Although global banking regulation has been overhauled in the wake of the financial crisis, the development of international insurance regulation is proceeding slowly, according to a new report from Fitch Ratings Inc.
There are several consultations underway to develop international regulation in the insurance sector, the report states, but "significant barriers to implementation of the new standards remain."
For example, the International Association of Insurance Supervisors (IAIS) is in the process of creating a risk-based capital standard for global insurers, but there's no deadline for the adoption of a capital standard based on a single calculation methodology.
Furthermore, it will be "particularly difficult" to implement a global standard "because of potential uncertainty on cross-border regulation where various competing regulatory bodies could have conflicting or overlapping mandates," the Fitch report says.
The IAIS has several other global initiatives underway, Fitch notes, including the development of its methodology on the criteria for identifying global systemically important insurers (G-SIIs), which would then be subject to tougher oversight.
"The development is intended to increase transparency over the criteria for insurers' inclusion on the list," the Fitch report says, adding that insurers will get insight into their initial assessments under the process, "which could help them to modify their strategy in view of the potential implications of G-SII designation."