Still no fallout for AIG policyholders
Despite the collapse of the parent company, not one policyholder in any of the 150 AIG subsidiaries in various countries has been left stranded, according to Australian Prudential Regulation Authority (APRA) executive member John Trowbridge.
He said this was an example of “the extraordinary strength of solo supervision”, with the assets of these insurers having been quarantined by regulators within the insurers, out of reach of the parent, he said.
Trowbridge said the “biggest single issue in insurance regulation today” is what is being colloquially called “the AIG problem”.
The issue is how to “maintain the integrity of the solo supervision of insurers while also carrying out effective group supervision”, Trowbridge said. The latter must protect not only the group in question, but all of its regulated and unregulated subsidiaries.
Solo supervision is working well, but effective group supervision is absent, Trowbridge said. That is why unregulated subsidiaries have been able to damage the groups they were associated with.
Trowbridge said this question has caught the attention of insurance regulators around the world because it demonstrates two critical features of insurance regulation today in various countries.
Trowbridge said all regulators must now consider how to respond so that this kind of situation does not recur.
He was speaking in Washington last week to the National Association of Insurance Commissioners.
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