US and EU representatives have announced a covered agreement that will lead to the elimination of collateral and local presence requirements. The agreement covers 3 areas of prudential insurance oversight: reinsurance, group supervision and the exchange of insurance information between supervisors.
However, the US National Association of Insurance Commissioners (NAIC) said it was concerned about the potential to use the agreement as a “backdoor to force foreign regulations on US companies” and has announced a review into the agreement.
The NAIC said state insurance regulators and NAIC attorneys are reviewing the agreement, seeking to ensure consumers remain protected and US companies are not competitively disadvantaged relative to foreign insurers. [...]
The move was welcomed however by Insurance Europe and the International Underwriting Association (IUA). The latter said the agreement would greatly enhance international reinsurance regulation, with a bilateral trade deal between the two sides promising to make cross-border trading more efficient and promote more open global access to reinsurance services.
The IUA said that, in reaching agreement, “negotiators have addressed difficulties that have arisen in recent years with restrictions imposed on US firms that are not deemed to be subject to a regulatory regime equivalent to Europe’s Solvency II”. It added: “At the same time, a path has been opened up for the removal of collateral requirements demanded of international firms reinsuring US risks.”
Chris Jones, director of legal and market services at the IUA, said: “A more level playing field can now be established between EU and US reinsurers, both in terms of collateral treatment and mutual recognition of two powerful and respected trading blocs. Furthermore, it sends a powerful message to other jurisdictions that protectionist regulation is not in the long-term interests of clients.”
He continued: “The London market is a major reinsurer of US risks and the IUA is pleased to see such effective cooperation between regulators and Federal negotiators in the US and Europe. We hope the approval process for this deal can now be completed as quickly as possible to guarantee more efficient international reinsurance regulation.” [...]
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