NU Online News Service, Aug. 8, 3:07 p.m. EDT

At its second public meeting on Aug. 6, the Federal Advisory Committee on Insurance (FACI), a private-public consultancy branch of the Federal Insurance Office, signaled it was viewing U.S. insurance regulation through the wide-angle lens of internationalization, and also seeking input on shortcomings and the need for updating state insurance regulation.

FIO Director Michael McRaith also said the long-awaited modernization report could be expected “in the near future,” according to those present.

A new FACI committee, formed under FACI Chairperson and Marsh McLennan CEO Brian Duperrealt, was specifically charged with examining possible changes to U.S. state insurance laws created by the implementation of an international body's work known as ComFrame.

ComFrame is the International Association of Insurance Supervisors' (IAIS) “Common Framework for the Supervision of Internationally Active Insurance Groups.” It is designed to make group-wide supervision more effective and establish better supervisory cooperation. ComFrame is a centerpiece of U.S./European Union insurance supervision dialogue, which, with Solvency II, has seen its share of U.S. state regulatory mistrust.

McRaith is a member of the IAIS executive committee.

According to a regulatory lawyer present at the FACI meeting, Tom Leonardi, the Connecticut Insurance commissioner, who participated in the meeting by phone, challenged McRaith with respect to ComFrame, asking whether the FIO would adopt the views of state-insurance regulators with respect to ComFrame. Consedine followed up, expressing his concern that the FIO and the states could end up diametrically opposed to one another on prudential supervision approaches.

McRaith responded that he is “entirely confident” that will not happen and that the FIO and state-insurance regulators have the same interest in a system that will be fair and protect the interests of consumers, this person stated.

McRaith also reiterated at the meeting that the coordination of the timing of the designation of insurers and groups as globally systemic important institutions by the IAIS and as systemically important financial institutions by the Financial Stability Oversight Council (FSOC) is a priority. This is seen as happening in 2013's first quarter.

Also at the FACI meeting, McKinsey and Co. provided an analysis of the global property and casualty market and the global life insurance market. As McRaith has pointed out using similar data in the past, large U.S. carriers are deriving more of their income from overseas than they used to.

McRaith cited in his May 17 testimony before the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity a recent McKinsey study that showed that insurers, including U.S.-based insurers but not limited to them, are now generating almost 33 percent of premium volume from outside the insurers' home countries.

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