In comments filed with the International Association of Insurance Supervisors (IAIS), the Association of Bermuda Insurers and Reinsurers (ABIR) offered its support for the development of insurance capital standards (ICS) and implementation of them via the Common Assessment Framework (ComFrame). The ComFrame program and the ICS are now under development subject to consultation by the IAIS with an expected implementation date later in this decade.
ABIR President and Executive Director Brad Kading commented: “Bermuda’s insurance regulator – the Bermuda Monetary Authority (BMA) —has implemented its group supervisory regime which includes a risk-based group capital requirement. The IAIS should look to existing group capital regulatory regimes in shaping its own proposals for an international capital standard.
He also pointed out that Bermuda’s regulatory framework is a candidate for equivalency under Europe’s Solvency II program; and is on the path for approval next week by the US National Association of Insurance Commissioners (NAIC) under its reinsurance regulatory modernization framework.
“An international capital standard that serves as a minimum capital number, that is drawn from existing regulatory frameworks, and that provides flexibility in capital management for insurance groups, stands the best chance of winning broad support as an IAIS standard,” Kading continued.
“Global standards should create efficiency in insurance regulation and can serve as best practice standards. In a cautionary note, the potential danger lurking in the IAIS development is that additive, duplicative or contradictory requirements may be imposed on insurance groups. Such inefficiencies in regulation will increase consumer costs and drive capital away from insurers. Once the IAIS standards are adopted, jurisdictions will need to consider changes to the local standards to accommodate the new IAIS framework,” he concluded.
Source: The Association of Bermuda Insurers and Reinsurers (ABIR)