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10/1/17

Insurance Industry: U.S. and EU Sign Covered Agreement on Insurance Regulation

The United States and European Union have scheduled a ceremony for today for the signing of a bilateral agreement on prudential insurance and reinsurance measures.

Both sides announced in July their intention to sign the agreement, also known as a covered agreement in the U.S.

The parties believe the agreement represents a step forward in U.S. – EU cooperation on insurance and reinsurance. In a joint statement, they said it conveys “benefits to EU and U.S. insurers and reinsurers operating across the Atlantic by offering them regulatory certainty, while maintaining consumer protections.”

The agreement was negotiated by the Obama Administration in talks that began in 2015. It was announced on January 13, 2017 in the final days of the previous administration.

The agreement – which is a “covered agreement” in the meaning of the Dodd-Frank Act and an agreement under Article 218 of the Treaty on the Functioning of the European Union – addresses three areas of insurance oversight: reinsurance; group supervision; and the exchange of insurance information between supervisors.

With regard to reinsurance, it will “eliminate collateral and local presence requirements for EU and U.S. reinsurers operating in each other’s markets.”

Regarding group supervision, U.S. and EU insurers operating in the other’s markets “will only be subject to worldwide insurance group oversight by supervisors in their home jurisdiction.”

The agreement also encourages insurance supervisory authorities in the U.S. and the EU to continue to exchange supervisory information on insurers and reinsurers that operate in the U.S. and EU markets and it includes model information sharing memorandum of understanding provisions.

In their joint statement, the parties said they will now move forward to provisional application. The European Union will take the necessary steps, involving the Council and the European Parliament pursuant to the Treaty on the Functioning of the European Union, to formally conclude the agreement.

In January, the U.S. Treasury Department released a fact sheet on the agreement and said the final legal text of the agreement had been given to Congress as required by the Dodd-Frank Act.

Read more: U.S. and EU Sign Covered Agreement on Insurance Regulation

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