Housing Subcommittee Discusses Potential Covered Agreement with the EU
Washington,
September 28, 2016 -
WASHINGTON – Today, the Housing and Insurance subcommittee held a hearing to examine international factors affecting domestic insurance markets. Subcommittee members questioned hearing witnesses on the various international regulatory standards being considered by the G-20, the Financial Stability Board, the International Association of Insurance Supervisors, and other international supervisory authorities. In addition, today’s hearing gave members the first real opportunity to examine the covered agreement negotiations between the United States and the European Union.
Without a covered agreement, U.S.-based insurers operating in the EU might be at a competitive disadvantage to European insurers because of the lack of harmonization between Europe’s insurance regulatory requirements and the U.S. state-based, policyholder-centric regulatory structure. Additionally, U.S. based insurers and reinsurers may be barred from doing business in certain EU countries without complying with Solvency II standards.
“While I believe that insurers are best regulated at the state level, a covered agreement with the European Union, when structured properly and with input from state insurance commissioners and stakeholders, presents a unique opportunity to level the playing field for U.S. insurers and reinsurers,” explained Subcommittee Chairman Luetkemeyer (R-MO) in his opening statement. “That’s particularly important given the actions we are beginning to see out of European regulatory bodies.”
On September 27, 2016, Treasury released a press statement on the status of negotiations following the meetings between the United States and Europe from September 21-22, 2016. According to the statement, both sides continue to discuss prudential measures such as group supervision, exchange of confidential regulatory information, and reinsurance collateral with the hopes of an agreement “in the near future.”
Key Takeaways from the Hearing:
- International regulatory efforts threaten the U.S. model of insurance supervision, which protects U.S. policyholders by keeping our insurance market financially strong and competitive.
- U.S. insurance supervisors need a unified strategy to defend and promote the strengths of our regulatory system internationally and ensure that U.S. insurers can effectively compete overseas.
- A covered agreement needs to resolve how U.S. insurers operating in the EU will be treated under Solvency II.
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