Members of the U.S. and European insurance communities are hoping to bridge the supervisory divide between the two regions with the EU-U.S. Dialogue Project, but more work needs to be done to make it more forward-looking and inclusive of some overlooked elements, many said.
Still, the state regulatory community and U.S. industry warmly embraced the non-judgmental and respectful tone for each regime and the scope of the project, calling it historic, a “milestone in the history of insurance regulation,” and generally praising the work done so far, more so than on any other international work stream. The draft compares and catalogues aspects of the insurance supervisory and regulatory regimes in the European Union and the United States.
The AIA executive did stress that more cooperation is needed in supporting efforts throughout the country to “swiftly adopt the amended NAIC credit for reinsurance model."
Some in the global reinsurance and insurance industry agree it is critical that the collateral reform laws and regulations be enacted by each state, or that some uniform law apply, while supporting ceding company efforts to effectively manage reinsurer counterparty risk under the new regulation. Thus far, 11 states have enacted laws consistent with the NAIC model, which was passed last November at the NAIC fall/winter meeting. The model law was seen as a compromise, as part of the struggle for the U.S. to not have to be girdled with the equivalency strictures expected in the now-delayed European Solvency 2. Much is at stake, almost all people who participated in Friday's hearing agree.
Brad Smith, the international affairs executive at the American Council of Life Insurers, said the ACLI thinks this process “is tremendously important. This is the most material insurance relationship in the world.”
ComFrame (the Common Framework for the Supervision of Internationally Active Insurance Groups) has caused either robust debate or stress, depending on who one talked to at the recent IAIS conference.