Regulatory proposals by international insurance standards setters that might influence U.S. compliance requirements are being met with resistance in this country.

Recent efforts by the International Association of Insurance Supervisors (IAIS) to establish a “higher loss absorbency” (HLA) capital standard is of particular concern to U.S. insurance carriers, agents and regulators.

U.S. Rep. Blaine Luetkemeyer (MO-03), the Chairman of the House Subcommittee on Housing and Insurance, recently introduced the Transparent Insurance Standards Act (H.R. 5143) to counter elements of the IAIS project. The proposed legislation seeks to require that a detailed U.S. review process take place before any final international insurance standards are adopted.

One of the objectives in HR 5143 requests the following,

“To ensure that the Secretary of the Treasury and the Board of Governors of the Federal Reserve System achieve consensus positions with State insurance commissioners when the Secretary and the Board are United States participants in discussions on insurance issues before the International Association of Insurance Supervisors, Financial Stability Board, or any other international forum of financial regulators or supervisors that considers such issues.”

International InsuranceBy way of background, the International Association of Insurance Supervisors (IAIS) is a Swiss-based voluntary membership organization of insurance supervisors and regulators from more than 200 jurisdictions in nearly than 140 countries. The National Association of Insurance Commissioners (NAIC) and 56 jurisdictions within the U.S. are members of the organization, according to the IAIS website.

The mission of the IAIS, as outlined in the 2013-2014 annual report, is to promote effective and globally consistent supervision of the insurance industry in order to develop and maintain fair, safe and stable insurance markets for the benefit and protection of policyholders, and to contribute to global financial stability.

The following U.S. insurance trade associations and business groups have expressed support for Rep. Luetkemeyer’s bill:

  • Independent Insurance Agents & Brokers of America
  • National Association of Mutual Insurance Companies
  • Property Casualty Insurers Association of America
  • S. Chamber of Congress

The National Association of Insurance Commissioners (NAIC) published a position paper titled “U.S. State Insurance Regulators’ Views: International Capital Proposals” in April 2015. In part, the NAIC observes that any higher loss absorbency capital requirements “should be developed for application to G-SIIs as a way to address systemic risk issues … but should not be applied to insurers which are not designated as systemically important.” G-SIIs are considered to be “global systemically important insurers.”

The Transparent Insurance Standards Act (H.R. 5143) was introduced in the U.S. House of Representatives on April 29 and is awaiting further action.

About Insurance Expert Bill Hager

Bill Hager is a former Commissioner of Insurance (Iowa), First Deputy Commissioner of Insurance and Assistant Attorney General (assigned on a full time basis to the Department of Insurance). He is a past member of the executive committee of the National Association of Insurance Commissioners (“NAIC”).

Mr. Hager has extensive and substantive experience in interpreting insurance policy language and determining the insurer’s obligations under such policies.

Click on the link to read more about Bill Hager’s insurance expertise.


Material for this article was taken from a collection of industry sources relating to the subject.

In all of the general statements here, see the state law of the controlling jurisdiction. Every case is different and circumstances vary widely depending on the governing state law, policy provisions, and related considerations.

This blog is provided for educational purposes only. It is not intended to provide legal advice or an opinion in regard to any topic discussed. The blog should not be used as a substitute for legal advice from a licensed attorney in your state.