A bilateral agreement on insurance and reinsurance regulations between the United States and European Union is another step closer to reality.
On Tuesday, a statement from the Treasury Department and the Office of the U.S. Trade Representative announced plans to begin negotiating a covered agreement and regulatory framework with the EU. The move comes amid evolving, insurance-focused regulations in the U.S. and new EU regulations, effective on New Year’s Day, which target insolvency concerns with heightened capital requirements. EU regulators have expressed a desire for an equivalency among those requirements and rules for foreign firms doing business in Member States.
“U.S. and EU representatives met in Brussels on 18-19 February 2016 to discuss a future bilateral agreement relating to prudential insurance and reinsurance measures,” the statement says. “Both sides agreed to move forward efficiently and expeditiously and affirmed their good faith pursuit of an agreement on matters relating to group supervision, exchange of confidential information between supervisory authorities on both sides, and reinsurance supervision, including collateral.”
“U.S. and EU representatives expressed hope that such future bilateral agreement will improve regulatory and supervisory treatment for insurers and reinsurers operating on both sides of the Atlantic,” the statement added. “The U.S. and EU representatives agreed to meaningful stakeholder consultation and engagement throughout the negotiations.”
In November 2015, the U.S. Department of the Treasury and the Office of the U.S. Trade Representative (USTR) announced their intention to begin negotiating a covered agreement with the European Union. A covered agreement is an agreement between the United States and one or more foreign governments, authorities or regulatory entities, regarding prudential measures with respect to insurance or reinsurance. Under the Federal Insurance Office Act of 2010, the Secretary of the Treasury, through the Federal Insurance Office (FIO) and USTR, is authorized to negotiate such an agreement.
In the covered agreement negotiations, Treasury and USTR will seek recognition of certain prudential measures “to ensure a more level playing field for U.S. firms.” A covered agreement is an agreement with one or more foreign governments, authorities or regulatory entities, regarding prudential measures with respect to insurance or reinsurance.
“Negotiating a covered agreement with the European Union is a critical step toward leveling the playing field for American insurers and reinsurers,” said Michael McRaith, FIO director, said in November. “As we begin negotiations with our European counterparts, I look forward to consultation and engagement with Congress, state regulators, and other stakeholders so that we can pursue a covered agreement that provides tangible benefits for the U.S. insurance industry and consumers.”