U.S. and European Union regulators are expected to announce Jan. 13 that they have reached an agreement to secure equal treatment of insurers and reinsurers in both jurisdictions, likely bringing an end to rising EU regulations on U.S. underwriters in Europe, an EU government source and two industry sources told Bloomberg BNA.
The deal, officially called a covered agreement, is authorized under the Dodd-Frank Act and is being negotiated by the Treasury Department’s Federal Insurance Office and U.S. Trade Representative with the European Commission, the EU’s executive branch.
The agreement is expected to be filed Jan. 13 with the required congressional committees for a 90 calendar-day review, after which point it will be considered agreed to. Opposition is not expected from U.S. lawmakers, some of whom have pressed U.S. federal regulators to get the deal done quickly.
The agreement must be filed with the House Ways and Means Committee, the House Financial Services Committee, the Senate Banking Committee and the Senate Finance Committee by Jan. 13 or would likely need to be postponed until after the Trump transition, as agency leaders will change with the new administration and Congress is going to be out next week.
The announcement is planned to be simultaneous in the U.S. and Europe, and is expected to come in the morning in the U.S.
The U.S. has not been deemed an equivalent regulatory jurisdiction under the EU’s insurance regime called Solvency II, leading to steadily increasing regulations on U.S. insurers and reinsurers operating in Europe, industry officials say.
Meanwhile, EU regulators want the U.S. federal regulators to supersede state rules by eliminating high collateral requirements that are a pre-condition for foreign reinsurers to offer coverage for U.S. insurers. High collateral requirements mean less money is available for investments and other activities.
States have previously maintained that such a federal preemption is unnecessary because states were already in the midst of lowering the collateral requirements, though not all states had yet complied with the standard to do so—a standard decided by the national organization representing state insurance regulators, the National Association of Insurance Commissioners.
Solvency II rules started going into full effect in January 2016, and since then, American companies have said they have faced new regulatory requirements like needing to open a subsidiary in a particular EU member country to continue doing business in that country—instead of getting the cross-border access benefits that operating in the EU generally provides.
If no agreement is reached, some leading U.S. lawmakers have urged U.S. federal regulators to find creative ways of retaliating against EU companies, underscoring the importance of a deal.
To contact the editor responsible for this story: Paul Hendrie at firstname.lastname@example.org
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)