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U.S., EU Reach Covered Agreement on Insurance Regulation

U.S. and European Union negotiators have reached an agreement that covers three areas of insurance oversight: reinsurance, group supervision, and the exchange of insurance information between regulators...
January 18, 2017

U.S. and European Union negotiators have reached an agreement that covers three areas of insurance oversight: reinsurance, group supervision, and the exchange of insurance information between regulators. The negotiators say U.S. and EU insurers operating in the other market will only be subject to oversight by the regulators in their home jurisdiction.

In the United States, the agreement preserves the primacy of state regulation of U.S. insurance groups. Furthermore, it calls for an end to collateral and local presence requirements for EU and U.S. reinsurers.


“After more than a year of secret meetings it’s disappointing that in the waning days of the administration we are finally seeing the details of what purports to be a covered agreement between the U.S. and EU,” said National Association of Insurance Commissioners (NAIC) President and Wisconsin Insurance Commissioner Ted Nickel in a statement.

“As most state regulators were not allowed to participate in the process, the NAIC is coordinating a thorough review of the agreement to ensure consumer protections are not compromised through the preemption of state law, and we encourage Congress to do the same. Of great concern is the potential to use this agreement as a backdoor to force foreign regulations on U.S. companies,” Nickel said.

The negotiators worked to complete the agreement before the end of President Barack Obama’s term in office to avoid any further delays when the Trump administration takes over. The agreement does not require U.S. insurers to comply with the new EU insurance regulations referred to as Solvency II that became effective in 2016 and are intended to guarantee that insurers have sufficient capital to cover severe losses and to standardize requirements among member nations.

On January 13, 2017, as required by The Dodd-Frank Wall Street Reform Act, the Federal Insurance Office and the Office of the U.S. Trade Representative jointly submitted the Agreement to the House Financial Services, House Ways and Means, Senate Banking, and Senate Finance committees on a day the House and Senate were in session.  The Agreement then becomes effective after 90 days have elapsed.  To view the text of the Covered Agreement, please click here.

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