Regulation gone global

Friday, 24 January 2014

Last week I attended the P&C Insurance Joint Industry Forum in New York, an annual event held at the beginning of each year, attended by industry leaders primarily from the US non-life industry.  The conference, attended by around 200 delegates, sets the agenda and identifies the challenges for the industry for the coming year.

The keynote speaker at the event was Neal Wolin who was Deputy Secretary of the Department of the (US) Treasury from May 2009 to August 2013 where he also spent a month as Acting Secretary of the Treasury. In the Obama administration he was one of the leading officials at the Treasury as they worked through the global financial crisis including the introduction of US financial reform plans. Prior to his public service roles he was President of The Hartford Financial Services Group where he was also Chief Operating Officer, he is therefore a person who knows the industry and who knows the politics.  During his presentation he talked through the reasoning behind the Obama decision to set up the Federal Insurance Office (FIO) in 2010, a decision not without its detractors in the US insurance industry. Other representative associations feared their influence could wane as a result and it could also have been seen as a move towards federal rather than state regulation.

The state versus federal regulation is a huge issue in the US and particularly for the mutual sector, NAMIC, the US mutual insurance association, constantly lobbies for the status quo to be maintained. However, Neal adeptly avoided the debate stating that the FIO’s main role was to represent the US Government in the global debate on financial services regulation.

So we have the largest economy in the world, with the largest insurance market in the world, feeling the need to step up its lobbying effort by setting up the FIO. Neal was very frank about why they did it, it was because they felt the US’s presence in the global financial services regulatory debate was fragmented, uncoordinated and ineffective at a global level.  The FIO has already made its presence felt by taking a seat on the IAIS Board and targeting the G20 meetings as part of its key influence role.

So why do I tell this story? Well, firstly,  what the US does other countries may follow, but, most importantly, it vindicates the public affairs strategy I set out for ICMIF at the Cape Town Conference in November, 2013. Our influence is already focused on the key global regulatory bodies such as the G20, the OECD, the FSB, the UN, the IMF, the World Bank and the IAIS. We are not just working on mutual and cooperative issues with our cooperative partners such as the ICA, we are also working on raising the profile of the whole insurance sector with our global partners the IIS and The Geneva Association with the aim that insurance is differentiated from banking so its role and services are seen as being for the social good of a country.

I am currently working with Catherine Hock, ICMIF’s Vice-President of International Relations on the terms of reference for our latest ‘Leaders Forum’ the Regulatory Leaders Forum (RLF).  Members will be invited, and indeed can volunteer, to be involved in the RLF over the next few months as the new group gets to grips with its global role. A role which will be crucial for the insurance industry and we ICMIF together with the RLF will pursue our mutual goals and promote our mutual values. This is a big task but we have a strong platform to build from already and there will be exciting challenges ahead.  If you want to be involved please send me an email or post a comment below.

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