Ben Nelson, CEO at the National Association of Insurance Commissioners (NAIC), has said that US regulators must convince international regulators that protecting policyholders takes a combination of capital and risk-based standards.
Speaking to A.M. Best, Nelson claimed that regulators around the world are struggling to find common ground, even those in the US, to prevent the possibility of a future systemic failure.
“To prevent a systemic failure of companies, the entire industry or the economy, some international segments are focused on capital, because that is the way they look at to regulate banks,” he said.
“Instead of getting a ‘one-size-fits-all’ capital standard, which is imposed by international sources, the NAIC, along with the Federal Reserve, the Treasury Department and the Federal Insurance Office, have created Team USA to examine what kind of capital standards is necessary for insurers in the US.”
Although some regulators think more capital is the solution, Nelson said that he does not.
“Adding more capital isn’t necessarily the answer. Finding a way to blend risk-based capital and solvency standards is the answer in the US, and we are looking for ways to be cooperative with international interests.”
Looking ahead, Nelson has stated that he expects concerns and struggles in terms of making sure the US maintains a system that is safe and works for the protection of policyholders.
He added: “At the same time, we recognise that we’re not alone, that we’re not isolated and we have to work within the international community.”
