U.S. Chamber Releases Report on Impact of Insurance Capital Standards

The U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness (CCMC) released a new report that examines insurance capital standards and discusses one of the chief proposed methods of estimating insurance group capital, the aggregation method (AM), currently under development by U.S. regulators. Robust capital standards and other regulatory tools can contribute to market certainty, but they must be appropriate for the social needs and other market dynamics of the jurisdiction.

As detailed earlier this year in a previously released report by the U.S. Chamber, the insurance industry plays an important role in economies— both to help manage risk and to provide a substantial source of funds for long-term investments. The assets of U.S. insurance firms alone total approximately $5.8 trillion.

“The insurance industry is one of the largest investors in the U.S. economy and policymakers’ decisions have ramifications that will be felt throughout the economy, from local governments to Main Street businesses.” said U.S. Chamber Center for Capital Markets Competitiveness Executive Vice President Tom Quaadman. “This report can help inform the International Association of Insurance Supervisors (IAIS) as it continues its deliberations on insurance capital standards so that consumers can continue to access the insurance products they need and so there is no disruption to investment through the capital markets.”

The report addresses three major topics:

  • Important features of the insurance business model and how insurance firms are designed to serve the social needs of local markets.
  • Market and regulatory context of insurance capital requirements and compares the aggregation method to the key features of other approaches (e.g. the ICS).
  • Implications of the aggregation method in the context of the wide range of roles insurance plays across international markets and the importance of insurance firms’ investments to the capital markets.

The report comes ahead of the upcoming IAIS fall meeting, where insurance supervisors from around the world exchange views on issues relevant to the supervision and development of insurance markets.

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