OLDWICK, N.J.--(BUSINESS WIRE)--In this episode of A.M.BestTV, Ben Nelson, chief executive officer at the National Association of Insurance Commissioners (NAIC) and a former U.S. senator, states that U.S. regulators must convince international regulators that protecting policyholders takes a combination of capital and risk-based standards. Click on http://www.ambest.com/v.asp?v=ebnelson515 to view the video program.
Nelson believes that regulators around the world are struggling to find common ground, even those in the United States, 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. “On the other hand, insurers aren’t subject to that kind of pressure. They have different kinds of pressure requiring different kinds of solutions. 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 United States.”
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 United States, and we are looking for ways to be cooperative with international interests.”
Looking ahead, Nelson knows it won’t be easy to find the answers. “There will be a lot of concerns and struggles in terms of making sure the United States maintains a system that is safe and works for the protection of policyholders in the midst of a changing world. At the same time, we recognize that we’re not alone, that we’re not isolated and we have to work within the international community.”
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