FOR IMMEDIATE RELEASE
NAIC ADVANCES TRANSPARENCY
TO TRACK RISK GLOBALLY
WASHINGTON, D.C. (Sept. 11, 2012) — Members of the
National Association of Insurance Commissioners (NAIC) have decided to add
the Legal Entity Identifier (LEI) to insurance industry regulatory
reporting. The LEI project is coordinated by the Financial Stability Board
and endorsed by the G-20. Until now it has been a challenge for financial
regulators to track entities beyond country borders, as current registries
are unique within countries and across different markets. This was
particularly a problem with derivatives counterparties and exposures during
the financial crisis.
“The LEI system will improve the ability of insurance and other
financial regulators to track, analyze and understand interconnectedness,
risk exposures and systemic issues in a global marketplace,” said Kevin M.
McCarty, NAIC President and Florida Insurance Commissioner. “This project
represents a significant improvement in global transparency.”
The goal of the LEI project is to assign a unique 20-digit identifier to
any entity that engages in financial transactions. The project
determines who is eligible to have a LEI and the rules under which they are
assigned. In addition to the identifier itself, there will also be
reference data maintained by the registrars. While the LEI project determines
eligibility, it is up to financial regulators to decide when the LEI is
required and how it should be used. U.S. insurance regulators have
been involved in its development since early in 2011 as the project work
streams got under way and are among the first regulators to adopt usage.
The proposal to add the LEI was exposed for comment in June and
discussed among regulators and industry participants at the Atlanta Summer
National Meeting; after which the proposal was unanimously adopted by the
Financial Condition Committee. The LEI is scheduled for launch in
March 2013 when the new reporting requirements become effective.