The Subcommittee on Housing and Insurance of the House of Representatives Committee on Financial Services held a hearing yesterday to discuss on U.S. engagement on insurance issues with the European Union (EU).
The hearing, entitled
The Impact of US-EU Dialogues on U.S. Insurance Markets, was called to bring Congress up to speed on the current US-EU dialogue and how it affects America’s insurance markets.
At the forefront of the hearing was the issue of the EU’s implementation of its Solvency II insurance regulatory regime. Under Solvency II, non-EU insurers and reinsurers may be subjected to an alternative regulatory regime if the EU has determined that the insurer’s/reinsurer’s country of domicile is not an equivalent jurisdiction.
"After more than a decade of dialogue and information exchange, the EU has all the information it needs to recognize the U.S. insurance regulatory system and avoid future regulatory retaliation," commented NAIC Vice President and Tennessee Insurance Commissioner Julie Mix McPeak in a testimony during the hearing. "Instead of negotiating a potentially preemptive agreement behind closed doors to solve a problem of the EU's creation, we encourage our federal colleagues to push back on the EU and urge them to reconsider their laws before agreeing to preempt ours."
U.S. Department of Treasury director Michael McRaith also shared the same sentiments.
“Given the prominence of the United States as an insurance market, and given the longstanding nature and success of the U.S. insurance regulatory system, the United States will not submit to the EU's formal Solvency II equivalence process to assess and rule on the adequacy of the U.S. system,” McRaith said in his own testimony.
McRaith suggested that a covered agreement should be negotiated with the EU to settle regulatory differences.
“In the covered agreement negotiations the United States seeks to level the playing field for U.S. insurers and reinsurers operating in the EU and to address critical prudential regulatory areas relating to group supervision and solvency, reinsurance supervision, including collateral, and the exchange of regulatory and supervisory information across borders,” he explained.
Insurance companies are concerned about how the U.S. and EU regulatory systems can work to be on the same page.
AIA released a statement on the same day following the hearing, saying that “the covered agreement negotiation between the U.S. and the EU is the best available option to combat these growing regulatory barriers and also provide an opportunity to promote the strengths of the state-based system.”
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