European Council authorises signing of EU-US re/insurance agreement

The European Council has agreed to the signing of an agreement with the US on insurance and reinsurance which is set to enhance regulatory certainty in transatlantic re/insurance operations.

The agreement eliminates, under specified conditions, local presence requirements imposed by a party or its supervisory authorities on an assuming reinsurer which has its head office or is domiciled in the other jurisdiction, as a condition for entering into any reinsurance agreement with a ceding insurer which has its head office or is domiciled in its territory or for allowing the ceding insurer to recognise credit for reinsurance or credit for risk mitigation effects of such reinsurance agreement.

Furthermore, the agreement eliminates, under specified conditions, collateral requirements imposed by one party or its supervisory authorities on an assuming reinsurer which has its head office or is domiciled in the other jurisdiction, as a condition for entering into any reinsurance agreement with a ceding insurer which has its head office or is domiciled in its territory or for allowing the ceding insurer to recognise credit for reinsurance or credit for risk mitigation effects of such reinsurance agreement.

The conclusion of the agreement will lead to enhanced regulatory certainty in the application of insurance and reinsurance regulatory frameworks for insurers and reinsurers operating in the EU and the US as well as to improved protection for policyholders and other consumers through cooperation between supervisors on the exchange of information, according to a press release.

The text of the agreement was negotiated by the European Commission on the basis of a mandate approved by the Council in April 2015. It includes provisions on reinsurance, group supervision and the exchange of information. A joint committee will oversee its implementation.

The Council's decision provides for provisional application of some of the agreement's provisions, pending the completion of the procedures necessary for its conclusion. The Council also requested the consent of the European Parliament for conclusion of the agreement.

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