US, UK to sign re/insurance agreement as Brexit looms
The US Department of the Treasury and the Office of the US Trade Representative intend to sign a bilateral agreement between the US and the UK on prudential measures regarding insurance and reinsurance (US-UK Covered Agreement) as the UK leaves the EU.
The deal will be consistent with the US-EU covered agreement signed in 2017. The US administration intends to issue a US policy statement regarding implementation of the US-UK Covered Agreement.
The agreement between the EU and the US eliminated collateral and local presence requirements for qualified reinsurers and facilitated the exchange of information between EU and US supervisors. It also included prudential benefits. For example, EU insurers and reinsurers needed to prepare only one risk and solvency assessment (ORSA) in light of their specific risk profile as a result of the agreement.
The US-UK Covered Agreement is an important step in providing regulatory certainty and market continuity as the UK prepares to leave the EU in March 2019, as well as in making US companies more competitive in domestic and foreign markets and making regulations more efficient, effective, and appropriately tailored, according to an official statement. The US-UK Covered Agreement also benefits the US economy and consumers by affirming the US state-based system of insurance regulation and increasing growth opportunities for US insurers, it stated.
The US-UK Covered Agreement will eliminate local presence and collateral requirements under specified conditions.
Malcolm Newman, chairman of the London Market Group’s (LMG’s) government affairs workstream, said: “The LMG welcomes the news of a new bilateral insurance agreement between the United States and the United Kingdom, which will provide much needed certainty and market continuity for UK firms operating in the US. It is a vindication of London’s position as the world leader in providing specialty insurance and reinsurance, and offers a significant opportunity for the London Market to continue to grow over the coming years, a case that LMG member associations have been making to HM Treasury over the past year.”
Dave Matcham, CEO of the International Underwriting Association (IUA), added: “This move is the result of close cooperation between regulators on both sides of the Atlantic and provides important certainty for companies as they look to service their clients’ needs post Brexit. It reflects both the strong trading relationships between the London Market and the US and international nature of our industry.”
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