REPORT TO CONGRESS

Engagement in Global Insurance

Regulatory or Supervisory Forums

in 2020

February 2022

Jerome H. Powell

Chair, Board of Governors of the

Federal Reserve

Janet Yellen

Secretary, U.S. Department of

the Treasury
Contents

Introduction ...................................................................................................................... 1

International Insurance Issues, Positions, and Effects ............................................. 4

International Forums: the IAIS, the FSB, and the OECD ......................................................... 4

IAIS Activities .................................................................................................................... 8

FSB Cross-Border Resolution ............................................................................................ 16

Transparency Efforts at the IAIS and the FSB .......................................................... 17

IAIS Transparency Efforts .................................................................................................. 17

FSB Transparency Efforts .................................................................................................. 18

Federal Advisory Committee on Insurance .......................................................................... 19

Insurance Policy Advisory Committee ................................................................................. 20

Conclusion ...................................................................................................................... 21

ii
Introduction

This report is submitted by the Secretary of the U.S. Department of the Treasury (Treasury) and

the Chair of the Board of Governors of the Federal Reserve System (Federal Reserve) pursuant to

section 211(c)(1) of the Economic Growth, Regulatory Relief, and Consumer Protection Act, Pub. L.

No. 115-174, 132 Stat. 1296, 1317–18 (the Act). The Act directs the Secretary of the Treasury

and the Chair of the Federal Reserve, or their designee, to submit an annual report to Congress on

their efforts with the National Association of Insurance Commissioners (NAIC) “with respect to

global insurance regulatory or supervisory forums.” The Act requires the report to include descriptions of

1. “the insurance regulatory or supervisory standard-setting issues under discussion at international standard-setting bodies”;

2. “the effects that proposals discussed at international insurance regulatory or supervisory

forums of insurance could have on consumer and insurance markets in the United States”;

3. “any position taken by the Secretary of the Treasury, the [Federal Reserve], and the Director of

the Federal Insurance Office in international insurance discussions”;1 and

4. “the efforts by the Secretary of the Treasury, the [Federal Reserve], and the Director of the Federal Insurance Office to increase transparency at the Financial Stability Board with respect to

insurance proposals and the International Association of Insurance Supervisors, including

efforts to provide additional public access to working groups and committees of the International Association of Insurance Supervisors.” This third annual report follows the same format as the prior two.2 This report covers activities

and developments during calendar year 2020. Specifically, the report begins, in the section “International Insurance Issues, Positions, and Effects,” by describing in general terms the efforts of the

Federal Reserve and Treasury (specifically, the Federal Insurance Office or FIO) in global insurance

1 Title V of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) established the Federal

Insurance Office (FIO) within Treasury. In addition to advising the Secretary of the Treasury (Secretary) on major domestic

and prudential international insurance policy issues, FIO is authorized to monitor all aspects of the insurance industry,

including identifying issues or gaps in the regulation of insurers that could contribute to a systemic crisis in the insurance industry or the U.S. financial system, and coordinate federal efforts and develop federal policy on prudential

aspects of international insurance matters, including representing the United States, as appropriate, in the International

Association of Insurance Supervisors and assisting the Secretary in negotiating covered agreements, among other functions. See 31 U.S.C. § 313. 2 Treasury and Federal Reserve, Report to Congress: Efforts of the U.S. Department of the Treasury and the Board of Gover- nors of the Federal Reserve System with respect to Global Insurance Regulatory or Supervisory Forums in 2019 (2020)

(2019 Fed-FIO Annual Report) (Washington: U.S. Department of the Treasury and Board of Governors of the Federal

Reserve System, December 2020), https://home.treasury.gov/system/files/311/Treasury-FRB-Report-2020.pdf;

Treasury and Federal Reserve, Report to Congress: Efforts of the U.S. Department of the Treasury and the Board of Gover- nors of the Federal Reserve System with respect to Global Insurance Regulatory or Supervisory Forums in 2018 (2019)

(2018 Fed-FIO Annual Report) (Washington: U.S. Department of the Treasury and Board of Governors of the Federal

Reserve System, September 2019), https://home.treasury.gov/system/files/311/Treasury_FRB_Report_2019.pdf.

1
regulatory and supervisory forums, including a short overview of the International Association of

Insurance Supervisors (IAIS), the international insurance standard-setting body. It explains the

IAIS’s structure, governance, and role in insurance supervision. This section also includes an overview of the Financial Stability Board (FSB), which coordinates among the different standard-setting

bodies, and the Organisation for Economic Co-Operation and Development (OECD), which has a

limited role in international insurance discussions.3

In the subsection “IAIS Activities,” the report outlines key international insurance standard-setting

initiatives in 2020, such as monitoring and responding to COVID-19’s impacts on the insurance

industry, activities related to climate risk, the work on the Insurance Capital Standard (ICS), implementation of the Holistic Framework for Systemic Risk in the Insurance Sector (Holistic Framework), and other initiatives.

The report continues, in the section “Transparency Efforts at the IAIS and the FSB,” by providing a

summary of ongoing efforts by FIO and the Federal Reserve to increase transparency at the FSB

and at the IAIS, as well as coordination with the NAIC and the U.S. state and territory insurance

regulators (together with FIO and the Federal Reserve, collectively referred to as Team USA).4 This

section also provides an update on the Insurance Policy Advisory Committee (IPAC), which was

established by the Act to advise the Federal Reserve on insurance issues.5 Additionally it provides

an update on the Federal Advisory Committee on Insurance (FACI), which provides non-binding

advice and recommendations to FIO to assist it in carrying out its duties and authorities.6

The “Conclusion” of the report emphasizes that FIO and the Federal Reserve will continue to advocate for insurance regulatory and supervisory standards that are appropriate for the United States

and will continue to report to Congress on their efforts. Team USA members’ leadership and

involvement in the IAIS and other international forums, as discussed in this report, is intended to

ensure that the United States continues to be able to influence international standards for insurance supervision and regulation. It remains important to recognize, however, that international

standard-setting bodies, such as the IAIS, do not have the power to establish standards that would

be binding in the United States. In the United States, no international insurance standards are

operational unless implemented through the relevant state or federal legislative or administrative

process, as appropriate.

3 Other standard-setting bodies include the Basel Committee on Banking Supervision, which is the primary standardsetting body for the prudential regulation of banks, and the International Organization of Securities Commissions, which

is the primary standard-setting body for the securities sector. 4 See, e.g., 2018 Fed-FIO Annual Report; Treasury and Federal Reserve, Report to the Congress: Efforts to Increase Trans- parency at Meetings of the International Association of Insurance Supervisors (2018) (Transparency Report) (Washington:

U.S. Department of the Treasury and Board of Governors, November 2018), https://www.treasury.gov/initiatives/fio/

reports-and-notices/Documents/2018_IAIS_Transparency_Report.pdf. 5 See Act § 211(b) (establishing the Insurance Policy Advisory Committee), 31 U.S.C. § 313 note. 6 The FACI was formed in 2011 pursuant to 31 U.S.C. § 313(h).

2 Engagement in Global Insurance Regulatory or Supervisory Forums in 2020
This report discusses topics that are also discussed in the 2018 Transparency Report as well as

in FIO’s 2020 and 2021 annual reports.7 These annual reports include detailed descriptions of

FIO’s international and domestic activities in the first half and second half of 2020, respectively. FIO’s annual reports also discuss international activities outside of the global insurance regulatory

and supervisory forums addressed here; these activities include bilateral and/or multilateral discussions and agreements (such as those that led to the covered agreement with the European

Union and the covered agreement with the United Kingdom) as well as information exchanges that

do not involve setting standards (such as the EU–U.S. Insurance Project). In addition, FIO’s annual

reports discuss input received from the FACI, including through its subcommittee on international

developments.8

7 FIO, Annual Report on the Insurance Industry (2020) (2020 Annual Report) (Washington: FIO 2020), https://

home.treasury.gov/system/files/311/2020-FIO-Annual-Report.pdf; FIO, 2021 Annual Report on the Insurance Industry

(2021) (2021 Annual Report) (Washington: FIO, September 2021), https://home.treasury.gov/system/files/311/FIO2021-Annual-Report-Insurance-Industry.pdf. 8 “Federal Advisory Committee on Insurance (FACI),” U.S. Department of the Treasury, https://www.treasury.gov/

initiatives/fio/Pages/faci.aspx.

Introduction 3
International Insurance Issues, Positions,

and Effects

The Act requires that this report include, among other things, a “description of the insurance regulatory or supervisory standard-setting issues under discussion at international standard setting

bodies,” and a “description of any position taken” by the Secretary, the Federal Reserve, and the

director of FIO in international insurance discussions at global insurance regulatory or supervisory

forums.9 As previously reported, in discussions at global insurance regulatory and supervisory

forums, FIO and the Federal Reserve promote robust engagement to ensure that U.S. insurance

stakeholders and the federal government are well represented.10 The Federal Reserve and FIO

continue to advocate for positions in international insurance discussions to help ensure that international standards reflect the U.S. insurance regulatory regime, and that the U.S. insurance sector

remains competitive internationally. The Act also requires that this report describe the effects that proposals discussed at international insurance regulatory or supervisory forums of insurance could have on U.S. consumers and

insurance markets.11 While certain IAIS standards remain under development, depending on how

they are finalized, they could affect U.S. insurers operating in foreign markets, regardless of

whether the standards are implemented in the United States. Treasury and the Federal Reserve

acknowledge that they are required, in consultation with the NAIC, to “complete a study on, and

submit to Congress a report on the results of the study, the impact on consumers and markets in

the United States before supporting or consenting to the adoption of any final international insurance capital standard.”

12 In their international engagement on insurance issues, FIO and the Federal Reserve coordinate closely with each other and with the other U.S. members of the IAIS.

International Forums: the IAIS, the FSB, and the OECD

IAIS Overview

Established in 1994, the IAIS is the international standard-setting body responsible for developing

and assisting in the implementation of principles, standards, and other supporting material for

supervision of the insurance sector.13 The IAIS also serves as a forum for members to exchange

9 See Act § 211(c)(1)(A)(i), (iii), 31 U.S.C. § 313 note. 10 See, e.g., 2018 Fed-FIO Annual Report; Treasury. 11 See Act § 211(c)(1)(A)(ii), 31 U.S.C. § 313 note. 12 Act § 211(c)(3)(A), 31 U.S.C. § 313 note. 13 See, e.g., IAIS, 2019 IAIS Annual Report (Basel: IAIS, 2020), 5, https://www.iaisweb.org/page/about-the-iais/annualreport/file/93662/2019-annual-report.

4
ideas and share experiences about insurance supervision and insurance markets. IAIS members

include insurance supervisors and regulators from more than 210 jurisdictions, accounting for

97 percent of worldwide insurance premium volume.14

The IAIS has stated that it is “a stand[ard]-setter, not a legislature. Members do not pass laws;

through agreement, they recommend principles and standards and provide supervisory guidance.

It is the prerogative of the appropriate sovereign authorities to implement or not implement IAIS

core principles, standards or policies.”

15

The IAIS operates through five key mechanisms: (1) the General Meeting, which ultimately oversees all matters before the IAIS; (2) the Executive Committee, which serves as the principal

decision-making body of the IAIS; (3) the Policy Development Committee, which is responsible for

standard-setting activities; (4) the Macroprudential Committee, which oversees the IAIS work on

financial stability issues; and (5) the Implementation and Assessment Committee, which is

responsible for assessments and assistance in implementing IAIS principles, standards, and guidance.16 The IAIS also has an Audit and Risk Committee and a Budget Committee.17 Multiple working groups and task forces, focused on a range of prudential regulation and market

supervision topics, report to these committees.18 All of the committees and subcommittees (“subcommittees” includes both IAIS working groups and IAIS task forces) are composed of and chaired

by IAIS members. Hosted by the Bank for International Settlements in Basel, Switzerland, the IAIS

operates with the support of a secretariat under the direction of a secretary general. Figure 1 illustrates the IAIS organizational structure in 2020.19 FIO, the Federal Reserve, and the states are

represented on the IAIS Executive Committee.

FSB Overview

The G-20 established the FSB in 2009 to promote international financial regulatory reform and

financial stability, and tasked it with coordinating the work of national financial authorities and

international standard-setting bodies, including the IAIS, “as they work toward developing strong

14 2019 IAIS Annual Report, 5. See also IAIS, IAIS Organisation Members (July 2, 2021), https://www.iaisweb.org/list/

iaismembers. 15 IAIS, 2017 IAIS Annual Report (Basel: IAIS, November 2018), 10, https://www.iaisweb.org/page/about-the-iais/annualreport//file/77857/iais-ar-2017-digital-pdf-def-dp. 16 See, e.g., IAIS, “IAIS By-Laws,” https://www.iaisweb.org/page/about-the-iais/by-laws/file/74644/2017-by-laws; IAIS,

“IAIS Organisational Structure,” https://www.iaisweb.org/page/about-the-iais/organisational-structure. 17 2019 IAIS Annual Report, 9. 18 The structure and operation of the IAIS, as well as FIO’s role at the IAIS, are discussed in FIO’s 2020 Annual Report, 74-78. See also IAIS, “IAIS Organisational Structure,” https://www.iaisweb.org/page/about-the-iais/organisationalstructure. 19 Based on “IAIS Organisational Structure,” https://www.iaisweb.org/page/about-the-iais/organisational-structure (does

not include all workstreams and expert teams).

International Insurance Issues, Positions, and Effects 5
regulatory, supervisory and other financial sector policies.”

20 The FSB’s decisions are not legally

binding on its members; the FSB “operates by moral suasion and peer pressure, in order to set

internationally agreed policies and minimum standards that its members commit to implementing”

in their jurisdictions through the relevant financial authorities.21

The FSB’s membership consists of 71 institutions from 24 jurisdictions and 13 international orga

nizations and standard-setting bodies, including the IAIS.22 Treasury, the Federal Reserve, and the

20 See 2018 Fed-FIO Annual Report. See also Treasury, Insurance EO Report, 57–59, 130; FSB, “History of the FSB,” https://www.fsb.org/history-of-the-fsb/; FSB, “About the FSB,” https://www.fsb.org/about/. 21 FSB, “About the FSB,” https://www.fsb.org/about/. 22 FSB, “Members of the FSB,” https://www.fsb.org/about/organisation-and-governance/members-of-the-financial-stabilityboard/.

Figure 1. IAIS organizational structure, 2020

FinTech

Forum

Retirement 

Income & 

Pension Forum

Signatories 

Working Group

Financial 

Inclusion

Forum

Supervisory 

Forum

Standards 

Assessment 

Working Group

Holistic 

Framework

Targeted 

Jurisdictional 

Assessments

Accounting & 

Auditing

Working Group

Insurance 

Groups

Working Group

Governance 

Working Group

Financial

Crime

Task Force

Capital,

Solvency & 

Field Testing 

Working Group

Market

Conduct 

Working Group

Resolution 

Working Group 

Infrastructure 

Task Force

Executive

Committee

(ExCo)

Policy 

Development 

Committee

Implementation 

& Assessment 

Committee

Coordination 

Group

Audit & Risk 

Committee

Insurance

Capital

Standard & 

Comparability 

Task Force

Macroprudential

Committee

Operational 

Resilience 

Task Force

Committees

Working Groups

Task Forces

Forums

Expert Teams

Macroprudential

Supervision 

Working Group

Macroprudential 

Monitoring 

Working Group

Note: The IAIS committee structure illustrated above captures only those IAIS committees and working groups that are

directly involved in policymaking, macroprudential monitoring, and assessment of the implementation of standards.

Source: FIO. See also IAIS, “IAIS Organisational Structure,” https://www.iaisweb.org/page/about-the-iais/organisationalstructure.

6 Engagement in Global Insurance Regulatory or Supervisory Forums in 2020
Securities and Exchange Commission are the FSB’s U.S. members.23 In 2020, the FSB Chair was

Randal K. Quarles.24

The FSB has created a compendium of standards that have been developed by various standardsetting bodies, including the IAIS. The compendium includes standards considered by the FSB to

be “key for sound financial systems and deserving of priority implementation depending on

country circumstances.”

25 The compendium includes standards that pertain to insurance,

including the Insurance Core Principles, Standards, Guidance, and Assessment Methodology; the

Key Attributes of Effective Resolution Regimes for Financial Institutions (discussed later in the

“FSB Cross-Border Resolution” section of this report); and the G-20/OECD Principles of Corporate

Governance.26

OECD Overview

The OECD operates through more than 200 committees and working groups composed of national

experts and supported by a secretariat. Within this structure, insurance matters are the purview of

the OECD Insurance and Private Pensions Committee (IPPC). In addition, the Working Party on Private Pensions (WPPP) engages on certain issues closely related to insurance. The U.S. delegation

to the OECD varies by committee. Delegates from FIO and the U.S. Departments of Commerce

and Labor, along with state insurance regulators, represent the views of the United States at the

IPPC and WPPP. The OECD develops legal instruments to express policies that its membership has developed. Typically, these instruments are non-legally binding recommendations and declarations. Since 1961,

the IPPC has helped develop 22 of these legal instruments, eight of which remain in force as nonlegally binding recommendations.27 Table 1 shows the in-force recommendations developed and

adopted by the IPPC. In 2020, the IPPC developed and adopted, together with the Committee on

Financial Markets, recommendations on financial literacy, replacing 2008-09 recommendations on

financial education.28

23 FSB, 5th Annual Report 1 April 2017–31 March 2018 (Basel: FSB, December 2018), 37, https://www.fsb.org/wpcontent/uploads/P011218.pdf. 24 FSB, “Organisational Structure and Governance,” https://www.fsb.org/about/organisation-and-governance/. 25 FSB, “The Compendium of Standards,” https://www.fsb.org/work-of-the-fsb/about-the-compendium-of-standards/

key_standards/. 26 FSB, “Key Standards for Sound Financial Systems,” https://www.fsb.org/work-of-the-fsb/about-the-compendium-ofstandards/key_standards/. 27 OECD, “OECD Legal Instruments involving the Insurance and Private Pensions Committee,” https://

legalinstruments.oecd.org/en/instruments?mode=advanced&committeeIds=1651&dateType=adoption. 28 OECD, “Recommendation of the Council on Financial Literacy” (adopted October 29, 2020), https://

legalinstruments.oecd.org/en/instruments/OECD-LEGAL-0461.

International Insurance Issues, Positions, and Effects 7
Table 1. OECD in-force insurance-related recommendations from IPPC

Recommendations Date adopted

Financial Literacy Oct. 29, 2020

Disaster Risk Financing Strategies Feb. 23, 2017

Core Principles of Private Pension Regulation Sep. 27, 2016

Policy Framework for Effective and Efficient Financial Regulation Nov. 26, 2009

Guidelines on Insurer Governance Apr. 28, 2005

Establishment of a Check-List of Criteria to define Terrorism for the Purpose of Compensation Dec. 9, 2004

Good Practices for Insurance Claim Management Nov. 24, 2004

Common Classification of the Classes of Insurance Recognised by the Supervisory Authorities of the Member Countries May 30, 1984

Source: OECD, “OECD Legal Instruments,” https://legalinstruments.oecd.org/en/instruments?mode=advanced&committeeIds=

1651&dateType=adoption.

In 2020, the IPPC contributed to a number of OECD publications, including analyses of artificial

intelligence,29 long-term care and healthcare insurance,30 the COVID-19 pandemic,31 and the

insurance market.32 Over the next few years, it is expected that the IPPC will continue to address

issues relating to the COVID-19 pandemic, long-term care insurance, disaster risk management

and financing, digitalization and innovation, cyber insurance, and insurance regulatory practices.

All of these issues touch on significant U.S. policy initiatives currently being led by Treasury. FIO

noted in both its 2019 Annual Report and 2020 Annual Report that it is important that FIO take an

active leadership role in the international work on insurance matters at the OECD.

IAIS Activities

The key “issues under discussion” at the IAIS include issues related to (1) COVID-19, (2) climate

risk, (3) ICS, (4) other IAIS macroprudential work, (5) assessments of jurisdictions against IAIS

standards, and (6) other IAIS work, such as the development of guidance and other written materials. Much of the work described below is ongoing and is expected to continue through 2021

and beyond.

29 OECD, The Impact of Big Data and Artificial Intelligence (AI) in the Insurance Sector (January 28, 2020), https:// www.oecd.org/finance/ImpactBigDataAIintheInsuranceSector.htm. 30 OECD, Long Term Care and Healthcare Insurance in OECD and Other Countries (February 10, 2020), https:// www.oecd.org/finance/insurance/LongTermCareHealthCareInsuranceinOECDandotherCountries.htm. 31 OECD, Initial Assessment of Insurance Coverage and Gaps for Tackling COVID19 Impacts (April 2020),

https://www.oecd.org/finance/insurance/InitialassessmentofinsurancecoverageandgapsfortacklingCOVID19impacts.pdf;

OECD, Responding to the COVID19 and Pandemic Protection Gap (May 28, 2020), https://www.oecd.org/coronavirus/

policyresponses/respondingtothecovid19andpandemicprotectiongapininsurance35e74736/. 32 OECD, Insurance Markets in Figures (Paris: June 2020), https://www.oecd.org/daf/fin/insurance/

InsuranceMarketsinFigures2020.pdf; see also OECD, Leveraging the Role of Property Catastrophe Reinsurance

Markets: The Case of India, Indonesia, Myanmar, and the Philippines (Paris: October 2020), https://www.oecd.org/

finance/insurance/leveraging-the-role-of-property-catastrophe-reinsurance-markets.htm.

8 Engagement in Global Insurance Regulatory or Supervisory Forums in 2020
Monitoring and Responding to the Effects of the COVID-19 Pandemic

The effects of the COVID-19 pandemic, including the associated financial and policy responses

(collectively, the effects of the COVID-19 pandemic), have brought a series of wide-ranging and

unprecedented new challenges for the global insurance industry, including transforming the insurance risk landscape. In response, the IAIS altered its work program to protect and provide operational relief to its constituents and also took steps to assess and address the implications of the

pandemic on the global insurance sector.33 These steps have included (1) adjusting IAIS operations, (2) facilitating communication and coordination among insurance supervisors on their policy

responses, (3) issuing public statements on policyholder protection matters while cautioning

against the payout of retroactive COVID-19-related claims by insurers, and (4) enhancing surveillance and analysis of the global insurance sector. The IAIS took immediate action to safeguard the well-being of its members and stakeholders in

March 2020 by suspending all in-person gatherings and transitioning to virtual events.34 In an

effort to provide operational relief, the IAIS adjusted its work program for members, insurers, and

other stakeholders through the extension of timelines for the ICS and Aggregation Method data

collections and the delay of public consultations on material such as Issues Papers and Application Papers by at least six months.35 The impact of these changes is discussed in more detail in

subsequent sections of this report.

Throughout 2020, the IAIS facilitated communication and coordination among insurance supervisors on policy responses to the effects of the COVID-19 pandemic.36 In March 2020, the IAIS

launched an ongoing survey of key regulatory, supervisory, and other financial policy measures

taken by its members in response to the COVID-19 pandemic.37 The survey and its responses

were intended to promote the exchange of information between insurance supervisors and to identify common approaches and potential areas for coordinated responses. Responses were aggregated in a cumulative, members-only database with nearly 130 submissions from more than

70 jurisdictions.38

33 NAIC, A Report of the NAIC on the State Insurance Regulatory Responses to COVID-19 (2020), 23, https://

content.naic.org/sites/default/files/naic_covid_19_report_update2.pdf. 34 Although the IAIS suspended in-person activities after its February 2020 committee meetings, IAIS groups, particularly

the Executive Committee, held frequent teleconferences to facilitate this communication and coordination. 35 IAIS, “IAIS Executive Committee takes steps to address impact of COVID-19 on the insurance sector,” news release,

March 27, 2020, https://www.iaisweb.org/page/news/press-releases/file/89387/27-march-2020-media-release-iaisexecutive-committee-takes-steps-to-address-impact-of-covid-19-on-the-insurance-sector. 36 See IAIS “IAIS Executive Committee takes steps to address impact of COVID-19 on the insurance sector.”

37 IAIS, Global Insurance Market Report (GIMAR – Covid-19 Edition) (2020), 9, https://www.iaisweb.org/page/supervisorymaterial/financial-stability/global-insurance-market-report-gimar/file/94221/iais-global-insurance-market-report-2020. Beginning in March 2020, IAIS members from all over the globe submitted responses to the IAIS survey asking about

the key regulatory, supervisory, and other financial policy measures taken in responses to COVID-19. The information was collected to facilitate information exchange between insurance supervisors and to identify common approaches and

potential areas for coordinated responses by the IAIS. 38 See IAIS, Global Insurance Market Report (GIMAR – Covid-19 Edition). An additional 11 jurisdictions outside of the IAIS’s

scope also participated in the sectorwide data collection. See IAIS, “Newsletter” (November/December 2020), 6,

https://www.iaisweb.org/page/news/newsletter-archive/file/93986/iais-newsletter-november-december-2020#.

International Insurance Issues, Positions, and Effects 9
The IAIS’s supervisory discussions emphasized the importance of effective policyholder protection

and fair treatment of customers during the pandemic.39 Many supervisors took proactive steps,

such as allowing alternative methods of distributing insurance policies that do not require physical

presence, giving policyholders extra flexibility on premiums, and refunding some premiums if loss

experience declined sharply, such as with auto insurance.40 The IAIS also encouraged insurers to

pay covered claims related to COVID-19 promptly.41 Discussion at the IAIS, however, revealed that

requiring insurers to cover excluded losses related to COVID-19 retroactively could have financial

stability implications. The IAIS cautioned against such initiatives.42

To assess the effects of the COVID-19 pandemic on global insurers and insurance sectors, the

IAIS repurposed its Global Monitoring Exercise (GME), previously planned to assess global

insurance-market trends and developments and to detect the possible build-up of systemic risk in

the global insurance sector. The IAIS focused the 2020 GME on the resulting economic impact of

the pandemic. To this end, data were collected from a pool of 60 insurance groups and regulatory

agencies in 28 jurisdictions. These data were collected to assess the financial impact of the pandemic at both the company and sector level as well as to inform insurance supervisors’

responses.43 Three different data collections provided the IAIS with four quarterly data points for

its monitoring and forward-looking analysis.44

In December 2020, the IAIS published a special edition of the 2020 Global Insurance Market

Report (GIMAR) which assessed the effects of the COVID-19 pandemic on the global insurance

sector in the first six months of 2020. The IAIS concluded that despite the volatility in the financial

markets during the first half of 2020, “the global insurance sector has remained both financially

and operationally resilient,” although the IAIS acknowledged that the pandemic’s ultimate impact

on the insurance sector and its policyholders remains uncertain.45

Based on data and information collected by the IAIS, financial-market volatility associated with the

effects of the COVID-19 pandemic primarily impacted the insurance sector’s profitability through

investment losses. The IAIS believes the surrounding duration and the long-term impact of

COVID-19 on the global insurance industry will continue to present risks to insurers’ profitability

and solvency, and to broader financial stability.46 The IAIS plans to continue to monitor and assess

how insurers are affected by focusing on key vulnerabilities, which may include

39 IAIS, “IAIS facilitates global coordination on financial stability and policyholder protection during Covid-19 crisis,” news

release, May 7, 2020, https://www.iaisweb.org/file/89860/iais-media-release-financial-stability-and-policyholderprotection. 40 IAIS, “IAIS facilitates global coordination on financial stability and policyholder protection during Covid-19 crisis.”

41 IAIS, “IAIS facilitates global coordination on financial stability and policyholder protection during Covid-19 crisis.”

42 IAIS, “IAIS facilitates global coordination on financial stability and policyholder protection during Covid-19 crisis.”

43 See IAIS, Global Insurance Market Report (GIMAR – Covid-19 Edition), 2. 44 See IAIS, Global Insurance Market Report (GIMAR – Covid-19 Edition), 2. 45 See IAIS, Global Insurance Market Report (GIMAR – Covid-19 Edition), 1. 46 See IAIS, Global Insurance Market Report (GIMAR – Covid-19 Edition), 11.

10 Engagement in Global Insurance Regulatory or Supervisory Forums in 2020
• the potential for credit quality deterioration, including adverse-ratings migration in insurers’

bond holdings; • the impact of the prolonged low interest environment, particularly for insurers writing interestsensitive products with long-term guarantees; and • increased COVID-19-related claims frequency and severity, including claims from business interruption insurance coverage due to the uncertainties surrounding policy wording.47

In addition to its then-current initiatives, the IAIS planned for ongoing assessment of potential vulnerabilities arising from the effects of the COVID-19 pandemic, additional supervisory material,

and other activities that would facilitate the leadership role that insurers, supported by supervisors, have to play in the recovery from the effects of the COVID-19 pandemic.

Climate Risk

During 2020, the IAIS’s climate efforts included finalizing an issues paper on recommendations

regarding climate-related financial disclosures,48 consulting the public on an application paper for

supervision of climate risks in insurance,49 analyzing the impact of climate change on insurers’

investments, and adopting an institutional environmental policy for the IAIS’s own behavior.50

The February 2020 joint IAIS and Sustainable Insurance Forum (SIF) issues paper on disclosures

followed recommendations released in 2017 by the FSB Task Force on Climate-related Financial

Disclosures (TCFD) and a 2018 joint IAIS and SIF issues paper on climate change risks to the

insurance sector. The IAIS and SIF based their 2020 paper on a 2019 SIF survey about insurers’

use of climate risk disclosures. The 2020 paper discussed likely trade-offs when strengthening

implementation, suggested a broad range of supervisory issues resulting from an increase in this

risk, and recommended that the IAIS and SIF, as a next step, issue a joint application paper on climate risk in the insurance sector.

In October 2020, the IAIS and SIF issued a public consultation on the Draft Application Paper on

the Supervision of Climate-related Risks in the Insurance Sector, setting a January 2021 deadline

for comments. They explained that the draft paper was meant to be a guide for supervisors

applying relevant IAIS Insurance Core Principles (ICPs) and standards when supervising climate

risk. In addition to public disclosure, the draft paper discussed the supervisory role, corporate gov47 See IAIS, Global Insurance Market Report (GIMAR – Covid-19 Edition), 1. 48 IAIS, “Issues Paper on the Implementation of the Recommendations of the Task Force on Climate-related Financial Disclosures,” (Basel: IAIS, February 2020), https://www.iaisweb.org/page/supervisory-material/issues-papers/file/88991/

issues-paper-on-the-implementation-of-the-tcfd-recommendations. 49 IAIS, “Public Consultation: Draft Application Paper on the Supervision of Climate-related Risks in the Insurance Sector,” https://www.iaisweb.org/page/consultations/closed-consultations/2021/application-paper-on-the-supervision-of

-climate-related-risks-in-the-insurance-sector. 50 IAIS, Environmental Policy (Basel: IAIS, December 2020), https://www.iaisweb.org/file/93682/iais-environmental-policy.

International Insurance Issues, Positions, and Effects 11
ernance, risk management and internal controls, enterprise risk management for solvency purposes, and investments. The IAIS also held a public session on the background of the paper.51

In early December 2020, the IAIS adopted a policy to guide its own stewardship of the environment. The policy sets guidelines for the IAIS’s performance on environmental issues with strategic

objectives and metrics for monitoring and reporting progress. For example, the IAIS seeks to

reduce its overall carbon footprint for travel related to in-person IAIS events and to reduce IAIS

Secretariat travel by 25 percent.

During 2020, the IAIS approved commencement of research for a GIMAR special topic report on

climate change. The IAIS indicated that the report will analyze the macroprudential risks from the

impacts of climate change on insurers’ investments. The IAIS also approved a collection of data to

support the development of this GIMAR special topic, with publication expected in 2021.52

ICS

The IAIS is developing the ICS, a risk-based global insurance capital standard for internationally

active insurance groups (IAIGs), which will represent the quantitative component of the Common

Framework for the Supervision of Internationally Active Insurance Groups (ComFrame).53 The ICS

aims to provide a comparable measure of group solvency, facilitating a common understanding of

IAIG capital adequacy that is expected to enhance cooperation and coordination among supervisors around the world. As a groupwide, consolidated approach, the ICS is intended to provide a

harmonized capital standard across jurisdictions.54

After six years of field testing the ICS, the IAIS launched its planned five-year ICS monitoring

period in January 2020, marking the start of annual confidential reporting of the ICS by volunteer

insurance groups and any additional reporting at the option of groupwide supervisors.55,56 One of

51 IAIS, “Public Consultation: Draft Application Paper on the Supervision of Climate-related Risks in the Insurance Sector,” https://www.iaisweb.org/page/consultations/closed-consultations/2021/application-paper-on-the-supervision-of

-climate-related-risks-in-the-insurance-sector. 52 IAIS, “2020-2021 Public Roadmap,” (2020), 5, https://www.iaisweb.org/page/about-the-iais/public-roadmap/file/

88079/2020-2021-iais-public-roadmap. 53 ComFrame, adopted in November 2019, establishes supervisory standards and guidance focusing on the effective

groupwide supervision of IAIGs. IAIS, “Frequently Asked Questions: IAIS Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame),” https://www.iaisweb.org/page/supervisory-material/insurance-coreprinciples-and-comframe/file/87287/comframe-frequently-asked-questions. 54 See IAIS, Risk-Based Global Insurance Capital Standard Version 2.0 (Public Consultation Document), https:// www.iaisweb.org/page/consultations/closed-consultations/2018/ics-version-20//file/76124/ics-version-20

-public-consultation-document. 55 The purpose of the monitoring period is to monitor the performance of the ICS over a period of time rather than the

capital adequacy of IAIGs. IAIGs are not expected to manage their businesses to the ICS during this time. As a result, no

supervisory actions will be taken if ICS coverage ratios fall below 100 percent. Furthermore, the monitoring period is

intended to be a period of stability for the reference ICS and additional reporting. This does not preclude possible clarifications or refinements and correction of major flaws or unintended consequences identified during the monitoring period

to improve the ongoing development of the ICS. IAIS, “Explanatory Note on the Insurance Capital Standard (ICS) and

Comparability Assessment” (November 2019), https://www.iaisweb.org/page/news/press-releases//file/87173/

explanatory-note-on-the-ics-and-comparability-assessment.

12 Engagement in Global Insurance Regulatory or Supervisory Forums in 2020
the primary objectives of the monitoring period is for the IAIS to improve the ICS through feedback

from supervisors and IAIGs.57 The effects of the COVID-19 pandemic, however, presented some

difficulties in the first year due to the lockdowns and travel restrictions that were imposed by

various governments. The IAIS responded by providing operational relief to supervisors and firms,

delaying the deadline for data submissions, and allowing firms to continue reporting on a bestefforts basis rather than a higher-quality basis. While the delay in reporting made it challenging for

supervisory college discussions on the ICS to take place more widely in 2020, the IAIS still

received some views from supervisors and firms, including on the appropriateness and performance of the reference ICS relative to existing capital standards.

The effects of the COVID-19 pandemic also led to the cancellation of the global supervisory forum

that was planned for 2020. In addition, one jurisdiction withdrew from the ICS project so that the

jurisdiction’s authorities could address the impact of the health crisis on its own market. In the

end, 39 insurance groups from around the world participated in the ICS confidential reporting exercise in 2020, six of which were from the United States.58 Additionally, the conditions created by

the pandemic provided the IAIS with some insight into the performance of the ICS in a period of

global stress.

The IAIS’s ultimate goal is a single ICS that includes a common methodology through which the

ICS achieves comparable outcomes across jurisdictions. In reaching that objective, the IAIS will

make certain key decisions during the monitoring period on whether other approaches will be part

of the final structure of the ICS. An alternative valuation methodology (GAAP Plus) and other

methods of calculating the ICS capital requirement—such as with the use of internal models—will

be under consideration for inclusion in the ICS in its final form.

FIO and the Federal Reserve will continue to engage with the IAIS in order to better reflect U.S.

insurance practices and markets in the ICS framework, endeavoring to also inform both the public

consultation of the ICS as a prescribed capital requirement (PCR) and the economic impact

assessment planned for later in the monitoring period. Team USA continues to advocate for an ICS

that is appropriate for the United States.

Led by the United States and in collaboration with other interested jurisdictions, the development

of the Aggregation Method (AM), a potential alternative approach to the ICS of calculating group

capital, continues to progress. In November 2020, the IAIS issued a public consultation,

56 Optional reporting for the ICS can include ICS results based on an alternative valuation methodology (Generally

Accepted Accounting Principles with Adjustments, or GAAP Plus) and other methods of calculating the ICS capital

requirement, including with the use of internal models and dynamic hedging. 57 IAIS, “Operationalisation of the Monitoring Period,” news release, November 14, 2019, https://www.iaisweb.org/page/ news/press-releases//file/87172/operationalisation-of-the-monitoring-period. 58 See IAIS, “Successful first year of monitoring of the global insurance capital standard (ICS) on route to adoption in

2024,” news release, March 8, 2021, https://www.iaisweb.org/news/press-release-successful-first-year-of-monitoring-ofthe-global-insurance-capital-standard-ics-on-route-to-adoption-in-2024.

International Insurance Issues, Positions, and Effects 13
requesting views on its draft definition of comparable outcomes and high-level principles to inform

the criteria that will be used to assess whether the AM provides comparable outcomes to the

ICS.59 If deemed comparable, the AM will be considered an outcome-equivalent approach for

implementation of the ICS as a PCR. As with the ICS work, FIO and the Federal Reserve will continue to take an active part in the ongoing comparability discussions at the IAIS.

As set out in the Act, before “supporting or consenting to the adoption of any final” ICS, Treasury

and the Federal Reserve—in consultation with the NAIC—are required to complete a study, and

provide a report to Congress, on the impact on U.S. consumers and markets.60 To help inform

FIO’s future work on the ICS and related matters at the IAIS, FIO issued a Request for Information

in October 2020, seeking views on the potential impact to the U.S. insurance market with the

planned implementation of the ICS, including the implications for global competitiveness of U.S.

insurers and product cost and availability for consumers.61 Treasury and the Federal Reserve consider that, in order for any form of an ICS to be considered a global standard, it must be appropriate for the U.S. insurance market.

Other IAIS Macroprudential Work

In 2020, the IAIS also further developed metrics to monitor the global insurance industry’s liquidity

position. On November 9, 2020, the IAIS published a draft liquidity monitoring metric for public

comment.62 This proposed metric would not be a requirement or have the potential to result in any

designation of an insurer as systemically important. Instead, it would help the IAIS form a comprehensive assessment about the potential build-up of systemic risk in the insurance sector. The IAIS

planned to continue to consult further on other liquidity metrics in 2021, including at least one

that relies on company projections, and finalize an initial set of metrics for monitoring in 2022.

Assessment Work

Throughout 2020, the IAIS continued its pivot from the development of standards to supporting

the implementation and assessment of implementation of standards. The IAIS published the

results from its corporate and risk-governance thematic Peer Review Process, in which 70 mem59 IAIS, “Public Consultation on the Draft Definition and High-Level Principles to Inform the Criteria that Will Be Used to

Assess Whether the Aggregation Method Provides Comparable Outcomes to the Insurance Capital Standard,” https:// www.iaisweb.org/page/consultations/closed-consultations/2021/draft-definition-of-comparableoutcomes-and-high-level-principles. 60 Act § 211(c)(3)(A), 31 U.S.C. § 313 note. 61 Federal Insurance Office Study on the Insurance Capital Standard, 85 Fed. Reg. 64,228 (October 9, 2020), https:// www.federalregister.gov/documents/2020/10/09/2020-22384/federal-insurance-office-study-on-theinsurance-capital-standard. 62 IAIS, Development of Liquidity Metrics: Phase 1 – Exposure Approach (Public Consultation Document) (Basel: IAIS,

November 2020), https://www.iaisweb.org/page/consultations/current-consultations/development-of-liquidity-metricsphae-1-exposure-approach/file/93103/pcd-on-development-of-liquidity-metrics-phase-1-exposure-approach-public.

14 Engagement in Global Insurance Regulatory or Supervisory Forums in 2020
bers participated, covering ICPs 4, 5, 7, and 8.63 Following its 2019 assessment of Guernsey, the

IAIS also published the results of its second pilot Member Assessment Process, a detailed

assessment of the implementation of all ICPs, for the Kingdom of Morocco.64 The IAIS additionally

took steps to identify implementation needs and challenges from its broader membership base,

particularly those from Emerging Market and Developing Economy (EMDE) jurisdictions.65

The IAIS also started its assessment of insurance supervisors’ implementation of the Holistic

Framework supervisory material. This assessment builds on existing IAIS assessment methodologies to promote globally consistent and effective implementation of the Holistic Framework supervisory material. In May 2020, the IAIS launched a self-assessment questionnaire, the first phase

of the project. These self-assessments are intended to assess a baseline level of implementation.

During 2020, the IAIS also agreed to the key design elements of the second phase of the implementation assessment, which is scheduled to start in 2021 and end in 2022, and feature more

intensive assessments by the IAIS of implementation of the Holistic Framework supervisory

material.

Other IAIS Activity

In response to the increasing significance of cyber risk, further exacerbated by increased teleworking and cyber incidents arising from the effects of the COVID-19 pandemic, the IAIS formed

the Operational Resilience Task Force (ORTF) in 2020. The aim of the ORTF is to focus on developing supervisory supporting guidance and material in operational resilience, specifically on information technology third-party outsourcing and insurance sector cyber resilience. The ORTF may

also look at integrating lessons on ensuring business continuity over an extended period into

supervisory guidance.66

The IAIS also published material on a range of topics beyond those outlined above. For example,

the Resolution Working Group, which FIO currently chairs, published an Application Paper on Resolution Powers and Planning in November 2020, based in part on issues raised during the consultation on ICP 12 and related ComFrame material.67 Also, the IAIS released an Issues Paper on the

63 IAIS, Peer Review of Corporate and Risk-Governance relative to the standards set out in Insurance Core Principles 4, 5, 7

and 8 (Basel: IAIS, June 2020), https://www.iaisweb.org/page/supervisory-material/implementation-and-capacitybuilding/assessments/file/90676/aggregate-report-of-prp-on-icps-457-and-8. 64 IAIS, Detailed Assessment of Observance IAIS Insurance Core Principles (ICPs) Morocco (Basel: IAIS, June 2020), https:// www.iaisweb.org/page/supervisory-material/implementation-and-capacity-building/assessments/file/

90877/assessment-report-map-morocco. 65 IAIS, Newsletter (November/December 2020), “Implementation and Assessment Committee,” https://www.iaisweb.org/

page/news/newsletter-archive/file/93986/iais-newsletter-november-december-2020#. 66 IAIS, “2021-2022 Roadmap Adopted on 22 February 2021,” https://www.iaisweb.org/page/about-the-iais/publicroadmap//file/95571/2021-2022-iais-public-roadmap. 67 IAIS, Application Paper on Resolution Powers and Planning (For Public Consultation) (Basel: IAIS, November 2020),

https://www.iaisweb.org/page/consultations/closed-consultations/2021/application-paper-onresolution-powers-and-planning.

International Insurance Issues, Positions, and Effects 15
Use of Big Data Analytics in Insurance,68 a report on the LIBOR transition from an insurance perspective,69 and a report on cyber risk underwriting.70 Staff from FIO and the Federal Reserve contributed to development of IAIS materials and will continue to advocate for U.S. interests

throughout the IAIS.

FSB Cross-Border Resolution

The FSB oversees some insurance resolution-planning work through the CrossBorder Crisis Management Group for Insurers (iCBCM).71 The FSB’s iCBCM assists and supports regulatory authorities in the development and implementation of resolution-related policy measures for global systemically important insurers (G-SIIs). Specifically, the iCBCM works under the direction of the FSB’s

Resolution Steering Group and in coordination with the IAIS’s Resolution Working Group, to

develop guidance for resolution powers and tools regarding G-SIIs, as well as addressing issues

relating to their application.72 Both FIO and the Federal Reserve are members of the iCBCM.

In 2014, the FSB released its Key Attributes for Effective Resolution Regimes for Financial Institutions (Key Attributes), which covers financial institutions overall, and includes separate annexes for

various sectors, including insurance.73 In August 2020, the FSB finalized the Key Attributes Assessment Methodology for the Insurance Sector, which presents the approach for assessing implementation of the Key Attributes in the insurance sector.74

In November 2020, the FSB issued its ninth report on the implementation of resolution reforms,

which noted that the iCBCM will continue to monitor the implementation of the Key Attributes for

the insurance sector.75

68 IAIS, Issues Paper on the Use of Big Data Analytics in Insurance (Basel: IAIS, February 2020), https://www.iaisweb.org/

page/supervisory-material/issues-papers/file/89244/issues-paper-on-use-of-big-data-analytics-in-insurance. 69 IAIS, Supervisory Issues Associated with Benchmark Transition from an Insurance Perspective (Basel: IAIS, July 2020),

https://www.iaisweb.org/page/supervisory-material/other-supervisory-papers-and-reports/file/90888/

iais-report-on-supervisory-issues-associated-with-benchmark-transition-from-an-insurance-perspective. 70 IAIS, Cyber Risk Underwriting: Identified Challenges and Supervisory Considerations for Sustainable Market Development

(Basel: IAIS, December 2020), https://www.iaisweb.org/page/supervisory-material/other-supervisory-papers-andreports/file/94255/cyber-risk-underwriting-identified-challenges-and-supervisory-considerationsfor-sustainable-market-development. 71 See 2019 Fed-FIO Annual Report. 72 FSB, FSB 2019 Resolution Report: Mind the Gap (Basel: FSB, November 2019), 16, https://www.fsb.org/wp-content/

uploads/P141119-3.pdf. 73 FSB, Key Attributes of Effective Resolution Regimes for Financial Institutions (Basel: FSB, October 2014), https:// www.fsb.org/wp-content/uploads/r_141015.pdf. 74 FSB, Key Attributes Assessment Methodology for the Insurance Sector (Basel: FSB, August 2020), https://www.fsb.org/

wp-content/uploads/P250820-1.pdf. 75 FSB, FSB 2020 Resolution Report (Basel: FSB, November 2020), 18, https://www.fsb.org/2020/11/2020-resolutionreport-be-prepared/.

16 Engagement in Global Insurance Regulatory or Supervisory Forums in 2020
Transparency Efforts at the IAIS and

the FSB

FIO and the Federal Reserve promote efforts to increase transparency at the IAIS and the FSB. FIO

further enhances transparency by engaging with stakeholders through the FACI, which provides

non-binding advice and recommendations to FIO. The Federal Reserve performs a similar function

through the IPAC.

IAIS Transparency Efforts

Our 2019 report noted several aspects of the IAIS’s approach to transparency, as follows:76 • enshrining in IAIS by-laws the requirement to “operate in an open and transparent manner”;77 • committing, in its 2017 Stakeholder Engagement Plan, to enhanced engagement opportunities;78 • holding an annual conference, open to all stakeholders and the general public;79 • expanding reliance on its newsletter and website to publish key materials and publicize engagement opportunities;80 and • a statement by the IAIS secretary general that the IAIS has “a fresh commitment to further

strengthen these stakeholder engagement efforts.”

81

As described in last year’s report, these commitments have been reflected in the increasingly

transparent manner by which the IAIS has considered, advanced, and adopted its policy initiatives,

standards, and guidance.82

While the IAIS made a range of adjustments to its work program in 2020 to provide operational

relief to member supervisors, insurers, and other stakeholders, and while no in-person meetings

were held after February 2020, the work and outreach of the IAIS continued. Table 2 compiles the

various stakeholder consultations and events conducted by the IAIS in 2020, all of which were

held through remote means. As in past years, Team USA members actively participated in each of

76 See 2019 Transparency Report, 2019 Fed-FIO Annual Report. 77 See “IAIS By-Laws,” Art. 2(3). 78 See IAIS, 2017 Annual Report, 10 (referencing the “commitments contained in the IAIS Stakeholder Engagement Plan”). 79 See IAIS, Stakeholder Engagement Plan, section I(J), https://www.iaisweb.org/file/65579/iais-stakeholder-engagementplan-2017. 80 See, e.g., IAIS, “Newsletter,” https://www.iaisweb.org/page/news/newsletter; IAIS, Stakeholder Engagement Plan, sec- tion I(K), https://www.iaisweb.org/file/65579/iais-stakeholder-engagement-plan-2017. 81 IAIS, “Newsletter” (Summer 2019), 1, https://www.iaisweb.org/page/news/newsletter-archive/file/83788/iais- newsletter-summer-2019. 82 See 2019 Transparency Report, 2019 Fed-FIO Annual Report, 15.

17
the sessions, including by chairing some of them. In the view of Treasury and the Federal Reserve,

this expansive list demonstrates that the IAIS continues to take seriously the need for transparency. Its efforts to do so during this difficult period reflect that commitment. Team USA members

will advocate for continued transparency by the IAIS and will continue to consult among themselves and with U.S. stakeholders in support of such efforts.

FSB Transparency Efforts

Treasury and the Federal Reserve have also worked to increase transparency at the FSB, including

through the Federal Reserve’s leadership role. Randal K. Quarles continued to serve as FSB Chair

in 2020. He made increasing FSB transparency and stakeholder engagement a key part of the

group’s agenda. In 2019, for the first time in its history, the FSB publicly disseminated its comprehensive work program. The FSB’s work program was also published in 2020 and 2021.

The FSB also continues to engage directly with insurers as part of its transparency efforts. In

May 2020, senior FSB representatives met with industry stakeholders, including insurers, on the

impact of COVID-19. Insurers also participated in other discussions at the FSB, including an FSB

event on credit-rating downgrades.

Table 2. IAIS stakeholder consultations and meetings, 2020

Date Consultations and meetings

January 14, 2020 Public background session on the draft Issues Paper on Task Force on Climate-related Financial Disclosures (TCFD)

Recommendations (webinar) with United Nations Sustainable Insurance Forum (SIF).

January 21, 2020 Public background session on ICS Version 2.0 for the monitoring period (teleconference).

February 27, 2020 Interested stakeholder call-in session with Accounting and Auditing Working Group to provide updates on its

activities and gather feedback on key matters of interest.

March 31, 2020 Public briefing session on Issues Paper on the Use of Big Data Analytics in Insurance (teleconference).

April 21, 2020 Stakeholder event (teleconference) of the Resolution Working Group to support the development of the Application

Paper on Resolution Powers and Planning. June 3, 2020 Interested stakeholder teleconference with Accounting and Auditing Working Group to provide updates on its

activities and gather feedback on key matters of interest.

June 9, 2020 IAIS SIF webinar supporting the development of an Application Paper on the Supervision of Climate-related Risks in

the Insurance Sector. June 25, 2020 IAIS ExCo virtual dialogue (webinar) focused on COVID-19 and an update on the IAIS’s Roadmap activities and

providing stakeholders with an opportunity to ask questions to leadership and share their perspectives and views. October 22, 2020 Interested stakeholder teleconference with Accounting and Auditing Working Group to provide updates on its

activities and gather feedback on key matters of interest.

October 26, 2020 Public background session co-hosted with SIF (webinar) on the Draft Application Paper on the Supervision of

Climate-related Risks in the Insurance Sector, that was published for consultation on October 13, 2020.

November 30, 2020 Public background sessions (webinar) on the two consultation documents: (1) Development of Liquidity Metrics:

Phase 1 – Exposure Approach; and (2) Application Paper on Resolution Powers and Planning. Source: IAIS, “Stakeholder Meetings,” https://www.iaisweb.org/page/events/stakeholder-meetings/previous-meetings.

18 Engagement in Global Insurance Regulatory or Supervisory Forums in 2020
The Federal Reserve and Treasury also have advocated for increased transparency on IAIS matters

at the FSB. The Federal Reserve and Treasury have advocated at both the IAIS and FSB for a

public consultation as part of the FSB’s planned 2022 review of G-SII designations. To accommodate this public consultation after the delays in implementation of the Holistic Framework due to

COVID-19, the Federal Reserve and Treasury have suggested postponing this review until 2023.

The FSB continues to look for ways to further increase stakeholder engagement.

Federal Advisory Committee on Insurance

FIO receives non-binding advice and recommendations from FACI, which includes a cross-section of

members who represent the views of state and non-government persons having an interest in

FIO’s duties and authorities, including state insurance regulators, industry experts, and consumer

advocates. FACI has four subcommittees, which prepare draft recommendations for FACI’s consideration. The Subcommittee on FIO’s International Work presented draft recommendations related

to international market access to FACI at the December 2020 meeting. The Subcommittee also

presented a white paper addressing key market access challenges for international insurers,

which elaborated on the proposed recommendations.83

Following discussion, FACI adopted the following recommendations:84 • FIO should advocate for Treasury and other federal departments and agencies with relevant

jurisdiction and expertise—including the Office of the U.S. Trade Representative—to ensure the

issues the Subcommittee has identified are considered and resolution sought when engaging in

trade negotiations and bilateral consultations with foreign jurisdictions. • Analysis of which jurisdictions are engaging in the market access and level playing field issues

the Subcommittee has identified should be expanded upon and maintained by the U.S. Government. FIO should advocate for the Office of the U.S. Trade Representative to request that the

U.S. International Trade Commission undertake this work. • Within the framework of international agreements, FIO should advocate for Treasury and the

Office of the U.S. Trade Representative to encourage relevant agencies and organizations to

strengthen monitoring of international trade agreement implementation and enforcement of violations, including establishment of annual meetings of signatories to review implementation

status and adherence to commitments and new approaches for early identification of issues

and resolution of disputes.

83 FACI International Subcommittee, “Market Access/Level Playing Field: Key Challenges for International Insurers,”

(2020), https://home.treasury.gov/system/files/311/faci-white-paper-market-access-12-20.pdf. 84 FACI, “Minutes – 3 December 2020,” 33-34, https://home.treasury.gov/system/files/311/FACI-Minutes-12-20.pdf. See

also Treasury, “FACI Recommendations,” https://home.treasury.gov/policy-issues/financial-markets-financial-institutionsand-fiscal-service/federal-insurance-office/federal-advisory-committee-on-insurance-faci/faci-recommendations.

Transparency Efforts at the IAIS and the FSB 19
• FIO should advocate for policies and standards at the IAIS that prevent disparate supervision of

market players operating in a jurisdiction. • FIO should advocate for Treasury to pursue policies and standards at the FSB that prevent disparate supervision of market players operating in a jurisdiction.

These recommendations were taken into consideration by FIO and helped inform Treasury’s position on a variety of market access topics.

Insurance Policy Advisory Committee

In 2020, the IPAC, which was established by Congress in 2018 through the Act, advised the Federal Reserve primarily on capital standards.85

The Federal Reserve also solicited applications for seven IPAC members.86 The Act provides that

the IPAC may have up to 21 members, “represent[ing] a diverse set of expert perspectives from

the various sectors of the United States insurance industry, including life insurance, property and

casualty insurance and reinsurance, agents and brokers, academics, consumer advocates, or

experts on issues facing underserved insurance communities and consumers.”

87 In 2020, the

Federal Reserve reappointed four of the inaugural IPAC members, who had served an initial oneyear term, and appointed three new IPAC members.88 These IPAC members will serve three-year

terms commencing in January 2021. The Federal Reserve continues to build a diverse IPAC

membership.

85 See Act § 211(b), 31 U.S.C. § 313 note (establishing the Insurance Policy Advisory Committee). 86 Solicitation of Statements of Interest for Membership on the Insurance Policy Advisory Committee, 84 Fed. Reg. 33,264

(July 12, 2019), https://www.federalregister.gov/documents/2019/07/12/2019-14873/solicitation-of-statements-ofinterest-for-membership-on-the-insurance-policy-advisory-committee. 87 Act § 211(b)(2). 88 Federal Reserve, “Records of the meetings of the Insurance Policy Advisory Committee,” (2020), https:// www.federalreserve.gov/aboutthefed/ipac.htm.

20 Engagement in Global Insurance Regulatory or Supervisory Forums in 2020
Conclusion

In 2020, Treasury and the Federal Reserve—in coordination with other Team USA members—

continued to advocate for the development of international insurance standards that are appropriate for the United States. Treasury and the Federal Reserve will continue to strengthen their

engagement in the work of the IAIS, FSB, and OECD, including, but not limited to, the ongoing

development of the ICS and implementation of the IAIS’s Holistic Framework.

Going forward, Treasury and the Federal Reserve will continue to advocate for insurance regulatory

and supervisory standards that are appropriate for the United States, and will continue to report

to Congress on their efforts. In addition, Treasury and the Federal Reserve will continue their

efforts to increase transparency at the IAIS and the other relevant standard-setting bodies.

21
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