US – EU
(WASHINGTON) – After 20 years of discussion and a year of formal talks, the European Union and the US signed a landmark bilateral agreement on insurance and reinsurance Saturday.
The agreement will enable reinsurers to boost their investment capacity. It is expected to boost consumer protection and cut costs and red tape for EU insurers and reinsurers active in the US.
The Agreement represents a major step forward in U.S.- EU cooperation on insurance and reinsurance, conveying benefits to EU and U.S. insurers and reinsurers operating across the Atlantic, by offering them enhanced regulatory certainty, while maintaining robust consumer protections,” the US and EU said in a joint statement.
For several decades, EU reinsurers have had to post collateral when signing reinsurance contracts in the US, while US reinsurers are not subject to such requirements.
EU reinsurers estimate that they have about $40 billion of collateral posted in the US, which could instead be invested to create jobs and growth. The opportunity cost is estimated at around $400 million per year.
The Agreement will enhance consumer protection by facilitating the exchange of information between EU and US supervisors. The Agreement also brings prudential benefits: for instance, EU insurers and reinsurers will have to prepare only one risk and solvency assessment (ORSA) in light of their specific risk profile.
This assessment will also be used by US supervisors. The signature allows parts of the Agreement to become immediately applicable on a provisional basis. The European Parliament and the Council will need to approve the conclusion of the Agreement.
EU - US Agreement on insurance and reinsurance - background guide
