Treasury Still Undecided on U.S.-EU Insurance Deal

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By Brandon Ross

The Trump administration still hasn’t decided if it will sign a deal with the European Union that would give U.S. and EU insurers and reinsurers equal regulatory treatment, the Treasury Department told lawmakers. Implementation is set to begin in two weeks but needs Treasury’s approval first.

Treasury Secretary Steven Mnuchin ordered agency staff to continue “engaging with key stakeholders” to get the full picture on the agreement, according to a recent letter obtained by Bloomberg BNA. In the letter, Luke Ballman, deputy assistant secretary of legislative affairs for Treasury, said the department is engaging with Reps. Sean Duffy (R-Wis.) and Dennis Ross (R-Fla.), chairman and vice chairman of the House Financial Services Housing and Insurance Subcommittee, on how to proceed on the deal.

Other “key stakeholders” the agency is gathering input from likely include U.S. insurance sectors with international dealings, which support the deal, and U.S. domestic insurers as well as states, which generally oppose it.

The Treasury letter doesn’t answer any of the questions Duffy and Ross asked Mnuchin regarding the deal in a February letter, most notably, if he plans to sign the agreement as is, to require additional or implied commitments from the EU related to the deal to be made in writing, or to flatly reject the deal, which was negotiated in the final year of the Obama administration. The deal isn’t considered a partisan issue.

The deal, called a covered agreement, is valued at billions of dollars in saved regulatory costs to U.S. insurers and reinsurers that operate in the EU, Michael McRaith, the former Treasury Federal Insurance Office (FIO) director who helped negotiate the deal, previously said.

The National Association of Insurance Commissioners, which represents state regulators, confirmed to Bloomberg BNA March 27 that NAIC staff and Treasury officials met the week of March 20, at which time NAIC told Treasury more clarity and certainty is needed on the agreement.

The Office of the U.S. Trade Representative, which also helped negotiate the deal, is also continuing to engage the deal’s stakeholders with Treasury, the letter said.

Groups Disagree Over U.S. Benefits

Though the agreement’s statutory 90-day review period will end in April, the expiration doesn’t necessarily mean the deal would be dead, as Treasury can sign it later. However, U.S. pro-deal groups have long called for the measure to be signed as quickly as possible, before new EU regulations kick in.

Both sides hope they have sufficiently convinced the Treasury to lean their way on the deal.

"[I]t is encouraging that [Treasury officials] recognize the goals of the negotiations [were] to provide substantial and immediate benefits to insurers,” Steve Simchak, director of international affairs, with the American Insurance Association, a pro-deal trade group, told Bloomberg BNA March 27.

“Before the agreement was even signed, we saw immediate benefits in that EU member state governments begin to lift these restrictions, which is really remarkable,” Simchak said. The EU member governments “made it clear that they were lifting those restrictions in anticipation that this agreement was made permanent.”

On the other hand, the National Association of Mutual Issuance Companies (NAMIC), which is against the proposed deal, “remains confident [Treasury] will reach the inescapable conclusion that the covered agreement as written is a perfect candidate for an international agreement that needs to be revisited to ensure we put the interests of the US insurance marketplace first,” Jonathan Bergner, assistant vice president of federal policy for NAMIC, told Bloomberg BNA in a March 27 email.

To contact the reporter on this story: Brandon Ross in Washington at bRoss@bna.com

To contact the editor responsible for this story: Paul Hendrie at pHendrie@bna.com

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