The U.S has passed a new bill that will allow Congress to have greater involvement in negotiations regarding international insurance standards, which it claims will preserve the State-based system of regulation and improve transparency.
Adopted by a vote in the House of Representatives recently, the International Insurance Standards Act of 2018 will require consultation with Congress and coordination with state insurance commissioners throughout international standard-setting discussions.
The bill states: “Parties representing the Federal Government in any international regulatory, standard-setting, or supervisory forum or in any negotiations of any international agreements relating to the prudential aspects of insurance shall not agree to, accede to, accept, or establish any proposed agreement or standard if the proposed agreement or standard fails to recognize the United States system of insurance regulation as satisfying such proposals.”
In addition to coordinating with commissioners, relevant parties must “provide written notice to and consult with the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate, and any other relevant committees of jurisdiction.”
The legislation was introduced in response in the covered agreement on prudential reinsurance measures that was reached between the U.S and the European Union (EU) in September 2017, and which was itself a response to the bloc’s Solvency II directive.
Both the National Association of Insurance Commissioners and federal legislators were unsatisfied with the degree of transparency in the covered agreement, and were concerned that it did not respect the U.S state-based system of insurance regulation.
In contrast, the new bill stresses that protecting policyholders through insurance industry regulation has been “the hallmark of the successful United States system and should be the paramount objective of domestic prudential regulation and emerging international standards.”
Speaking on behalf of the Property Casualty Insurers Association of America (PCI), Nat Wienecke, Senior Vice President (SVP) of Federal Government Relations, said: “PCI applauds House members on both sides of the aisle for supporting the International Insurance Standards Act.
“This important bipartisan legislation reinforces the primacy of the state regulation of insurance. H.R. 4537 also ensures international insurance agreements recognize our standards as they evolve to meet new challenges.
“This bill also recognizes the appropriate role of state insurance regulators in developing international insurance standards and provides that Congress receives appropriate notice to exercise its oversight over such negotiations.”
Additionally, Jon Gentile, National Vice President of Government Relations at the National Association of Professional Insurance Agents (PIA), stated: “International negotiations can have serious consequences for the domestic insurance industry and its consumers.
“Thankfully, Reps. Duffy and Heck came together on this common-sense legislation that seeks to protect state insurance regulation from harmful international developments, while giving Congress a role in preventing destructive international insurance agreements from hurting our successful domestic system. This bill is pro-consumer and pro-state insurance regulation.”
