The U.S Department of the Treasury and the Office of the U.S Trade Representative have finalised the terms of a bilateral agreement that aims to provide regulatory certainty for UK and U.S re/insurance markets ahead of Brexit.
The new U.S-UK Covered Agreement will uphold the terms of the U.S-EU Covered Agreement, signed in 2017, which outlined prudential measures for re/insurers operating between the U.S and European Union member states.
The agreement aims to protect insurance and reinsurance policyholders and other consumers while respecting each country’s existing system for supervision and regulation.
It will provide for the exchange of confidential information between U.S and UK supervisory authorities and make other practical arrangements for cross-border cooperation following the UK’s departure from the European Union in March 2019.
In a letter to Congress, Secretary of the Treasury Steven Mnuchin and U.S Trade Representative Robert Lighthizer explained that the agreement would ensure the continued benefits of the U.S-E.U agreement to U.S re/insurers operating in the UK or assuming business from UK ceding insurers.
The U.S Department of the Treasury also claimed that the agreement would provide market stability, make U.S companies more competitive in domestic and foreign markets, and make regulations more efficient, effective, and appropriately tailored.
The terms will also benefit both the U.S economy and consumer, it argued, by affirming the U.S state-based system of re/insurance regulation and by increasing growth opportunities for U.S insurers.
Dave Matcham, Chief Executive of the International Underwriting Association, commented on the agreement: “The IUA warmly welcomes the US Treasury’s announcement that it intends to sign a US-UK covered agreement.”
“This move is the result of close cooperation between regulators on both sides of the Atlantic and provides important certainty for companies as they look to service their clients’ needs post Brexit,” he continued. “It reflects both the strong trading relationships between the London Market and the US and the international nature of our industry.”
