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U.S. Regulators May Refuse to Apply Global Capital Standards

The United States may refuse to apply new global capital rules in the domestic insurance market because of the “breakneck speed” they are being pushed through, according to National Association of Insurance Commissioners officials speaking in London...
June 27, 2014

The United States may refuse to apply new global capital rules in the domestic insurance market because of the “breakneck speed” they are being pushed through, according to National Association of Insurance Commissioners (NAIC) officials speaking in London. The first of the new rules from the International Association of Insurance Supervisors (IAIS) will be put to leaders of the Group of 20 economies, which includes the United States, for endorsement when they meet in November.

NAIC officials said there is no proven need for global capital rules for the insurance market, and regulators could refuse to apply those rules because they are being developed too quickly. NAIC President-elect and Montana Insurance Commissioner Monica Lindeen said U.S. regulators want to preserve capital requirements on a local basis to protect policyholders and that U.S. insurers already are properly capitalized. NAIC officials are concerned about the push by global regulators to have the capital rules agreed upon within three years “without adequate analysis.” Lindeen said, “This is breakneck speed ... Where’s the need?”

NAIC CEO Ben Nelson said the United States is not alone in its concerns about the new standards. “If the U.S. is not part of it, then is it a global rule? That’s not a threat, it’s a question because it can’t be forced on us legally,” the former U.S. senator told Reuters. “We are trying to work to get more information as opposed to simply saying no, but there may be a point in time that we say it won’t happen, we just can’t be there ... We are reserving the right to say that’s a bridge too far.”

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