The U.S. Treasury and U.S. Trade Representative have said they plan to work for a covered agreement.
The insurance news announcement has now been made that the U.S. Treasury and the U.S. Trade Representative intend to enter into negotiations with the European Union over a covered agreement regarding insurance.
The goal of these negotiations will be to “level the regulatory playing field for U.S-based insurers and reinsurers.”
E.U. insurance companies and industry regulators have been expressing frustration with regards to the American reinsurance collateral requirements. The issue at the center of this insurance news is that the insurers and the regulators aren’t just required to comply with the solvency rules in the European Union, but they also have to meet with added requirements when they do their underwriting within the U.S.
The E.U. released its own insurance news announcement back in April with regards to its desire for change.
At that time, the E.U. said that it would work more earnestly in order to encourage the United States to free up the collateral consisting of billions of euros, which are necessary for foreign reinsurers to have available to them against their policies. In the present ecosystem, American competition to reinsurers based in Europe – for example, Germany’s Hannover Re and Munich Re as well as Lloyd’s of London market syndicates – has an advantage because they can afford to offer lower premiums due to their comparatively lower capital costs.
Now, the U.S. Treasury Department has explained that it has issued letters to a spectrum of different committees in Congress in order to announce that it does plan to go ahead with these negotiations. The Obama administration will be consulting with Congress all the way through the negotiation process.
According to an insurance news statement from the Treasury, it was working to achieve “certain prudential measures” which would offer “tangible benefits” for American insurance companies and consumers. At that time, it didn’t offer details with regards to what those prudential measures would actually be. This has the potential to be a mutually beneficial agreement for the insurance industry in the U.S. and the E.U.