As the world’s economy continues to sputter ever onward, global insurance and banking regulators are setting their sights on financial institutions that provide insurance products. These institutions contributed to the global recession in varying degrees, and regulators now want to ensure that a similar crisis does not form due to lack of oversight. Regulators have drafted a new set of rules that aim to assess whether banks selling insurance products are managing their liquidity and capital levels as they are meant to.
The Basel Committee on Banking Supervision, the International Organization of Securities Commissions, and the International Association of Insurance Supervisors, have issued the new rules to address perceived shortfalls in the supervision on these financial institutions. Regulators note that these shortfalls contributed to the 2008 recession because they such supervisions were not adequate enough to handle the breadth of activities that banks were participating in at the time. Regulators have released the new rules via the ISCO website.
Regulators will be looking for feedback from consumers and businesses regarding the new guidelines until March 16, 2012. After that point, the group may make changes to the rules based upon the needs of the insurance and banking industries. Regulators say that more supervision is required to ensure another, more disastrous recession does not hit the global economy and will likely keep the more stringent rules in place.