The U.S. Federal Reserve Board invited comment this week on a report that examines the impact of a proposed international capital standard (ICS) for large international insurance groups.
Specifically, the report, conducted with the U.S. Department of the Treasury, analyzes the impact of the proposal on U.S. consumers and markets.
According to the report, states have indicated that the ICS is not appropriate for the U.S. insurance market. Instead, the states plan to implement the Aggregation Method (AM) and have sought recognition by the International Association of Insurance Supervisors (IAIS) that the AM results in comparable supervisory outcomes to the ICS.
The AM was developed as an alternative group capital method to the ICS, under which existing local regulatory capital results are utilized and aggregated. The AM is expected to be implemented through the NAIC Group Capital Calculation (GCC), which was incorporated by the NAIC into NAIC’s Insurance Holding Company System Regulatory Act in 2020.
However, the report states that the NAIC act needs to be implemented by the individual states in order to be authorized.
“All states that serve as groupwide supervisors of U.S. IAIGs have adopted the GCC. Therefore, the implementation of the AM, via the GCC by U.S. state insurance authorities, is not expected to introduce significant changes to existing regulatory requirements or have significant impacts overall on U.S. insurers, consumers, and markets,” the executive summary of the report concludes.
Comments on the report are due by Jan. 12, 2025.