U.S. insurer trade groups fear a proposed change in how the International Association of Insurance Supervisors conducts some meetings will hamper their ability to influence international regulatory policy at a crucial juncture.

The Basel, Switzerland-based IAIS' proposal would eliminate so-called “observer” status at its committee and subcommittee meetings.

In a statement emailed to Business Insurance, IAIS Secretary General Yoshi Kawai said the proposal is part of a larger package of reforms necessitated by the group having to take on new responsibilities, such as developing global insurance capital standards.

As part of the package, the IAIS proposes that stakeholders no longer have to contribute financially to the organization to participate in its consultations. Not surprisingly, insurance groups and others greeted that proposal favorably.

But the plan also advocates excluding industry observers and others from its subcommittee and committee meetings, although some stakeholders could be invited to attend. In the email, the secretary general said the IAIS remains “committed to continuing to inform and seek input from all interested stakeholders in as structured, effective and efficient manner as possible.”

He said the international insurance regulator group acknowledges the concerns of stakeholders unhappy with the proposed change, but “as this proposed shift away from observer status is part of a comprehensive package of reforms, (we) believe it is important to take a step back and look at things in whole.”

The current system allows only some stakeholders “enhanced access rights, such as the ability to attend hearings like the (common framework for supervising internationally active insurers) and capital sessions we held recently. Instead of this system, we are proposing one in which any interested stakeholder can follow and participate in IAIS activities in an efficient, structured manner,” Mr. Kawai said in the email.

For U.S. insurance organizations, the proposed change slated to go into effect on Jan. 1, 2015, couldn't come at a worse time. In addition to the common supervisory framework, the group also is considering capital standards as well as how to designate and supervise global systemically important insurers.

How IAIS deals with these issues could significantly affect U.S. insurers.

U.S. insurer groups fear the proposed meeting participation changes would harm transparency, and filed comments opposing the change during a comment period that ended earlier this month.

“We have been a longtime observer of the IAIS and we think that transparency is critical,” said Robert Neill, senior director of international and government affairs at the Washington-based American Council of Life Insurers. “The U.S. government system is built on a transparent process, and we're concerned about any departure from transparency.”

Steve Simchak, director of international affairs at the Washington-based American Insurance Association, called the proposal “very concerning.”

“The work the IAIS is doing now could have major impact on insurance regulation here in the U.S. and also on U.S. insurance groups that operate internationally,” Mr. Simchak said. “We think as the work of the IAIS becomes more important, that's a cause for more transparency and not less.”

Mr. Simchak said the IAIS cited the increasing importance of its work and the need for greater efficiency as spurring the change.

“If that's the case, we're happy to work with them on improving efficiency without reducing transparency,” he said of efforts to get the IAIS to reconsider the change.

“It's a very big issue,” said David Snyder, senior vice president in the Washington office of the Property Casualty Insurers Association of America.

“There's a very bad combination of closed meetings plus the ability to invite in handpicked guests.” That combination gives rise to questions of lack

of fair play and regulators not getting the full spectrum of input, which he described as a “very bad synergy.”

Mr. Snyder praised the National Association of Insurance Commissioners for opposing the plan.

Public scrutiny “limits the ability of those with political access to hold sway,” the NAIC said in comments filed with the IAIS. “We have tremendous respect” for global regulators and “faith that each of us discharges our responsibility with independence and professionalism. But we should then leave no doubt of this to those we supervise and those we supervise for by embracing the quality of openness, access and transparency that all stakeholders deserve.”

Mr. Snyder said the IAIS decision will have a long-term effect.

Procedures adopted now would cover future actions, so the IAIS' decision “will affect the future of IAIS and future regulatory issues,” he said.