PCI Commends New Report Highlighting Potential Harm to the U.S. from Global Insurance Regulatory Proposals and Report Offers a Better Approach
WASHINGTON – The Property and Casualty Insurers Association of America (PCI) today commends the release of a new report highlighting the potential concerns for U.S. insurance markets and insurance consumers arising out of the push for global one-size fits all insurance regulatory proposals.
The report, entitled “International Developments in the Insurance Sector: the Road to Financial Instability?” was coauthored by two insurance leaders Therese M. Vaughan, former CEO of the National Association of Insurance Commissioners (NAIC) and Mark A. Calabria, director of financial regulation at the Cato Institute and former senior professional staffer of the U.S. Senate Committee on Banking, Housing and Urban Affairs. It highlights the evolution of international developments at the Financial Stability Board (FSB) and the International Association of Insurance Supervisors (IAIS) and concludes that the risk of unintended consequences from a poorly designed international capital standard for insurance is significant.
“PCI strongly supports the report by Vaughan and Calabria. This report highlights the evolution of the international developments that have emerged from the global financial crisis and the unintended consequences for U.S. insurance markets and the American consumer,” said Robert Gordon, PCI’s senior vice president, policy development and research.
“It has been generally recognized that insurers were not a cause of the financial crisis, and traditional insurance activities are not systemic,” continued Gordon. “There is a need for insurance supervisors around the world to increase their level of cooperation. However, a bank-centric, global capital standard is not appropriate for insurers and could raise costs for American consumers and destabilize U.S. insurance markets.”
This report also discusses the effects on the internationally active insurance groups (IAIGs) and alternative approaches to assessing capital adequacy of an internationally active insurance group (IAIG). “An alternative approach could provide a basis for collaboration and communication between group supervisors as well as promote a much needed culture of trust among the supervisors,” continued Gordon.
“The unintended risks here are real. Policymakers should urge the IAIS and the FSB to move away from the one-size fits all global capital standard and embrace an alternative approach,” concluded Gordon.
The release of the report comes ahead of three Congressional hearings, Senate Banking Committee Tuesday hearing titled “The State of the Insurance Industry and Insurance Regulation,” the House Financial Services Subcommittee on Housing and Insurance Wednesday hearing titled “The Impact of International Regulatory Standards on the competitiveness of U.S. Insurers”, and the Senate Banking Subcommittee on Securities, Insurance, and Investment hearing titled “Examining Insurance Capital Rules and FSOC Process.”
The full report can be found here.
PCI promotes and protects the viability of a competitive private insurance market for the benefit of consumers and insurers. PCI is composed of nearly 1,000 member companies, representing the broadest cross section of insurers of any national trade association. PCI members write more than $183 billion in annual premium, 39 percent of the nation's property casualty insurance.
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Contact:
Eileen Gilligan
Phone:
202-639-0497
Email:
Eileen.Gilligan@pciaa.net
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