The Property Casualty Insurance Association of America (PCI) has defended the system of state-based regulators and rejected a Financial Stability Board review that calls for a streamlined, federal structure.

The association says an approach designed for banks should not be imposed on insurers.

The international stability board’s recent peer review of US regulation says good progress has been made in some areas of financial markets.

But it says insurance supervision is less advanced and “characterised by the multiplicity of state regulators, the absence of federal regulatory powers to promote greater regulatory uniformity and the limited rights to pre-empt state law”. This “constrains the ability of the US to ensure regulatory uniformity”.

Consolidated financial reporting should be required and states should implement recommendations on state commissioners’ appointments, their departmental powers, funding and staffing, the board says.

PCI VP International Policy David Snyder says the report was prepared by a global team “that may not like our state-based system, not because it is ineffective, but because it is different”.

“The US insurance market is widely recognised as being highly competitive, with a large number of very successful companies,” he said.

“Our market is large and diverse, serves consumers well and has withstood the financial crisis – better than some other sectors – [as well as] unprecedented natural catastrophes and years of economic slowdown.”