The National Association of Insurance Commissioners has asked the new Treasury secretary to clarify provisions of the covered agreement reached between the United States and the European Union in response to the bloc’s Solvency II directive.
The covered agreement deal negotiated by the U.S. Department of the Treasury under the Obama administration and the Office of the U.S. Trade Representative, announced on Jan. 13, aims to address the fact that the European Commission has not deemed the United States an equivalent jurisdiction, per the EU’s Solvency II directive outlining a risk-based capital regime for insurers and reinsurers in Europe.
Continue Reading “NAIC asks Treasury secretary to review EU-US covered agreement” at Business Insurance News
US supervisory rules should be treated as equal to Solvency II regardless of a deal on reinsurance collateral, urges Nelson
It would be “unnecessary and irresponsible” for US federal bodies to sign up to a reinsurance covered agreement with the European Union to smoothe the way for full Solvency II equivalence, according to the chief executive of the National Association of Insurance Commissioners (NAIC).
Talks between the US Treasury Department, the US Trade Representative (USTR) and the EU to agree a reduction in collateral requirements for foreign reinsurers in the US could needlessly override state laws protecting US consumers, said Senator Ben Nelson, speaking at the Insurance Risk North America conference in New York on November 4.
At the same time, European regulators should recognise US rules as fully equivalent to Solvency II, which is still an “untested” regime, he said.
The NAIC has opposed the negotiation of a covered agreement between the US and EU on reinsurance collateral, saying its own model law will achieve the same objective.
Continue Reading “Covered agreement the wrong path to US equivalence – NAIC chief” at Risk.net
WHAT is risk-based capital (RBC)? On its website, the United States’s National Association of Insurance Commissioners (NAIC) defines it as “a method of measuring the minimum amount of capital appropriate for a reporting entity to support its overall business operations in consideration of its size and risk profile.”
“RBC limits the amount of risk a company can take. It requires a company with a higher amount of risk to hold a higher amount of capital. Capital provides a cushion to a company against insolvency. RBC is intended to be a minimum regulatory capital standard and not necessarily the full amount of capital that an insurer would want to hold to meet its safety and competitive objectives,” NAIC explains.
Continue Reading “Risk-based Capital for Insurers” at Business Mirror News
Many industry observers consider Solvency II to be a worthy attempt by European regulators to forge a more uniform approach to safety and soundness supervision. Its impact extends beyond Europe: It has influenced global-standard setters at the International Association of Insurance Supervisors and—though some of my former colleagues might dispute this—has even had an impact here in the U.S. at the National Association of Insurance Commissioners (NAIC).
That said, many people, particularly at the NAIC, have voiced concerns that Solvency II so far is largely a theoretical exercise rather than a tried and true regulatory regime (notwithstanding certain countries that already have moved to risk-based regulatory frameworks, such as the UK, via its Individual Capital Adequacy Standards regime).
Compounding this lingering uncertainty about Solvency II’s details is even greater and more existential concern about European strategies to overcome sovereign-debt issues in the face of a regional economic slowdown.
Continue Reading “Will Economic Crisis in Eurozone Affect Solvency II?” at Property Casualty 360 News
Therese Vaughn, CEO of the National Association of Insurance Commissioners (NAIC) released a statement this month about the US’ progress towards the European directive.
Vaughn said while the US will not have a single set of rules like the European Union (EU), the state-based regulation works and has been tested by the recent financial crisis.
Skip Myers, a member of the NRRA and partner at Morris, Manning and Martin, said the industry is very apprehensive about equivalence.
“The SMI is going to be more of a burden than the previous positions the NAIC have taken on RRGs.
All insurance is affected by this, and compared to the rest of the industry captives can learn to live with it…”