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FOR IMMEDIATE RELEASE

SOLVENCY MODERNIZATION INITIATIVE BRINGS TOGETHER U.S. AND INTERNATIONAL REGULATORS
Discussion Centers on New Ideas for Solvency Initiatives

SAN FRANCISCO (Dec. 4, 2009) - Members of the National Association of Insurance Commissioners (NAIC) met with their international counterparts to discuss new ideas to enhance the Solvency Modernization Initiative. During a meeting between the International Association of Insurance Supervisors (IAIS) Solvency and Actuarial Issues Subcommittee and the NAIC International Solvency (EX) Working Group, discussion centered on the introduction of enterprise risk management (ERM) requirements and the utilization of a company's own risk and solvency assessment (ORSA) in financial solvency supervision.

During the meeting, state regulators described the U.S. enhanced risk-focused surveillance process and explained how insurance companies in the U.S. are required to detail the risks they face and how they mitigate those risks. IAIS members shared their standards on ERM and how ERM supervisory requirements are implemented around the world. International speakers from Australia, Canada, Switzerland and the United Kingdom were also present at the meeting.

"A focus on the risks faced by insurance companies and how those risks are addressed is critically important in insurance regulation," said Alfred Gross, Chair of the Solvency Modernization Task Force and Virginia Insurance Commissioner. "The U.S. utilizes a risk-focused approach in their financial analysis and examination processes and utilize ORSA-type requirements when appropriate. We greatly appreciate the opportunity to discuss alternative requirements utilized or proposed in other regulatory systems so that we can further deliberate on the potential implementation of these new ideas in the Solvency Modernization Initiative."

The International Solvency Working Group also released two consultation papers for public comment. The first paper highlights numerous ideas being discussed around the world about capital requirements. The ideas in this paper could result in significant modification to the U.S. risk-based capital requirements (RBC). The second paper released for comment identifies issues regarding corporate governance and risk management. Comments from interested parties are requested by March 1, 2010. An interim meeting of the International Solvency Working Group is tentatively planned for March 11-12, 2010 in Phoenix.

 

About the NAIC

Formed in 1871, 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 five U.S. territories. The NAIC has three offices: Executive Office, Washington, D.C.; Central Office, Kansas City, Mo.; and Securities Valuation Office, New York City. The NAIC serves the needs of consumers and the industry, with an overriding objective of supporting state insurance regulators as they protect consumers and maintain the financial stability of the insurance marketplace. For more information, visit www.naic.org.

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