Summit News: Warning on government intervention

GOVERNMENT intervention in the insurance industry must not contribute to market distortion, a former senior regulator has warned.

Alessandro Iuppa, the former Superintendent of the Maine Bureau of Insurance and president of the National Association of Insurance Commissioners, told delegates at the Insurance Day Summit London that government intervention should not favour one company over another, or one sector over another.

Iuppa, who his now senior vice-president of government and industry affairs, Zurich North America, said insurance groups should be able to rely on “supervisory architecture”. In particular he said global groups should be supervised by a “college of supervisors”.

“To be effective, group oversight will require greater transparency and co-operation between supervisors. Progress should not be held up by real or perceived difficulties.

“Effective regulation should not be measured by quantity of rules, but should reflect the effective needs,” he said.

According to Iuppa, lawmakers considering new financial services regulation need to understand that the business models for insurers are different from those of other financial services providers.

In particular he noted insurers are funded by premium paid in advance rather than deposits. Equally he said insurance risks represents a high proportion of the risk profile of insurers. These are not correlated to market risk, he said.