By Brandon Ross
July 26 — Chinese insurance regulators echoed their American counterparts during a recent visit to the U.S., urging a go-slow approach in developing international insurance capital standards that would allow for jurisdictional control of implementation.
The officials of the fourth-largest insurance market sounded a lot like U.S. regulators, lawmakers and industry officials who have steadily pushed back against the International Association of Insurance Supervisors (IAIS) proposal for global insurance capital reserve requirements. U.S. officials have argued that those requirements are unfair to countries with insurance governance styles dissimilar to the European Union's Solvency II regulatory regime (See previous story, 06/08/16) (See previous story, 06/17/16).
The U.S. has long relied on a state-based approach to insurance regulation, whereas the Solvency II system is based a centralized-government methodology.
U.S. officials from the National Association of Insurance Commissioners (NAIC) and the New York State Department of Financial Services met July 26 with representatives from the China Insurance Regulatory Commission (CIRC) at NAIC's New York office.
The IAIS standards would, if implemented by various governments, establish new thresholds for the amount of capital that insurance companies have to hold on the side to cover potential failures of their holding companies or subsidiaries.
“The ongoing work at the IAIS to develop an Insurance Capital Standard must proceed at a measured pace and should be a standard which jurisdictions can implement to ensure it is truly global in nature,” Xiang Junbo, chairman of CIRC, said in a NAIC press release about the meeting.
Discourse between U.S. and Chinese regulators is especially important because China is a growing player in the world market, U.S. insurance industry officials said.
“Dialogue between insurance regulators from the United States and China is important for fostering regulatory environments that benefit both countries,” Steve Simchak, director of international affairs for the American Insurance Association told Bloomberg BNA in a July 26 e-mail. “China represents one of the world’s most significant emerging insurance markets.”
China is expected to become the world's second-largest insurance market within the next 10 years, the NAIC said in its release.
“We remain committed to working together in the spirit of consumer protection,” Junbo said.
The meeting follows a meeting that CIRC officials held last week with officials of the the U.S. Trade Representative, Commerce Department and the NAIC.
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