski will testify before the NAIC Industry Liaison Committee on Tuesday regarding group supervision. Zielezienski will emphasize the group-wide supervision’s consistency with common goals of more efficient regulation, growth of private markets here and abroad, and the competitiveness of U.S. insurers, according to the AIA.
Also regarding international group-wide regulation, IAIS's Common Framework for the Supervision of Internationally Active Insurance Groups, or ComFrame, is being discussed by the NAIC's International Committee and its International Solvency and Accounting Standards Working Group.
"It's important that the NAIC's ComFrame comments reaffirm the need for U.S. insurers to have access to a competitive marketplace that is complemented by an efficient regulatory environment," said Carson. "The current ComFrame proposal, however, appears to prescribe more requirements upon Internationally Active Insurance Groups (IAIGs), rather than focusing on improving cooperation, coordination, and communication among insurance supervisors."
Lastly, the NAIC's development of its ORSA proposal appears to be a direct response to Solvency II, which is scheduled to go into effect in 2014, and is expected to meet some of the equivalence requirements. The NAIC is expected to advance its proposal at this meeting for a model ORSA law in the United States. According to the AIA, “ORSA is an internal evaluation by an insurer of its risk profile, in order to determine its ability to remain solvent under various scenarios.”
The AIA sees the recommendations of the Corporate Governance Working Group appear as an effort to satisfy expectations of the International Monetary Fund (IMF) when it performs its next assessment of the U.S. insurance regulatory system, under its Financial Sector Assessment Program (FSAP).
"We are concerned that some of the Working Group's recommendations attempt to substitute regulators' judgment in running the business, a direction that is contrary to traditional corporate governance standards," said Phillip Carson, AIA assistant general counsel. "Although we appreciate the NAIC's desire to receive a favorable FSAP review, regulators should not ignore the distinctive legal, regulatory and cultural aspects of the U.S. corporate governance system."
Register or login for access to this item and much more
All Digital Insurance content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access