On Thursday at the ACI Conference on Insurance Regulation a panel composed of Kermit Brooks, Managing Director and Associate General Counsel, AXA Equitable; Alessandro Iuppa, SVP & Senior Policy Advisor on Global Affairs International Government Affairs, Zurich Insurance Group; Edward J. Kelley, Sr. Vice President and Deputy General Counsel, Transatlantic Reinsurance Company; and Barry Leigh Weissman, Partner, Locke Lord LLP had a lively discussion concerning among other things International Capital Standards, Group Supervision, Systemic Risk and ComFrame.
A highlight of the discussion was the disclosure of information that panel members had received during their recent participation in meetings with IAIS in Basel and the FIO in Washington, D.C., over the last few weeks.
Participants in the conference learned that the timeline for the International Capital Standards (“ICS”) is no longer going to be 2016 but will likely be iterative over the next several years. One of the stumbling blocks is not just setting the ICS but also determination of how it will be calculated. What is acceptable in the U.S. may not be acceptable in a third world country or even in Europe or Asia.
Some members of the panel had recently attended conferences in Basel and in Washington, D.C., and met with FIO Director Michael McRaith concerning not only ICS issues but also those dealing with the IAIS and related international items such as Group Supervision, Systemic Risk and ComFrame. One of the thought provoking comments made by a panel member was whether one can even consider the insurance industry to be systemically important.
Also, one of the panel members told the audience that Michael McRaith has made the statement that regardless of what happens with ICS, the use of RBS “is not in jeopardy”. In fact, it appears that the International Association of Insurance Supervisors (“IAIS”) is beginning to agree that there needs to an analysis of the use of GAAP accounting standards versus the IAIS preference for market-adjusted accounting.