IUA appeals for global regulatory environment

Reinsurance must be subject to a seamless global regulatory environment, according to the International Underwriting Association (IUA).

Speaking at the International Association of Insurance Supervisors' (IAIS) annual conference in Amman, Jordan, IUA chief executive Marie-Louise Rossi said that reinsurers must be able to trade cross-border without the expensive burden of complying with unnecessarily duplicated regulatory requirements.

During a panel discussion with regulators and industry representatives from the Middle East, European Union, London Market and United States, Ms Rossi outlined the IUA's support for the principle of 'mutual recognition' in insurance and reinsurance supervision. Under this approach, national regulators - once certain international standards have been agreed - recognise and accept the authority of their counterparts elsewhere. As a result, providing they comply with the rules issued by their own home state regulator, companies are free to operate internationally without having to adapt to the requirements of many other alternative regimes.

"The goal of mutual recognition is to allow different regimes to maintain their own systems without stifling the business that supervisors are required to regulate," declared Ms Rossi. "It is not about regulators all doing the same thing - it is about them agreeing to recognise that other regulators have attained appropriate standards and are imposing a satisfactory regime on the businesses they supervise." The IAIS was established in 1994 with the aim of setting international standards for insurance and reinsurance supervision and regulation. Ms Rossi said the effect of such principles must not be to make the international reinsurance trade more complicated and expensive. They should instead have a liberalising effect, lowering costs for insurers and for the ultimate consumers. She added: "Of course, certain minimum standards must be met in order to establish confidence in the market. But regulation must meet the test of cost-effectiveness to the market, the overall economy and society. "I am pleased to see that the issue of mutual recognition is now firmly on the IAIS agenda." The IUA said that it is keen to see IAIS principles or standards for potential mutual recognition agreements that are not prescriptive, but lay out broad areas for such agreements to cover. The actual framework and details of mutual recognition agreements can only be decided by the participating countries.