The American Property Casualty Insurance Association (APCIA) has submitted comments to the International Association of Insurance Supervisors (IAIS), opposing its draft criteria for determining whether the U.S.-backed Aggregation Method (AM) for assessing insurance group capital is comparable to the IAIS’ Insurance Capital Standard (ICS).
The comments follow on from the IAIS Global Seminar in Dubrovnik earlier this year, where APCIA reiterated its strong support for the US-developed AM for group capital assessment.
Robert Gordon, APCIA senior vice president of policy, research and international, stated, “In our view, the draft criteria inappropriately and incorrectly preclude at the outset a finding that the AM produces comparable outcomes to the ICS in solvency protection.”
“We have come to this conclusion because the criteria focus on a quantitative assessment of whether the solvency ratios produced by the AM and ICS are significantly correlated, notwithstanding the fact that the two assessment approaches are fundamentally different.”
“Secondly, the cost to U.S. volunteer insurance groups to participate in the evaluation of the AM and ICS would be prohibitively expensive and unnecessary, given that the IAIS has already amassed ample data over years of field testing. That data can be used to evaluate differences between the AM and ICS.”
“Finally, we believe the comparability assessment must be both quantitative and qualitative. It must also consider the differing solvency frameworks in which the AM and ICS reside, as well as the timing at which supervisory actions may be taken within those frameworks.”
“We are confident that if our concerns are addressed the AM will be found to provide similar if not greater solvency protection than the ICS.”
“Without further improvement, the criteria do not provide a viable way forward.”
