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FOR IMMEDIATE RELEASE NAIC PRESIDENT HIGHLIGHTS GLOBAL SOLVENCY,
PRINCIPLES-BASED SUPERVISION IN KEYNOTE SPEECH
KANSAS CITY, Mo. (Nov. 14, 2006) — National Association of Insurance Commissioners (NAIC) President and Maine Insurance Superintendent Alessandro Iuppa delivered a keynote speech today as part of the 2006 Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) Conference in Frankfurt, Germany. Iuppa’s address, entitled Solvency II from a Trans-Atlantic Perspective, highlighted the significance of securing an effective solvency regime and the NAIC’s current focus on a principles-based system of insurance supervision. “The NAIC understands the importance of being committed to monitoring and staying engaged in the solvency initiatives around the world,” Iuppa said during his speech. “While the European Union (EU) currently goes through the process of introducing a new solvency regime, the NAIC too is in the process of reviewing our risk-based capital approach to solvency supervision.” Iuppa also spoke on the importance of the United States’ engagement in global solvency initiatives. He said that through regular meetings between NAIC members and insurance representatives from the EU, it has become evident that both groups, despite being separated by the Atlantic Ocean, face many of the same regulatory challenges and opportunities. “To meet the needs of today’s global consumers, I am a firm believer that the U.S. regulatory community must continue our efforts to be actively engaged in the processes and forums that lead to greater international coordination,” Iuppa said. “The NAIC and EU dialogue that began nearly eight years ago is a prime example of that commitment.” In his address, Iuppa noted the differences between Solvency II, which is a principles-based approach to insurance regulation employed by the EU, and the current risk-based capital system used by U.S. regulators since 1994. He said that many U.S. insurance regulators now acknowledge that the current reserve methodologies do not adequately focus on the benefits, revenues and risk characteristics of insurance products being offered. He also said that a more permanent, principles-based solution is needed, especially in the life insurance sector, where companies now offer more complex products and investments. “While the traditional system uses more prescribed formulas and assumptions, a principles-based system has a process of identifying and measuring all risks,” Iuppa said. “The NAIC has created a Principles-Based Oversight Committee, whose responsibilities include working toward the implementation of a principles-based system. As this process moves forward, it is important to understand that U.S. regulators have dual responsibility. First, to develop and articulate a sound public policy for establishing a principles-based approach. Secondly, to create the technical framework for implementation and monitoring.” At this time, the NAIC is concurrently working to develop a valuation manual approach for establishing reserves as well as a new standard valuation model law that states can adopt. “This will not be an easy process, and will take extensive resources and a high degree of judgment,” Iuppa said. “But we are committed to considering changes to our traditional rules-based system to a more principles-based system.” View Alessandro Iuppa’s entire keynote address.
About the NAIC Headquartered in Kansas City, Missouri, the National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and the five U.S. territories. The NAIC’s overriding objective is to assist state insurance regulators in protecting consumers and helping maintain the financial stability of the insurance industry by offering financial, actuarial, legal, computer, research, market conduct and economic expertise. Formed in 1871, the NAIC is the oldest association of state officials. For more than 135 years, state-based insurance supervision has served the needs of consumers, industry and the business of insurance at-large by ensuring hands-on, frontline protection for consumers, while providing insurers the uniform platforms and coordinated systems they need to compete effectively in an ever-changing marketplace. For more information, visit NAIC on the Web at: http://www.naic.org/press_home.htm
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2006 National Association of Insurance Commissioners. All rights reserved. | ||
