Consistent with an array of mandates from the Group of Twenty, the International Association of Insurance Supervisors has finalized both a list of global systemically-important insurers (G-SIIs) and new standards governing them. Although most immediately important to G-SIIs and firms potentially subject to designation, aspects of the framework would redefine insurance regulation more generally (often in a bank-centric fashion). Aspects of the new rules (e.g., higher capital) are not finalized, but the overall framework still subjects designated firms to significant new regulation that will differentiate and, most likely disadvantage G-SIIs vis-à-vis smaller competitors. The final G-SII standards include new protocols to ensure orderly resolution in a manner compatible with broader global principles. These will require considerable build-out in the global arena and may prove difficult to implement in the U.S., where state – not federal – law governs insurance insolvency. Although the G-SII standards do not impose size and/or activity bans, they are intended to shrink and/or break up designated firms, as well as to limit non-traditional and/or non-insurance activities.
The full report is available to subscription clients. To find out how you can sign up for the service, click here