Banking Committee Spotlight on Standards Important for Consumer
The Senate Banking Committee is digging into an important topic today with a hearing that probably won’t attract any TV news crews.
That’s too bad, because the topic – insurance capital standards – is important. Improper insurance capital standards can hamper the availability and affordability of consumer products like life insurance and annuities.
Right now, the Insurance Capital Standard (ICS) is under development by the International Association of Insurance Supervisors (IAIS).
Lawmakers and regulators need to work together to ensure that the IAIS doesn’t implement a capital regime that is unfair to U.S. life insurers and harmful for consumers.
The IAIS had been developing the ICS for years. The next development phase comes next year when a five-year monitoring period begins. But the American Council of Life Insurers (ACLI) and other interested parties have raised serious concerns.
The draft ICS is designed in a way that inaccurately reflects U.S. life insurers’ business model with long-duration financial security products like life insurance and annuities. U.S. regulators are developing an alternative to the ICS that would treat U.S. insurers fairly. But it is uncertain if the IAIS is open to an alternative.
To that end, ACLI wrote a letter to the key U.S. regulators: the National Association of Insurance Commissioners, the Federal Reserve Bank and the Federal Insurance Office – collectively known as Team USA. This letter was shared with the members of the Banking Committee for its hearing.
We asked Team USA to work together to ensure that U.S. interests are heard and considered by the IAIS. In November, the IAIS will meet in Abu Dhabi to make critical decisions about the ICS. It is essential that the U.S. regulators attending the IAIS meeting work together for a pathway to consider the U.S. proposed alternative that is in development.
This topic probably won’t make headlines. But life insurers know that the current draft needs work. It’s essential for U.S. insurers and consumers’ financial protection. And it’s up to Team USA to make that happen.