The Trump Administration recently announced it will support a deal on international insurance regulation between the U.S. and the European Union (EU) brokered in the final days of the Obama Administration.
The agreement had received mixed reaction from some industry stakeholders, leading to questions about whether the Trump Administration would ultimately support it. Those questions were laid to rest last week when the White House announced its intention to sign the agreement in the coming weeks. In addition, the White House plans to issue a policy statement on implementation.
In January, the U.S. Department of Treasury and the U.S. Trade Representative (USTR) reached an agreement with the EU on the regulation of certain aspects of international insurance and reinsurance. The “covered agreement” was negotiated pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which authorized negotiation of agreements to address areas where U.S. state insurance laws or regulations treat non-U.S. insurers differently than U.S. insurers.
The agreement addresses three areas: insurance company group supervision, reinsurance and the exchange of information between supervisory authorities. Additionally, it seeks to alleviate regulatory requirements for insurers that are subject to oversight in both the U.S. and EU. The agreement also removes certain collateral requirements for foreign reinsurance companies, which require some companies to hold higher levels of collateral than others, as well as local presence requirements. Finally, the agreement encourages the exchange of information between regulators.
The agreement may also impact state insurance regulation for some insurers and reinsurers. In response to the announcement, the National Association of Insurance Commissioners (NAIC) released a statement noting that it has worked with the USTR and Treasury since January to address concerns state regulators had with the agreement. According to the NAIC statement, state regulators anticipate having significant implementation responsibilities once the agreement takes effect.
Jennifer Webb is Big “I” federal government affairs counsel.
