WASHINGTON — The Property Casualty Insurers Association of America (PCI) submitted comments on two International Association of Insurance Supervisors (IAIS) proposals: the draft Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame) and Version 2.0 of its Insurance Capital Standard (ICS). These proposals are scheduled for adoption by the IAIS in late 2019; although the ICS 2.0 adoption would be in provisional form while it undergoes a process of confidential reporting to supervisors and monitoring over a five-year period. The following statement can be attributed to Steve Broadie, PCI’s vice president, financial policy.
“PCI continues to have significant concerns about the IAIS’ development of two major proposals for global insurance standards. 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,” said Broadie.
A number of aspects of the ICS remain under development or are in need of further field testing. The current version includes only a market value-based standard method, a design that fundamentally differs from the insurance regulatory accounting basis and capital requirement that has served state insurance regulators and U.S. consumers well 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.,” continued Broadie.
“It is essential that ComFrame recognize the U.S. pro-consumer state-based insurance regulatory system and provide flexibility to recognize diverse methods of insurance group organization and regulatory authority. A one-size-fits-all approach will harm American consumers and disrupt the international insurance marketplace,” said Broadie.
“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,” concluded Broadie.
PCI’s comments on the IAIS’ ComFrame and ICS 2.0 can be accessed here.
The Global Federation of Insurance Associations (GFIA), of which PCI is a member, also submitted comments on the IAIS ComFrame and ICS provisions. GFIA’s comments can be accessed here.