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There are fundamental disagreements between regulators on how the IAIS should advance its work to develop a common framework (known as Comframe) for the supervision of internationally active insurance groups (IAIGs) and regulation of global systemically important insurers (G-SIIs). Some regulators are questioning whether a global capital standard would be an appropriate tool for encouraging greater convergence of different supervisory regimes around the world. The IAIS recently began a feasibility study into the development of such a standard.
Thomas Leonardi, insurance commissioner for the US state of Connecticut, argues that a global capital standard should not be seen as a "silver bullet" by regulators seeking to eliminate systemic risk from insurance. "I still don't hear the compelling reasons for why we should have a global standard. We gloss over the fact that maybe there isn't a strong reason to have it other than it would be nice", he said at an insurance industry conference in Rome.
Yet other regulators are convinced of the merits of such a standard. Naruki Mori, vice-chairman on the executive committee of the IAIS and assistant commissioner for international affairs at the Financial Services Agency in Japan, said a fixed benchmark applicable to every company around the world would provide the foundation on which harmonised risk-based supervisory regimes can be built.
European regulators also support work on a global standard. Paul Sharma, deputy head of the UK's Prudential Regulation Authority, said the key to making this happen is to tailor the arguments for the standard so that it makes sense to regulators operating in different contexts. As mutual recognition requires local regulators to educate other regulators on the features of their supervisory system, it offers an initial level of comparability between jurisdictions that the IAIS could build on, he said.
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