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By Brandon Ross
Sept. 27 — U.S. regulators said they are closing in on a deal with the European Union that the insurance industry believes will lift roadblocks to U.S. insurers operating in Europe.
The Treasury Department and Office of the U.S. Trade Representative on Sept. 27 announced progress toward completing an insurance deal with the EU called a covered agreement. American insurers hope U.S. regulators can persuade the EU to designate U.S. insurance regulation as equivalent to European oversight. Jurisdictions not deemed equivalent face stricter regulation from EU member countries, under the bloc's Solvency II insurance rules.
Formal negotiations have been underway for less than a year, but the industry and U.S. lawmakers have been steadily pushing for a quick resolution. American insurers complain they are encountering increasing regulatory restrictions in the EU that have put them at an operational disadvantage, industry representatives have told Bloomberg BNA (See previous story, 08/01/16).
“Both sides continued to discuss in good faith matters relating to group supervision, exchange of confidential information between supervisory authorities on both sides, and reinsurance supervision, including collateral,” the Sept. 27 joint statement said about meetings with EU officials held Sept. 21-22. “U.S. and EU representatives made progress on key issues, and identified next steps toward a possible completion of negotiations in the near future.”
Treasury press staff declined to comment further on what was discussed during the meetings.
If a deal is signed then regulators would need to submit it to the House Ways and Means Committee, the House Financial Services Committee, the Senate Banking Committee and the Senate Finance Committee. It would become official 90 calendar days after that notification.
A top Treasury official recently hinted that a covered agreement like this one could be fast-tracked between the U.S. and Britain, once the U.K. finalizes its “Brexit” from the EU (See previous story, 08/22/16).
The industry's response to the Treasury-USTR statement was positive, despite an absence of details about the negotiations.
“From industry's perspective, we certainly want the negotiations to be done and submitted to Congress before the end of the year,” Steve Simchak, director of international affairs for the American Insurance Association, told Bloomberg BNA in a Sept. 27 e-mail. “Considering the growing barriers U.S. insurers are facing in Europe, the best outcome at this point would be for the negotiations to conclude even sooner, of course.”
Simchak said negotiators appear to be making “substantial progress” and it looks like a “final deal is in sight.”
“That is an important statement,” he said. “We are optimistic.”
Ways and Means leaders recently encouraged U.S. regulators to take action against EU companies operating in the U.S. if the negotiations are unsuccessful (See previous story, 08/18/16).
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The announcement about the progress in negotiations can be viewed at https://www.treasury.gov/press-center/press-releases/Pages/jl0558.aspx.
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