World needs rules for insurers

Tatsuo Yamazaki, vice chairman of an executive committee at the International Association of Insurance Supervisors has the world needs common solvency rules to prevent another AIG, Bloomberg reports.

“Insurers are becoming internationally active, and they are forming conglomerates as they handle various financial products in addition to insurance products. There’s an increasing awareness that global standards will be needed in the insurance industry.”

Regulators should establish global standards on capital requirements, including the minimum ratio for solvency margins, a gauge of an insurer’s ability to pay policyholders, Yamazaki said. Common rules also need to be applied to all group companies of global insurers, rather than just the insurer itself, he said.

“As insurance regulators, we have started thinking about what we can do to prevent such a crisis from happening again,” said Yamazaki, who is also deputy commissioner for international affairs at Japan’s Financial Services Agency.