Uniformity Needed To Keep Insurance Market Truly Global

Better regulatory uniformity is required globally to help facilitate insurance trade between the United States and its European partners, a panel of insurance officials said.

The panel–examining "Global Insurance Regulation: Assessing the New Frontier"–was sponsored by the American Insurance Association and held during the recent summer meeting of the National Association of Insurance Commissioners in Seattle.

The total insurance trade between the United States and the rest of the world–more than $100 billion, of which the U.S. market accounts for $40 billion in property and casualty alone–makes ironing out regulatory issues critical, according to David Snyder, vice president and associate general counsel for AIA.

He said the creation of a Federal Insurance Office as part of the new financial services reform law is a major accomplishment toward this goal.

George Brady, international counsel for the NAIC, referred to the FIO as "our friend," noting a great opportunity to solve cross-border regulatory differences.

Yoshihiro Kawai, secretary general for the International Association of Insurance Supervisors, said a common regulatory language must be developed between Europe and the United States to assure "fundamental cooperation."

Mr. Kawai said one lesson from the financial crisis is that international regulators must come to terms with how insurance holding company risks can create problems, noting that while insurance subsidiaries avoided financial ruin, other segments within their holding company caused turmoil.

One major bone of contention noted by both Mr. Snyder and Mr. Brady was that the United States has not been granted equivalency in the eyes of European regulators because of differences in the systems–primarily concerns about lack of continuity in the U.S. regulatory structure.

Mr. Snyder acknowledged that much work needs to be done between the two parties, noting that negotiations are ongoing but difficult. "We are fixing a plane as we are flying in it," he said.