The U.S. and The European Commission have launched negotiations with an eye toward a “covered agreement” on insurance and reinsurance matters.
Representatives from the U.S. and EU met formally regarding the matter on Feb. 18 and 19, according to the American Insurance Association. This follows the U.S. announcement back in November that it would participate in this process.
The AIA issued a release on Feb. 23 applauding the launch of the discussions—something that it said its necessary to ensure that Solvency II implementation in Europe doesn’t discriminate against U.S. insurers that also conduct business in the EU.
Solvency II kicked in on Jan. 1, a law designed to harmonize insurance regulations and minimum capital requirements through the European Union. The AIA is among insurance groups who have long been a proponent of a covered agreement, which could help fuel the process for non-EU countries to be determined as equivalent to Solvency II regulations regarding group supervision and reinsurance capital requirements.
Issues remain, however, because state insurance regulators in the U.S. fear that a covered agreement could preempt state law and undermine the U.S.’s successful insurance regulation at the state level.
Steve Simchak, AIA’s director of international affairs, said in prepared remarks that the covered agreement “must ensure that regulatory changes do not result in conditions that discriminate against U.S. insurers and reinsurers, and that prudential recognition of the U.S. and EU frameworks is fostered.”