NAIC Applauds International Agreement on U.S. Aggregation Method Comparability
State insurance regulators and the National Association of Insurance Commissioners (NAIC) welcome the successful conclusion of the International Association of Insurance Supervisors (IAIS) process, which has determined that the Aggregation Method (AM) provides a basis for implementation in the U.S. of the Insurance Capital Standard (ICS) to produce comparable outcomes. The comparability assessment has been a multi-year robust, technical process examining the two approaches to group capital adequacy. The AM was developed as a more appropriate approach for the U.S. insurance market and supervisory regime and ensures policyholder protection and the availability of insurance products on which U.S. consumers rely.
The finalization of the ICS and conclusion of the AM comparability assessment, which will be officially affirmed during the IAIS’s upcoming meetings in Cape Town, is a major milestone for the IAIS. It reflects the commitment of the international insurance supervisory community to moving forward together and the importance of having appropriate jurisdictional flexibility. Reaching this milestone is also a testament to the resolve of insurance supervisors to collaborate on setting standards that protect policyholders and enhance global financial stability. As work transitions into implementation, the NAIC will work domestically on its approach to the AM as the U.S. implementation of the ICS. Collaboration and coordination will continue with international counterparts as they adapt the ICS to their respective jurisdictional approaches and as the IAIS works on developing an appropriate implementation assessment framework.
With the successful development of a risk-based global insurance capital standard, the IAIS fully satisfies the 2013 charge of the Financial Stability Board (FSB) to develop a comprehensive, group-wide supervisory and regulatory framework for internationally active insurance groups (IAIGs), including a quantitative capital standard. The finalization of the ICS and conclusion of the AM comparability assessment will help in ensuring the Common Framework for the Supervision of IAIGs (ComFrame) establishes appropriate and effective supervisory standards and guidance tailored to the international activities and size of IAIGs.
About the National Association of Insurance Commissioners
As part of our state-based system of insurance regulation in the United States, the National Association of Insurance Commissioners (NAIC) provides expertise, data, and analysis for insurance commissioners to effectively regulate the industry and protect consumers. The U.S. standard-setting organization is governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer reviews, and coordinate regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally.