Part of what has moved Treasury officials is an effort to keep up with the globalization of insurance supervision. Europe responded to the crisis by overhauling the way it looks after its industry, with renewed attention to its ability to survive financial shocks, and the empowerment of a continent-wide insurance supervisor. The European Union’s so-called Solvency II framework, moreover, raises the specter that Europe may use it solvency rules to keep foreign insurers out of European markets, on the grounds that they are too risky to trust with the money of European consumers. That threat, among other things, means that copies of the European approach are taking root across the world.
But keeping pace with Europe doesn’t work well with the American system of insurance regulation, where the federal role is minimal and each state has a different regulatory regime.
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