WASHINGTON (Sept. 12, 2019)— Eric A. Cioppa, Superintendent of the Maine Bureau of Insurance testified today on behalf of the National Association of Insurance Commissioners (NAIC) before the U.S. Senate Committee on Banking, Housing & Urban Affairs. Cioppa serves as NAIC President and is also the state regulator representative on the Financial Stability Oversight Council (FSOC).
Cioppa's testimony outlined concerns of state insurance regulators in the development of an Insurance Capital Standard (ICS) and a holistic framework for systemic risk in the insurance sector. These are two workstreams pursued by the International Association of Insurance Supervisors (IAIS).
"The NAIC has long contributed to development of international insurance standards and adopted those that make sense for our market, but we have significant concerns with the direction and construction of the ICS," testified Cioppa. "The ICS remains not only technically flawed but also contrary to key policy initiatives in the U.S. such as retirement security, long-term care, infrastructure investment, and disaster resiliency."
The hearing, titled "Developments in Global Insurance Regulatory and Supervisory Forums," focused on the views of the United States in the development of global standards for insurance regulators. Also testifying were Steven Seitz, Director of the Federal Insurance Office and Thomas Sullivan, Associate Director of the Board of Governors of the Federal Reserve System.
Cioppa indicated that the NAIC remains committed to international standard-setting, but he cautioned that presently the U.S. delegation views the draft ICS as inherently problematic and are pursuing an aggregation method as an alternative that is not only comparable but superior to the ICS in several respects.
"States are moving forward with a Group Capital Calculation and the Fed is moving forward with a building block approach, both of which are compatible with the Aggregation Method," added Cioppa. "We believe this is the best path forward for U.S. policyholders and market participants, while remaining consistent with the underlying purpose of the ICS."