The United States and the European Union have signed a landmark bilateral agreement on insurance and reinsurance, which aims to boost consumer protection and cut costs and red tape for EU re/insurers active in the US.
The signing marks the final step in more than 20 years of discussions and a year of formal negotiations between the European Commission and the US Department of the Treasury and Office of the Trade Representative.
“The Agreement represents a major step forward in US-EU cooperation on insurance and reinsurance, conveying benefits to EU and US insurers and reinsurers operating across the Atlantic, by offering them enhanced regulatory certainty, while maintaining robust consumer protections,” the EU and the US said in a joint statement.
The agreement will also enable reinsurers to boost their investment capacity. EU reinsurers estimate that they have around $40 billion of collateral posted in the US, which could instead be invested to create job and growth.
Furthermore, the agreement also aims to enhance consumer protection by facilitating the exchange of information between EU and US supervisors.
The European Commission states that the agreement also brings prudential benefits, for example EU re/insurers will have to prepare only one risk and solvency assessment (ORSA) in light of their specific risk profile. This assessment will also be used by US supervisors.
Frank Nutter, president of the Reinsurance Association of America, said: "We commend the Administration for executing the Agreement. It is a significant milestone and one that recognises the strength of the US state-based regulatory system and formalizes the strong regulatory cooperation between the US and the European Union on insurance and reinsurance issues.
“Importantly, the US and European Union have established a model of regulatory cooperation between well-regulated jurisdictions that others should follow.”
US-EU Covered Agreement, European Commission, US Department of the Treasury, North America, Europe