Insurance Europe, the European re/insurance federation, has welcomed the announcement that the US Treasury, together with the US Trade Representative (USTR), intend to begin negotiations with the EU for a covered agreement on re/insurance.
Cristina Mihai, head of international affairs and reinsurance at Insurance Europe, said: “Insurance Europe is pleased that negotiations can finally begin for a covered agreement on re/insurance between the EU and the US.
On 20 November, 2015, the US Department of the Treasury and the USTR notified the chairs of the US House Financial Services Committee, House Ways and Means Committee, Senate Banking Committee and Senate Finance Committee of their intent to initiate negotiations to enter into a covered agreement with the EU in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The notices were issued in the midst of the National Association of Insurance Commissioner’s (NAIC) Fall National Meeting and three days before a public forum on the EU-US Insurance Project, and less than six weeks before Solvency II group supervision requirements are scheduled to take effect in the EU.
The 20 November letters state that the covered agreement negotiations with the EU will seek to obtain treatment of the US insurance regulatory system by the EU as ‘equivalent’ to allow for a level playing field for US insurers and reinsurers operating in the EU; obtain recognition by the EU of the integrated state and federal insurance regulatory and oversight system in the US, including with respect to group supervision; facilitate the exchange of confidential regulatory information between lead supervisors across national borders; and afford nationally uniform treatment of EU-based reinsurers operating in the US, including with respect to collateral requirement,
The negotiations also seek to obtain permanent equivalent treatment for the solvency regime in the US and applicable to insurance and reinsurance undertaking.
If implemented as proposed, the US Treasury says that a covered agreement would address concerns of US insurers doing business in Europe that the US will not be deemed “equivalent” under Solvency II.
Mihai added: “In particular, Insurance Europe welcomes the intention to afford nationally uniform treatment to all EU re/insurers operating in the US.
“At the same time, it hopes that the final agreement will be ambitious and will include equal treatment for both EU and US re/insurers, by eliminating the current discriminatory collateral requirements that are applied to EU re/insurers.”
The US Treasury and USTR say that in the absence of such equivalence, insurance regulators in EU member states will be required to apply various Solvency II rules to the US insurers’ worldwide group as if it were based in the EU, unless “other methods” are applied that allow the objectives of group supervision under Solvency II to be achieved. Solvency II is scheduled for implementation on January 1, 2016.
Insurance Europe, US Treasury, US Trade Representative, Cristina Mihai, North America, Europe