NAIC Sets Info Swap With China

Mr. Mirel was part of a group from the National Association of Insurance Commissioners that met over the weekend in Kansas City, Mo. with the China Insurance Regulatory Commission to forge a Memorandum of Understanding.

A six-member Chinese delegation was led by Vice Chairman Feng Xiaozeng.

The agreement, Mr. Mirel said, is the first step in making arrangements for an exchange of personnel and information.

He said the Chinese commissioners are relative novices in the regulatory field, with the agency having been formed only four years ago.

China began allowing private insurers to operate 15 years ago, he noted. The exchange, according to Mr. Mirel, will involve the NAIC providing expertise in how to evaluate the financial solvency of firms, what kind of reserves to require, and methods to regulate agents and brokers.

Mr. Mirel said the back and forth between the NAIC and China had been ongoing for several years, and that he and other commissioners had traveled for talks in Bei Jing and Shanghai.

There has already been some staff exchange, he noted, with an intern from China visiting with both the Washington, D.C. and Connecticut insurance departments.

Mr. Mirel said that as part of the arrangements with China, a working group has been set up that will have yearly meetings.

"In today's global economy, it's essential to foster open communication among regulators and encourage cooperation on matters of common interest," said NAIC President Terri Vaughan, the Iowa insurance commissioner, in a statement. "The purpose of this [memorandum of understanding] is to help insurance regulators maintain efficient, fair, safe and stable insurance markets in China and the United States for the benefit and protection of policyholders."

The memorandum will provide a framework for cooperation, the exchange of information, and technical assistance to the extent permitted by applicable laws, regulations and requirements, the NAIC said.

The NAIC action with China drew immediate praise from the American Insurance Association, which applauded the NAIC "for reaching out to Chinese regulators in an effort that could benefit Chinese consumers."

"A cooperative and mutually beneficial relationship between the NAIC and CIRC will strengthen the Chinese insurance market and help Chinese insurance consumers," said John Savercool, AIA's vice president for federal affairs. "A strong insurance sector is important to China's overall economic health, and this partnership should help develop the sector in a positive and productive way."

Mr. Savercool noted that the NAIC, various U.S. insurance regulators, the U.S. government, and the U.S. insurance industry have worked effectively together in recent years to provide technical assistance to a number of countries, particularly in China, Vietnam, India and other emerging markets.

Such technical assistance efforts should multiply as new World Trade Organization negotiations and new bilateral U.S. trade agreements develop, Mr. Savercool said.

"U.S. insurance companies operating overseas are able to compete more effectively in open and well-regulated markets. We support efforts to modernize undeveloped insurance markets around the world," he said. The U.S. insurance industry strongly supported China's admission to the WTO last year, he noted.