The International Monetary Fund (IMF) has called on the US to create an independent national regulator for the insurance industry.

The US has state-based regulation, and National Association of Insurance Commissioners President Monica Lindeen has rejected the recommendation, which features in an IMF assessment of the country’s financial system.

“The report acknowledges our sophisticated approach to capital adequacy regulation through risk-based capital, the high degree of transparency and accountability in our state-based system and our efforts to improve group and international supervision,” she said in a statement to insuranceNEWS.com.au.

Ms Lindeen, who is also Montana Commissioner of Securities and Insurance, says the IMF does not substantiate its preference for a national regulator.

The IMF’s call is among recommendations aimed at helping the US protect its financial system.

It says key risks over the next three years include increased volatility in financial markets, cyber attacks, natural disasters and IT failures.

“Low interest rates have led to a build-up in leverage – the use of borrowed money to invest – and are creating risks that affect insurance companies, mutual funds and other non-banks,” the IMF says.

Stress testing suggests insurers, hedge funds and other managed funds contribute to overall financial risks by an amount larger than suggested by their size.

The US Government established a Federal Insurance Office within the Treasury Department in 2010, in response to the global financial crisis, but it has no supervisory or regulatory authority.