NU Online News Service, Dec. 12, 2:07 p.m.EST

There has been a paradigm shift away from thestate-versus-federal regulation debate in the U.S. to concernsabout international regulatory proposals, according to the PropertyCasualty Insurers Association of America (PCI).

During a conference call on U.S. and global financial issues,PCI's Robert Gordon said chief executives from the association'smembership are now focused on the "titanic battles going on" at theinternational regulation front.

International regulatory proposals are of "great importance toour CEOs," says Gordon, senior vice president of policy developmentand research for PCI. "It is a priority—a game-changingthreat."

From international insurance core principles (ICPs) thatestablish "new rules for bread-and-butter issues" to thedesignation of systemically important financial institutions(SIFIs) here and abroad (known as globally systemically importantfinancial institutions, or G-SIFIs), Gordon says the industry isfollowing the progression closely and PCI is working on each issuein the best interests of insurers.

The National Association of Insurance Commissioners (NAIC) andthe International Association of Insurance Supervisors (IAIS) iscurrently working on a common framework for the supervision ofinternationally active insurance groups (ComFrame) to developinternational group supervision, and PCI supports the project as itapplies to regulatory cooperation and coordination. However, thereis a fear that it will "develop into another layer of internationalregulation," says Stephen Broadie, vice president of financialpolicy for PCI.

The "soup-to-nuts insurance regulation" contained within theICPs will be monitored closely as the NAIC looks to incorporatethem into the U.S. state-regulatory system. Broadie says several ofthe 26 standards remain open for review, including reporting offinancial statements, the valuation of assets and supervisoryexaminations.

PCI is partnering with the NAIC to "work this out on anissue-by-issue basis," he adds.

Broadie says PCI also remains concerned with the NAIC's Own Riskand Solvency Assessment (ORSA) manual.

Broadie says the enhanced enterprise risk managementrequirements in ORSA are appropriate, but the confidentiality ofreports filed with regulators remains critical.

"We are working with regulators on how to implement ORSA butprotect confidentiality," says Broadie, who adds that PCI is alsokeeping a close eye on regulations to reduce collateral posted byoverseas reinsurers operating in the U.S.

PCI is not opposed to reduced collateral, but Broadie says theassociation will remain vigilant since the NAIC is sure to facepressure from foreign reinsurers to post no collateral, as U.S.reinsurers do.