IUA welcomes EU/US reinsurance talks

The International Underwriting Association (IUA) has welcomed a move to open talks between the EU and US on reinsurance.

On April 21, EU states agreed to give the European Commission a mandate to negotiate an agreement with the US aimed at improving trading conditions and streamlining supervision procedures.

The talks will revolve around reinsurance collateral requirements for European reinsurers in the US. Currently, European reinsurers must not only comply with EU solvency rules but must also meet additional collateral requirements when operating in the US.

"An agreement with the US will greatly facilitate trade in reinsurance and related activities,” said Janis Reirs, minister for finance of Latvia and president of the Council. "It will enable us for instance to recognise each other’s prudential rules and help supervisors exchange information."

Dave Matcham, chief executive of the IUA, said: “This is an important step forward. A covered agreement on reinsurance between Europe and the US could be used to help eliminate rules requiring foreign firms to post collateral against American liabilities. This would reduce industry costs and provide clients with greater choice.

He explained that the IUA has been arguing for such a solution for a long time and said that the solution now seems to have momentum with EU and US authorities.

“Virtually all mature insurance markets now operate with such regulations for foreign companies. A sliding scale of collateral requirements implemented in 2011 has already demonstrated that the US can operate with reduced collateral without any collection problems and that it is possible to rely on the regulatory systems of other countries,” he said.

“A covered agreement would make trading reinsurance significantly simpler and much better co-ordinated.”