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US regulators were “very suspect” of several aspects of Solvency II, the European Union’s forthcoming rules overhaul, Mr McCarty said. The NAIC is the standard-setting and regulatory support organisation governed by the states’ chief insurance regulators. Mr McCarty’s comments come at a crucial time for European insurers operating in the US. They fear the rules as they stand could make it impossible for them to compete in the world’s biggest insurance market.
EU officials are in the process of deciding which countries it deems to have an “equivalent” regulatory system to Solvency II, which takes effect at the start of 2014. Unless a country is deemed equivalent, EU-based insurers operating there would have to comply with Solvency II as well as local regulations.
But Mr McCarty told the Financial Times: “I don’t mean to suggest we don’t have anything to learn from the process. But I don’t think that Europe necessarily is the only place you can learn anything from. No disrespect to the EU but I think it’s kind of interesting, at best, they would want to make a comparison to a system [Solvency II] that isn’t in place yet.”
The commissioner said US regulators were happy to work with Brussels to develop “mutual understanding and cooperation”. But the European Commission indicated in a statement last week it was keen to go beyond this, seeking “a basis for future discussions on third country equivalence” with the US.
The conflicting stances of officials in Brussels and the US about the future of insurance regulation contrast with signs of deeper integration in other parts of financial services. Last week it emerged US regulators were exploring ways of giving large foreign banks and overseas subsidiaries of American lenders a reprieve from stringent new derivatives rules. The US system of insurance regulation is state based and dates from the 19th century.
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