When insurance firms launched social media initiatives, the results were rewarding.
WASHINGTON, Nov. 29 -- The National Association of Mutual Insurance Companies issued the following news release:
The National Association of Mutual Insurance Companies today released a report that examines efforts by European and U.S. insurance regulators to modernize the system for overseeing the financial condition of insurance companies.
The new report, "Insurance Regulation and the Challenge of Solvency II:(http://www.namic.org/pdf/publicpolicy/insRegSolvII.pdf) Modernizing the System of U.S. Solvency Regulation," written by Robert Klein, Ph.D., associate professor of risk management and Insurance at Georgia State University, deconstructs the current U.S. solvency regulatory regime, highlighting the critical role of the National Association of Insurance Commissioners and evaluating recent NAIC-led innovations such as "risk-focused surveillance" of insurers' financial condition. It then examines the EU's complex and multi-faceted Solvency II directive to modernize insurer solvency regulation, comparing it to the U.S. system with respect to discrete rules and practices, as well as underlying philosophies and objectives. The report then turns to the NAIC's Solvency Modernization Initiative, providing a comprehensive overview that critically examines each of the SMI's five principal components: capital requirements; governance and risk management; group supervision; statutory accounting and financial reporting; and reinsurance. Special attention is given to the SMI's most consequential progeny to date, the Own Risk and Solvency Assessment, that many U.S. insurers will soon be required to file.
The report is informed throughout by Klein's observation that "tighter solvency standards will tend to reduce the supply of insurance and increase its price," whereas "greater flexibility with respect to solvency requirements allows insurers to offer a wider range of possible product and price options, and allows consumers to incur greater risk in return for lower prices and/or greater benefits." Solvency regulation, he notes, should aim to achieve "optimal balance between insolvency costs and regulatory costs."
"Dr. Klein's objective and unbiased treatment of the ongoing effort to modernize insurer solvency regulation will be enormously useful to insurance industry professionals, media analysts and commentators, and policymakers both in the U.S. and abroad," said Charles M. Chamness, NAMIC's president/CEO. "If done correctly, modernized solvency regulation could spark a movement to reform other aspects of insurance regulation - such as rules governing rates and policy forms - that also cry out for modernization in today's insurance marketplace."