Vaughan.Crisis - Removed from Syllabus

REMOVED FROM SYLLABUS: Lessons from State Insurance Regulation

This section has been removed from the syllabus starting 2023-Fall

Insurance companies fared relatively well during the financial crisis of 2007-08. This shows that the state-based system of insurance regulation with its various checks & balances is a good model. Financial systems, including insurance, are becoming increasingly globalized. Can we take elements of the U.S. state-based system and expand it to the global stage?

Question: identify 4 elements in building an effective global insurance regulatory system [Hint: TSAR]

Element 1: Trust

• regulators must trust each other

   U.S.: accomplished through NAIC accreditation

   global proposal: IMF Financial Sector Assessment Program and G20 peer review

Element 2: Share

• regulators in different countries must share information

(this is the greatest challenge because domestic regulators want to protect domestic industries)

Element 3: Action

• other countries must be able to take action against an insurer

(if dissatisfied with actions by other regulators)

Element 4: Resolution

• mechanism of resolution for bankruptcies

(must be fair to all countries involved)

This list strikes me as very important. Globalization is a core issue facing all of us. Do we need a global TSAR for insurance regulation?