The American Insurance Association (AIA) fears the ComFrame working draft is being interpreted as a new layer of prudential supervision.

Senior Vice President Stef Zielezienski says his organisation, representing 300 US insurers, has a number of concerns about the International Association of Insurance Supervisors’ (IAIS) proposed framework.

“The prescriptive nature and focus on module two in the ComFrame working draft is being interpreted as a new prudential layer of regulation for international active insurance groups (IAIGs), rather than guidance for regulators on the supervision of these insurance groups,” Mr Zielezienski said.

“There is confusion over the substantive differences between supervision of IAIGs and the heightened prudential standards that will apply to those firms that are determined to be global systemically important institutions. 

“It is important that IAIGs be distinguished from those entities that are true sources of systemic risk to global financial stability.”

Mr Zielezienski wants a balance between ComFrame, national regulatory frameworks and market competition.

“If ComFrame establishes new regulatory hurdles for IAIGs and does not allow flexibility for national regulatory schemes to function it may have competitive consequences for these groups and create unlevel… playing fields on a national basis,” he said.

Connecticut Insurance Commissioner Tom Leonardi says ComFrame should not supersede local regulation. “To have a lead regulator that has ‘ultra powers’ would be detrimental,” he told the IAIS conference in Washington last week.

European Insurance and Occupational Pensions Authority Chairman Gabriel Bernardino says the proposed framework must catch “real risks” at a group level.

“Here we have an opportunity,” he said. “We should have a global standard for insurers’ group supervision. It needs to be quantitative and qualitative.”

But Mr Bernardino has expressed doubts about ComFrame being developed quickly. “Can we achieve it tomorrow? No,” he said.