In public policy, it has often rightly been said that “sunlight is the best antiseptic.”

Executive Summary

PCI’s David Snyder believes the IAIS is “blocking out the sunlight” with its plan to close meetings and limit participation to handpicked guests. Instead, he calls for more transparency and a chance for interested voices to be heard.

Recognizing this, governments all around the world have begun to open their proceedings more to the public and interested parties. But acting directly contrary to this trend, the International Association of Insurance Supervisors (IAIS) has just proposed changes to its procedures that would actually block out the sunlight by closing meetings and severely limiting participation by interested parties.

The IAIS’s actions are particularly ironic considering that consumer advocates have just now been let in as observers. And also ironically, IAIS justifies its actions by saying that because the supervisors are tackling more critical issues, they must become more “efficient.”

If the issues that IAIS is dealing with are indeed more important, that alone justifies more transparency, not less.

The IAIS has proposed to close its working and plenary meetings. As a kind of consolation prize, interested parties would be briefed before a work stream is commenced and would be able to consult on papers after they have been written.

Frankly, this is no consolation at all. The nearly universal experience with IAIS papers is that by the time they have been issued for formal consultation, the regulators have essentially agreed on what they will do, so that comments are rejected—especially if they challenge the direction of the paper.

One of the worst elements of the proposal, however, is the permission explicitly granted to invite behind the otherwise closed doors handpicked “guests” when the regulators want to hear from the industry. This, of course, virtually assures that the regulators will not be hearing from parties—industry and nonindustry—that strongly disagree with them.

Even worse, this will breed a new kind of destructive competition. This will not be an open competition among ideas but a secretive competition to see which parties can gain the most behind-the-scenes influence so as to be an invited “guest.”

In short, it is an invitation to favoritism and creating unlevel playing fields.

Imagine the harm this could cause to small and medium-sized companies that can’t afford international lobbyists. Trade associations from apparently disfavored insurance regulatory systems would likely be excluded, and consumer advocates might be unwelcome as well.

IAIS argues that closing meetings is actually opening them up because it eliminates the fees that parties must now pay to be observers. We support that change. But that does not justify cutting back on transparency by closing meetings to everyone except regulators or handpicked guests, as IAIS has proposed.

Indeed, while still not perfect, the NAIC has evolved a far more transparent and still effective way to operate: All meetings are open to all interested parties—who usually have a chance to speak—except for a few designated reasons to close a meeting, and then with notice. That transparency, although still capable of improvement, has helped to create the most highly competitive, financially sound, comprehensively regulated and largest insurance market in the world. Compare this record of success with the record of more exclusive and closed-door financial services regulatory systems.

Regardless of the justifications for closed meetings and the agendas they may represent, they are bad government that produces bad results. And selective opening to handpicked parties is anything but transparency—it is simply an invitation to cronyism or worse.

Considering the public’s interest in a healthy global insurance market and the growing role of international insurance regulation, the public deserves better. The public deserves more transparency in the IAIS, not less.