Neugebauer: International Insurance Regulatory Coordination Must be in the Best Interests of American Policyholders
Congressman Randy Neugebauer (R-TX), Chairman of the Financial Services Subcommittee on Housing and Insurance, gave the following statement at a hearing today on international insurance regulatory standards.
“Thank you all for attending this important hearing examining a range of international regulatory standards being proposed by the G-20, the Financial Stability Board and the International Association of Insurance Supervisors. This will be the first of many hearings examining the international competitiveness of the U.S. insurance industry.
“Through this hearing our members hope to get a better understanding of how our insurance supervisors are balancing the need to coordinate regulatory efforts overseas with their duty to make certain that U.S. insurers can effectively compete in a global marketplace.
“In particular, I am looking to accomplish three things with this hearing:
“First, I would like to get a better understanding of the strategic objectives being pursued by our insurance supervisors overseas and how the National Association of Insurance Commissioners and the Federal Insurance Office are working together to achieve these shared goals.
“Second, I would like to receive assurances from our witnesses that the agenda being advocated for is a net positive for domestic policyholders and insurers.
“And lastly, I would like to raise awareness of certain IAIS proposals that, as currently drafted, would needlessly undermine our system of state-based insurance regulation.
“Overall, this Committee does see the benefit of better international coordination in terms of preventing regulatory gaps and promoting efficiency; however I am concerned that the IAIS appears to be moving away from a regulatory coordination approach to one of international standard setting. Such a shift would be an unwelcome development; especially given the unique nature of our insurance regulatory model, which is policyholder-centric and quite dissimilar from the consolidated, bank-like model favored by the IAIS.
“In that regard, I would like to hear what strategy, if any, is being pursued to protect the U.S. system of state-based insurance regulation. In particular, I would like to hear how the NAIC and FIO are working together to prevent the importation of European-centric regulatory standards that could increase costs to our domestic policyholders and limit the ability of our domestic insurers to compete globally.
“In particular, I would like to examine the IAIS’s recent common framework, or ComFrame, proposal. The current ComFrame draft would create a one-size-fits-all regulatory regime for global insurers, including group-wide capital assessments and prescriptive prudential standards. Given the unique nature of our insurance regulatory model, this proposal has the potential to disproportionately impact U.S. insurers and U.S. policyholders. I would like to hear how our witnesses view the ComFrame proposal and how they believe it would affect our insurance markets.
“And finally, I am interested in examining the IAIS’s process for recommending global systemically important insurers, or G-SIIs. I am concerned that the IAIS’s selection methodology lacks transparency, and a reasonable appeals process for U.S. insurers that may disagree with IAIS’s determination and wish to challenge it. I would like to hear how our witnesses plan to harmonize our efforts to designate SIFIs here at home with other efforts overseas. And given the impact that the IAIS decisions could have on U.S. insurers, I would like to hear what our insurance supervisors are doing to ensure due process for U.S. firms.
“I thank our witnesses for participating today and I look forward to a productive hearing.”