The ‘covered agreement’ between the U.S. and the European Union (EU) on prudential reinsurance measures is to be signed today, according to a joint statement.
Early in 2017 both the U.S. and the EU noted intentions to sign the agreement, which has been in discussion for some time. Now, in a joint statement, the pair have announced that the agreement is to be signed on the afternoon of Friday, September 22nd, 2017.
“The Agreement represents a major step forward in U.S. – EU cooperation on insurance and reinsurance, conveying benefits to EU and U.S. insurers and reinsurers operating across the Atlantic, by offering them enhanced regulatory certainty, while maintaining robust consumer protections,” explains the joint statement.
The ‘covered agreement’ addresses three key areas of prudential insurance oversight, which includes reinsurance, group supervision, and also the exchange of insurance information between supervisors.
Importantly, the statement explains that regarding reinsurance operations, the agreement will result in the elimination of both collateral and local presence requirements for reinsurance companies from both sides when operating in the other’s market.
Under the new agreement, insurance entities of both sides will only be subject to international prudential insurance group oversight by supervision in their “home jurisdiction.”
Furthermore, the new agreement supports and encourages both EU and U.S. supervisors working together and sharing information surrounding insurance and reinsurance companies that operate in both markets. The agreement includes a model information sharing memorandum of understanding provisions to support this.
“The United States and the EU look forward to successful implementation of the Agreement, including through the Joint Committee established by the Agreement. The Agreement provides meaningful benefits for U.S. and EU insurance consumers and for U.S. and EU insurers and reinsurers that operate in both markets,” says the statement.
Continuing to note that both parties will now work towards provisional application in accordance with the agreement, and to formally conclude the agreement, the EU will “follow the necessary steps, involving the Council and the European Parliament pursuant to the Treaty on the Functioning of the European Union.”
