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REGULATORY REFORM

AIA has long supported federal and state initiatives to modernize the insurance regulatory system so that the system is efficient, market-driven, aligned with business models used in the property-casualty industry, and focused on the type of functions such as safety and soundness and market conduct oversight that truly protect customers.

State

AIA pursues and supports reform initiatives wherever they arise, whenever they make good economic sense, and wherever they are politically viable.  That policy extends to all lines of insurance, commercial and personal.  The focus of AIA’s reform initiatives is two-tiered:  (a) “regulatory framework”  modifications that will change the rate and policy form filing and review system from prior governmental review to a market-based system that relies on competition; and (b) “operational efficiency” recommendations that make the filing and review process more efficient.  When seeking reform – whether systemic changes or operational efficiencies – our goal is to achieve uniformity and consistency of regulation across jurisdictional lines. 

 

On the regulatory framework side, AIA’s primary goal is to eliminate governmental price and product controls where they exist and to focus regulation on the core functions of financial integrity and market conduct oversight. Where systemic reform is not politically viable in a particular state, AIA’s goal is to improve the regulatory climate through adoption of operational efficiencies and to lay the foundation for future systemic change.

 

AIA pursues and supports reform initiatives wherever they arise, whenever they make good economic sense, and wherever they are politically viable.

Federal

In March 2009, in the midst of the worst financial crisis in decades, AIA revisited its public policy position on regulatory modernization and approved an updated set of regulatory reform principles that addressed the prospect of systemic risk oversight, federal insurance regulation, and the state insurance regulatory system.

 

 Implementation of the Dodd-Frank Act presented its own set of challenges, but, for the most part, the method and manner of influencing the financial services regulatory landscape in the United States at the federal level has already been developed and is now being carried out in an informally coordinated fashion by insurance industry trades and their respective member companies. AIA has led that process for the property-casualty industry. We regularly engage federal agency staff on these issues. Providing the substance to support these contacts, AIA has submitted numerous comments on a variety of Dodd-Frank Act implementation issues, including the systemic risk designation process for nonbank financial companies, prudential supervision and capital standards for designated nonbank financial companies, orderly liquidation procedures under Title II, derivatives regulation, the Volcker Rule study, Truth-In-Lending Act disclosures, and corporate governance standards.

 

International

 

AIA has been equally engaged at the international level, submitting written comments, testifying and coordinating with industry allies. We have been engaged with the International Association of Insurance Supervisors (IAIS), the National Association of Insurance Commissioners (NAIC), the Organization for Economic Cooperation and Development (OECD), Treasury, Congress, and EU instrumentalities in these efforts.

 

At the global level, regulatory framework changes were initially driven by the EU’s Solvency II initiative – an effort that began prior to the global crisis at least in part to place European Economic Area (EEA) insurers on competitive footing with other international insurers. Solvency II is not simply a financial regulatory initiative, but a comprehensive restructuring of capital requirements, risk management measures, disclosure and reporting, and group-wide requirements and supervision. Many of the elements at the core of Solvency II have also migrated to the IAIS in the form of proposed new IAIS Insurance Core Principles (ICPs), which could provide extensive new authority to every insurance supervisor if the ICPs were to be adopted in legislative form at the national level.  Solvency II also contains an external component – the third-country equivalence process – that has been the principal source of pressure on the United States and the state-based insurance regulatory system.