Regulatory reforms in insurance: the view from Washington

Key industry players met in Washington in September on the occasion of the annual meetings of the IMF and the International Institute of Finance (IIF) to discuss the hot topics related to insurance regulation.

The IIF International Insurance Regulatory Roundtable highlighted the issues of systemic risk, group supervision and cross-sectoral implications of regulatory reform – topics which have dominated regulatory discussion in the financial sector since the global financial crisis. The roundtable provided a timely opportunity for insurers to reach out to insurance regulators, central bankers and policymakers in the financial sector, in the background of the IMF annual meeting and lead up to November’s G20 Summit in Cannes, where a formal decision on financial services reform is expected.

Speaking at the event was Walter Kielholz, Chairman of Swiss Re’s Board of Directors, who stressed the point that, while insurers have not traditionally dealt with the Financial Services Board or central banks, such dialogues are crucial. He added: “Failure to recognise the fundamental differences between banking and insurance, as well as the impact banking regulation will have on insurance, could compromise the role insurers and reinsurers play as stabilisers of the real economy.”

The IIF report on cross-sectoral implications of the regulatory reform was also extensively discussed. The report, which was released in August 2011, underlines the fundamental concerns of insurers as long-term investors in light of up-coming regulatory changes in insurance and banking. Recent research papers from the Committee on the Global Financial System and the IMF share the view of the IIF.

Group supervision was also a topic of discussion because, despite a number of jurisdictions and regions tackling the issue through their solvency modernisation efforts, a gap exists in the international coordination for the supervision of international insurance groups. The International Association of Insurance Supervisors (IAIS) is addressing this gap through development of an internationally recognised Common Framework for the Supervision of Globally Active Groups (ComFrame).

Swiss Re welcomes the ComFrame and believes it will accelerate the convergence of regulatory regimes around the globe. However, as Swiss Re Chief Risk Officer David Cole explains, the ComFrame should avoid becoming too prescriptive or introducing a two-tier system of supervision: “In order to achieve its objective, the ComFrame must ensure it remains strongly principles-based and allow a recognition mechanism of already advanced group supervisory regimes”.

ltr: Charles Dallara, Managing Director of the IIF, and Walter Kielholz, Chairman of Swiss Re’s Board of Directors
ltr: Walter Bell, Chairman of Swiss Re America Holding Corp, and David Cole, CRO Swiss Re

Published 17 October 2011

Photographs courtesy of the IIF

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