ARTICLE
18 December 2014

Corporate Insurance Advent Calendar-US to focus closely on international insurance capital standards

CC
Clyde & Co

Contributor

Clyde & Co is a leading, sector-focused global law firm with 415 partners, 2200 legal professionals and 3800 staff in over 50 offices and associated offices on six continents. The firm specialises in the sectors that move, build and power our connected world and the insurance that underpins it, namely: transport, infrastructure, energy, trade & commodities and insurance. With a strong focus on developed and emerging markets, the firm is one of the fastest growing law firms in the world with ambitious plans for further growth.
To celebrate the countdown to Christmas, the Corporate Insurance team will be publishing a prediction for 2015 each day.
Singapore Insurance

To celebrate the countdown to Christmas, the Corporate Insurance team will be publishing a prediction for 2015 each day.

The US insurance industry and its regulators will be even more concerned about and actively engage with the ongoing efforts by the International Association of Insurance Supervisors (IAIS) to develop international insurance capital standards.

The IAIS has already developed the Basic Capital Requirements (BCR) for global systemically important insurers (G-SIIs) for reporting in 2015, and is developing the Higher Loss Absorption (HLA) capacity for completion by the end of 2015 and a risk-based group-wide global insurance capital (ICS) standard for Internationally Active Insurance Groups (IAIGs) for completion by 2016 and implementation in 2019.

US insurance regulators and industry are watching these developments warily.  The process undertaken by the IAIS has been criticized for lack of transparency and lack of opportunities for interested parties to participate.  More fundamentally, the US has questioned the need for and potential costs and other concerns with respect to such international standards for the US insurance industry.

However, there is a sense that the IAIS process is inevitable and that the new international capital standards will filter down to the US insurance industry in one way or another. This realisation may lead the US insurance regulators and industry to be more active in responding to, and engaging with, the IAIS on the development of international insurance capital standards in 2015.

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