Japan lauds an insurance regulatory uniformity proposal in the US.
For over a decade after the Japan-US insurance agreement was concluded in 1994, the Japanese non-life insurance industry has been calling for better regulatory uniformity among the 50 different states in the US. Each state has had its own regulatory mechanism, which occasionally works in a diametrically opposite manner to the federal body.
The matter was high on the agenda during the recent Japan-US Insurance Consultation and during the World Trade Organisation (WTO) Financial Services negotiations.Last year, the Japanese government urged both the government of the US and the National Association of Insurance Companies “to harmonise and unify the State-based insurance supervisory systems, or to shift to the federal regulatory system.”
On 5 April this year, two senators, John Sununu and Tim Johnson, pushed for the introduction of the National Insurance Act of 2006 (NIA), to improve regulation of property/casualty insurance as well as life insurance in the US. “The General Insurance Association of Japan [GIAJ] welcomes the initiative taken by the two senators in introducing federal regulation of insurance,” said Tadashi Kodama, chairman of GIAJ. “As a number of US insurers have stated, regulations which vary from state to state impose on all insurers who operate in the US, including non-US insurers, significant costs and burdens, and hamper the efficiency of their operations.”
“State regulations require insurers to obtain a licence in every state in which they wish to do business, and to comply with the respective (and often contradictory) regulatory requirements of all of them,” Kodama added. “This has caused various inefficiencies in the market, such as preventing insurers from marketing new products to consumers in a timely manner throughout the US. It has also increased operational costs due to multiple filings, applications and reporting requirements.”