Like the global capital standard for banks set up by the Basel Committee in 1988 - now being revised - the unprecedented uniform standards insurance regulators have in mind could have a major impact on the industry.

Once established - they would still need to be written into national laws - the standards could mean some insurers may find themselves under-capitalised, though it is too early to say exactly which ones, and to what degree.

The standards could also give some new powers to regulators.

The effort has not been widely publicised, as it is still in its early stages, following the Group of Seven (G7)countries' decision last year to press for reforms in the world's global financial architecture. The G7 comprises Britain, Canada, France, Germany, Italy, Japan, and the US.

Regulators say there have not been any recent financial crises sparked by an insurance company failure.

"We didn't see the necessity for such regulation before, because we always said, `Where is the risk to financial stability?'" Hohlfeld said.

But over the past 10 years, as the industry has globalised, risks have increased that insurers may "arbitrage" between different regulatory environments. Those unhappy with domestic rules may circumvent them by moving some business elsewhere.

"We have so many global players...and those global players could just look to where the solvency regime is one they would like most," said Hohlfeld.The IAIS, like the Basel Committee, has its administrative base at the Bank for International Settlements (BIS) in Basel.

There are some similarities between the standards bank regulators and the IAISenvision.

Like the avenues being opened to bank regulators via revisions to the Basel Accord, insurance supervisors also would like their rules to allow them to intervene early enough to catch problems before a company is in serious trouble. "I hope that we will at least succeed in putting that in our standard," Hohlfeld said.

But while the Basel Accord was the brainchild of just 11 of the world's top industrial powers, the IAIS effort will involve all its members, representing 100 countries.

The next test will be a questionnaire sent out to insurance regulators worldwide in the next few weeks.

The timetable for going forward "will very much depend on this survey", Hohlfeld said.

-- Reuters