Insurers should not be forced to hold extra capital just because of their size because the extra cost would simply be passed on to consumers, US regulators said.
G20 world leaders have backed imposing extra capital requirements on the 30 or so biggest banks from 2016 to avoid a repeat of taxpayer bailouts seen during the financial crisis. Global work on a similar regime for insurers is now in the final stages amid fierce debate over whether they must have added capacity to absorb losses like the biggest banks.
Firms are waiting to see who will be deemed systemically important under work led by the G20's Financial Stability Board (FSB). The US Financial Stability Oversight Council (FSOC) will publish its own list shortly of systemic US insurers. Being on a list should also not automatically mean the insurer must have extra loss absorption capacity, NAIC chief executive Ben Nelson and other US regulators told Reuters during a visit to London.
The United States represents a third of the world's insurance market and Adam Hamm, commissioner for North Dakota, said the FSB and FSOC decisions will have a "real world result".
The US regulators are watching how the European Union is trying to finalise its long-delayed Solvency II capital rules for insurers, which the bloc hopes other countries will copy. "Not immediately and probably not in its entirety ever but we certainly are amendable to a common framework both systems can accommodate", James Donelon, current NAIC president, said. "What we are not interested in doing is throwing away a system that has served us well for over a hundred years."
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