The Property Casualty Insurers Association of America (PCI) has submitted formal comments to the International Association of Insurance Supervisors (IAIS) on its ComFrame Consultation Draft stating that ComFrame, while improved over prior versions, still imposes an unnecessary additional level of prescriptive regulation on large international insurance groups.
Steve Broadie, PCI’s vice president, financial policy said that the organization “supports the proposed common framework for supervision of internationally active insurance groups (IAIGs) to the extent that it improves coordination, cooperation and efficiency of supervision of those groups;” adding that we “are happy to note that this draft of the ComFrame document has been improved in this regard.”
“However,” continued Broadie, “we are concerned that ComFrame will impose an additional level of regulatory requirements upon IAIGs that are not justified by the need to close supervisory gaps or solve particular cross-border issues that IAIGs may pose.
“These requirements will harm consumers by imposing unnecessary inefficiencies and costs on large international insurers. IAIG supervision should ensure that supervisors understand the relevant risks posed by an IAIG’s operations and are satisfied that the IAIG is able to manage those risks.
“ComFrame should not dictate how the IAIG conducts its business. In addition, PCI opposes the use of ComFrame to impose a global insurance capital standard (ICS). The group capital assessment should remain an ’assessment’ where a breach of the ‘benchmark’ level triggers a discussion with an IAIG’s supervisory college and does not trigger regulatory action.”
Broadie noted that the U.S. and global insurance industries are financially strong and highly competitive, despite the financial crisis, years of recession, and unprecedented natural catastrophes, according to all of the evidence.
As a result he stressed that, “unless ComFrame is refocused, it will impose new uniform global standards on large internationally active insurance companies, including many U.S. companies competing abroad, threatening to harm well run companies and artificially creating an ‘un-level’ competitive playing field.”
PCI’s submission to the IAIS is attached below. The IAIS asked for observer comments by December 16, and will respond to those comments in early 2014.
“PCI appreciates the opportunity to provide comments to the IAIS. We look forward to working with the IAIS to ensure that the ComFrame project meets its chief justifications, improving supervisory coordination, cooperation, and efficiency,” Broadie concluded.
Source: Property Casualty Insurers Association of America (PCI)