Bilateral Insurance Agreement Between US, EU Approved
Thu 27 Jul, 2017 / by McIntyre & Lemon / Legislative Updates
07/27/17 – The Trump administration, via the Treasury Department, announced its intent to sign the Bilateral Covered Agreement (“Covered Agreement”) between the U.S. and the European Union (“EU”).
According to the Treasury’s press release, “the Covered Agreement affirms the U.S. system of insurance supervision, protects insurance consumers, and provides meaningful benefits for U.S. insurers and reinsurers.”
A covered agreement is a “written bilateral or multilateral agreement regarding prudential measures with respect to the business of insurance or reinsurance.”
The Covered Agreement limits the worldwide application of EU prudential measures on U.S. insurers operating in the EU, including the elimination of worldwide group capital, governance, and reporting requirements. EU prudential supervision of U.S. insurers will be limited to these insurers’ EU operations and activities. Additionally, the Covered Agreement includes state-based reinsurance provisions that build on work largely underway at the state level and are expected to reduce reinsurance costs for primary insurers and improve the affordability and availability of insurance products to personal and commercial insurance consumers.
The Covered Agreement addresses three areas of prudential insurance supervision: group supervision, reinsurance, and exchange of information between supervisory authorities. In general, the Covered Agreement terms apply on a mutual basis. The group supervision and reinsurance provisions are conditioned upon one another under the application provisions of the Covered Agreement.
Administration officials are expected to sign the Agreement in the coming weeks, and they also plan to issue a US policy statement on implementation.