Moody's says a recent outline put forth by the International Association of Insurance Supervisors (IAIS) regarding a regulatory framework to monitor international insurers' group-wide activities is credit positive.

“We regard development of a common framework as a challenging process that will ultimately benefit insurance policyholders, creditors and other market participants,” Moody's says in its Weekly Credit Outlook, adding that IAIS's publication of the outline is “an early milestone in a three-year effort to roll out a common framework.”

IAIS says it released the Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame) as a response to the increasing globalization in the insurance sector, combined with key lessons learned from the financial crisis.

ComFrame seeks to develop methods of “operating group-wide supervision of internationally active insurance groups in order to make group-wide supervision more effective and more reflective of actual business practices,” according to IAIS's notice.

Moody's notes that the recent credit crisis showed that a problem in one or two operating units of a diversified insurance firm can disrupt operations in other jurisdictions and other lines of business. “In particular,” Moody's notes, “certain insurers were exposed to problems in non-insurance affiliates that have historically fallen outside the purview of insurance supervisors.”

IAIS's initiative, Moody's says, seeks to close such regulatory gaps.

ComFrame consists of five “modules” that range from identifying internationally active insurance groups to assessing their structure and business mix to setting minimum criteria for these groups to meet.

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Moody&rsquo;s Discusses IAIS Framework For Monitoring Group-Wide Activities

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Moody’s Discusses IAIS Framework For Monitoring Group-Wide Activities