The American Insurance Association has submitted comments in response to the International Association of Insurance Supervisors’ (IAIS) July 2, 2012 Public Consultation Document entitled “Working Draft of the Common Framework for the Supervision of Internationally Active Insurance Groups” referred to as ComFrame.
The AIA said its “comments focus on the concern that the current ComFrame draft includes prescriptive standards for internationally active insurance groups (IAIGs) that can be interpreted as setting forth a new prudential regulatory regime as well as capital standards requirements which could have adverse consequences for insurers.”
J. Stephen (Stef) Zielezienski, the AIA’s senior vice president and general counsel, urged the IAIS “to align ComFrame with the goals of regulatory efficiency and effectiveness.” He stressed that ComFrame’s goal “should be to promote private market expansion rather than establishing a new prudential regulatory regime that is both unnecessary and counterproductive.”
Zielezienski also indicated that the AIA recommends “that the IAIS adopt a staged approach for ComFrame, which first focuses on supervisory responsibilities and coordination, bringing practical experience to bear to help inform supervision and make it both efficient and effective.”
According to the AIA, ComFrame’s Module 3, which relates to the supervisors, should focus on the goals of enhanced supervisory cooperation and coordination based on prior experience and insurance core principles.
“Module 3 should clarify the mechanics of supervisory cooperation, including identification of a single group-wide supervisor and coordination of responsibilities among regulators participating in supervisory colleges,” Zielezienski explained. “The development of procedures to create regulatory efficiencies and the resolution of potential supervisory conflicts is needed for IAIGs.”
In addition the AIA said “Module 2, which relates to internationally active insurance groups, must be reframed and substantially revised following a full implementation and successful application of Module 3, as well as a gap analysis.”
Zielezienski indicated that Module 2 “should be focused on principles that will guide regulators in assessing their respective jurisdictions’ supervisory standards against ComFrame’s principles. It should not apply prescriptive regulatory requirements to IAIGs and should not include a group capital standard.
“The outcome of the ComFrame debate will have consequences for AIA members wherever they conduct business,” Zielezienski continued. “Whether those consequences are adverse or beneficial depends largely on whether ComFrame is viewed and implemented as a guidance document for group-wide supervision or as a new layer of regulation that is applied to IAIGs.” he concluded.
The AIA isn’t the only organization that has pointed out the potentially restrictive role some of ComFrame’s regulations may mandate. The Geneva Association, an authoritative source of research and analysis on the global insurance industry, reacted in similar fashion in July to the restrictive nature inherent in some of the IAIS’ proposals.
A complete copy of the AIA’s comments is available on the organization’s website.
Source: American Insurance Association
Topics Legislation
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