US to honor EU insurance pact

Commitment to insurance pact expressed by both sides despite doubts

US to honor EU insurance pact

Insurance News

By Terry Gangcuangco

It looks like there’s no taking back the covered agreement between the European Union and the United States. Both parties – more importantly the US side – have signified their commitment to the insurance pact.

The agreement – completed during Barack Obama’s administration just a week prior to US President Donald Trump’s inauguration – was at risk of not being followed through when those opposing it called for renegotiation.

However, the US Department of the Treasury and the Office of the US Trade Representative have now said they will sign the agreement soon, according to a report by InsuranceERM.

The US negotiating partners have also announced their imminent move to issue a policy statement on implementation. The covered agreement involves the coordinated regulation of multinational insurance companies.

“This is an important step in making US companies more competitive in domestic and foreign markets and making regulations efficient, effective, and appropriately tailored. Furthermore, the bilateral agreement benefits the US economy and consumers by affirming America’s state-based system of insurance regulation, providing regulatory certainty, and increasing growth opportunities for US insurers,” they said, as quoted by the report.

For its part, the European Commission has confirmed that the signing of the agreement will happen in the near future. Dave Matcham, chief executive of the International Underwriting Association, describes the development as “great news” for both the EU and the London Market.

“It sets an important precedent and makes it much easier for the UK to conclude its own covered agreement with the US post-Brexit. The deal also includes certain provisions which could be used as a template for further free trade agreements with other countries,” the report quoted him as saying.
Under the covered agreement, there is no need for collateral and local presence requirements for reinsurers. It addresses the following areas of insurance regulation: group supervision, reinsurance, and the exchange of information between insurance supervisors.

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