Commission welcomes the successful conclusion of negotiations on an EU/US Agreement on insurance and reinsurance
The European Commission and the US Department of the Treasury and Office of the Trade Representative jointly announced last Friday the successful conclusion of negotiations of an Agreement between the EU and the USA on insurance and reinsurance. This agreement was reached after more than 20 years of discussions between both sides on reinsurance collateral in particular and almost a year of formal negotiations. The Agreement covers prudential benefits which are granted on certain conditions for reinsurers and for reinsurance and insurance groups of the EU operating in the US and conversely, and exchange of information between supervisors on both sides of the Atlantic. Welcoming the successful closure of negotiations Valdis Dombrovskis, Commission Vice-President for Financial Stability, Financial Services and Capital Markets Union said: “We welcome this agreement, which is both balanced and fair. This is a major deal that is set to benefit insurers, reinsurers and policyholders on both sides of the Atlantic. It is a win-win solution. It shows that both EU and US regulators can reach mutually-beneficial outcomes through enhanced international cooperation.”Through this Agreement, the EU and the US agree to remove collateral and local presence requirements for reinsurers operating on a cross-border basis between the EU and the USA, if they meet the conditions laid down in the Agreement. In line with the objectives of the Investment Plan for Europe and the Capital Markets Union, this Agreement will make possible increased investment by reinsurers. EU reinsurers estimate that they have about $40 billion of collateral posted in the USA, which could be used more effectively in other investments. The opportunity cost is estimated at around $400 million per year. EU and US insurance and reinsurance groups active in both jurisdictions will not be subject to certain requirements with respect to group supervision for their worldwide activities, but supervisors retain the ability to request and obtain information about worldwide activities which could harm policyholders’ interests or financial stability. The Agreement also contains model provisions for the exchange of information between supervisors, which supervisors on both sides of the Atlantic are encouraged to follow. The Agreement is being notified to Congress in the USA. In the EU, it will be submitted to the EU Member States in Council in view of its formal signature. The European Parliament’s consent will also be needed for conclusion of this Agreement.