The Property Casualty Insurers Association of America (PCI) has concerns about two recent proposals by the International Association of Insurance Supervisors (IAIS) that go into effect in 2019.
One of the proposals is the Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame). The other is version 2.0 of its Insurance Capital Standard (ICS).
“PCI continues to have significant concerns about the IAIS’ development of two major proposals for global insurance standards,” Steve Broadie, PCI’s vice president, financial policy, said. “As the IAIS moves ahead with these proposals, PCI urges the IAIS to recognize jurisdictional group capital frameworks that achieve comparable results in policyholder protection as an appropriate implementation of the ICS. This will avoid both significant additional implementation costs and conflicts among differing group capital assessments.”
Broadie said several aspects of the ICS need to be further developed or are in need of more field testing. The current version only includes a market value-based standard method, which is a design that is fundamentally different from the insurance regulatory basis and capital requirement that has been used by state insurance regulators and U.S. consumers for many years.
“Imposing a market value-based group capital requirement would significantly increase costs for consumers and decrease competitiveness and stability. Such an anti-consumer requirement would not be adopted in the U.S.,” Broadie said.
Further, the ComFrame proposal needs to recognize the state-based insurance regulatory system in the U.S. and provide flexibility to identify diverse methods of regulatory authority.
“A one-size-fits-all approach will harm American consumers and disrupt the international insurance marketplace,” Broadie said. “PCI will continue to work with the IAIS and TEAM USA on an ICS that recognizes the U.S. group capital models that are currently under development: the NAIC’s Group Capital Calculation and the Federal Reserve’s Building Block Approach,” Broadie said.