Canadian insurers urge G20 leaders to support principles-based regulation

The Insurance Bureau of Canada (IBC) and six other international insurance associations have presented a unified statement in support of principles-based regulation yesterday to the G20 leaders in advance of the Apr. 2 G20 summit meeting in London, England.
“This initiative, undertaken by leading insurance associations, reflects our joint commitment to encourage G20 leaders to continue down the path of risk- and principles based regulation while strengthening regulatory cooperation around the world,” said Frank Swedlove, president of the Canadian Life and Health Insurance Association (CLHIA).
In a statement, the insurance industry lays out principles for the G20 leaders to consider as a means to stabilize global financial markets.
“These include gearing prudential regulation to reflect an insurer’s level of risk and diversification; addressing accounting issues to improve the applicability of fair value accounting; and equipping regulators to supervise a globalized insurance industry and guard against systemic risks,” the statement says.
In a letter to G20 country leaders, the insurers ask that solutions to resolve the global financial recession be tailored to specific financial industries, as opposed to being applied across the board.
“Insurance has a fundamentally different business model from banking,” the letter reads. “While not immune to the financial crisis, with very few exceptions, the insurance industry entered this crisis from a position of relative strength.
“It is therefore important that solutions devised to solve problems in the banking industry are not automatically applied to insurance.”
The same selectivity should apply to the application of regulatory solutions, the group says.
“The inconsistency of having a globalized insurance industry on the one hand and a ‘siloed’ national approach to regulation on the other must be reconciled,” the letter states.