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New international insurance head signals shift in priorities

The International Association of Insurance Supervisors, the insurance supervisory standard-setting body, is positioning itself to monitor risks in financial technology, cybersecurity and climate-related financial exposure while at the same time prioritizing the recognition of emerging markets, according to its new secretary general, Jonathan Dixon.

Dixon spoke Dec. 2 at a U.S. insurance regulatory forum in Honolulu. His remarks represent a shift from a previous laser focus on systemic risk and financial stability to embrace wider market issues and developing insurance economies around the world.

In an open forum during the National Association of Insurance Commissioners' fall meeting, Dixon emphasized the need for the IAIS to address the escalating risks that accompany digital technology. He said the IAIS intends to launch a fintech forum in 2018, and to address good supervisory practices in the cybersecurity risk arena. Dixon also told the assembled industry representatives and state insurance regulators that there would be a much bigger focus on market conduct issues going forward with regard to fintech.

Dixon, who was South Africa's top insurance regulator before he officially took the helm of the Basel-based IAIS, pointed out that almost two-thirds of IAIS members represent emerging markets. He said that under his direction, the IAIS will seek to find a balance between stability and market development issues.

While Dixon is expanding the focus of IAIS, he said the "ultimate goal" of applying one insurance capital standard to all global insurers remains.

Dixon assumed the role of secretary general following the IAIS annual conference in early November, succeeding Yoshihiro Kawai who had held the position since 2003. Kawai had spoken about his dream for having one international insurance capital standard, or ICS, and characterized the U.S. approach to the ICS as challenging.

The IAIS is moving forward with an approach to capital requirements that is favored by European insurance regulators, following the annual IAIS conference last month in Kuala Lumpur. The U.S. favors a different approach, and at the Hawaii meeting, the NAIC's International Insurance Relations Committee head, Katharine Wade, said U.S. insurance regulators are "deeply concerned" about the international capital standard. It is important the U.S. gets recognition for its method of calculating capital as the IAIS works toward a meaningful standard that can be compared globally so that supervisors "can talk to each other across the world," said Wade, who is also Connecticut's Insurance Commissioner.

In a subsequent NAIC meeting, also Dec. 2, Dixon characterized the IAIS as moving toward a more inclusive "collaboration approach" in dealing with stakeholders. Dixon's move to greatly expand stakeholder involvement comes after a period where some parties felt left out of key IAIS proceedings.

In remarks to S&P Global Market Intelligence, Dixon embraced his predecessor's goal of a "single standard" for capital when asked, but added that the ICS can be adapted to be "proportionate." He referenced a single standard resulting in a "comparable outcome" among jurisdictions.

The term comparable has not been defined yet, but some in the industry are heartened by the fact the IAIS appears to be willing to consider different approaches that lead to the same strong outcome.