these insurers are capable of dealing with the unprecedented challenges posed by the covid event. another new challenge is understanding and ensuring that firms account for climate - related financial risks. and a central part of the fed ’ s agenda is working with other regulators and the industry to devise an appropriate approach to regulating capital — one that recognizes the unique role of insurance in the financial system and the distinctions between insurance companies and banks. our deliberate process has helped build confidence among regulators and the industry and is bringing us to consensus. the public, which depends on a strong and stable insurance sector, has been well - served by that process and will benefit from the outcome. thank you for the opportunity to speak with you. i look forward to engaging with you all in the future. 1 kerry a. odell and marc d. weidenmier, “ real shock, monetary aftershock : the 1906 san francisco earthquake and the panic of 1907, " j. econ. hist. 64, no. 4 ( 2004 ) : 1002 – 1027. return to text 4 / 4 bis central bankers'speeches

the ipac, the ipac will shortly be accepting 2 / 4 bis central bankers'speeches applications. in addition to the insurance policy advisory committee, we ’ re also working with the states and the national association of insurance commissioners ( naic ), which i want to congratulate on adopting a model law related to their group capital calculation ( gcc ) at the end of last year. we coordinated with the states and the naic to ensure that there would not be unnecessary duplication and burden between our two capital frameworks. while the building block approach and group capital calculation cannot be exactly aligned due to reasons that include our different legal mandates and restrictions, this collaboration has been successful. as one example, no group will be subject to both the bba and gcc. instead, the fed and the states will share information on groups we both supervise. this reduces unnecessary burden on firms while still allowing appropriate supervision. our close coordination with the states, the naic, and also the federal insurance office extends to international policy development at the iais. the members of “ team usa, ” as we refer to this group, work together to advocate for the united states internationally. one important international project that i have already mentioned is the ics. two years ago, the ics reached a milestone when the iais membership adopted ics version 2. 0 for use in a five - year monitoring period. the purpose of this monitoring period is to evaluate the functionality and performance of the ics. team usa has argued that as currently constructed, the ics would not be appropriate as a capital rule for u. s. internationally active insurance groups. its market adjusted valuation approach could introduce significant volatility into the capital measure and capital requirement, which could lead to procyclical economic effects and harm the ability of insurers to provide longterm savings products. accordingly, team usa and other interested jurisdictions continue to build on our work on the group capital calculation and building block approach to develop what the iais terms the aggregation method, which could be considered an equivalent implementation of a group capital rule for large, internationally active insurers in the united states. to accomplish that, team usa is currently working with other iais members to develop criteria to assess whether the aggregation method and ics have a sufficient level of comparability. these criteria are planned to be released by the iais for public comment at the end of this year or early next year. as i have mentioned, it