|August 21, 2014|
Previously published on August 14, 2014
Amid mounting assertions by United States ("US") lawmakers and regulators that individual states should participate directly in the debate on international insurance regulatory standards and convergence, the EU-US Insurance Project has proposed that initial steps should be taken toward entering into a covered agreement between the European Union ("EU") and the U.S. federal government by the end of 2014.
The call to bypass the current state-by-state approach to approving reinsurance collateral requirements was outlined in a recent update to an EU-US Insurance Project roadmap document known as "The Way Forward." Published on August 1, 2014, the document calls for the proposed covered agreement to be based on the National Association of Insurance Commissioners ("NAIC") Credit for Reinsurance Model Law and Regulation. An evaluation would also be made as to whether the agreement can achieve the mutual group supervision objectives set forth.
The EU-US Insurance Project builds on the established U.S.-EU bilateral dialogue and includes representatives from the NAIC, the European Commission and European Insurance and Occupational Pensions Authority ("EIOPA") and the Federal Insurance Office.
Representatives from the NAIC, the EIOPA and the European Commission held a series of meetings earlier this year to advance a mutual regulatory understanding of insurance activities in the US and EU. Discussion topics during the regulator meetings included group supervision, market regulation and global systemic risk.
"A common understanding of our respective regulatory systems is core to international cooperation, and is in the best interest of both the U.S. and European insurance markets," said NAIC President and North Dakota Insurance Commissioner Adam Hamm about the update. "Our continued engagement in the EU-U.S. Insurance Project is reflected in a constructive 'Way Forward' plan, which was updated recently to reflect new developments and affirms our collective commitment to increased policyholder protections and effective communication on regulatory issues of mutual concern."
The EU-US Insurance Project is led by a Steering Committee that includes three top supervisory officials from the U.S. and three from the EU. Together, they have agreed upon the following seven topics considered fundamentally important to a sound regulatory regime, policyholder protection and financial stability:
- Professional secrecy and confidentiality
- Group supervision
- Solvency and capital requirements
- Reinsurance and collateral requirements
- Supervisory reporting, data collection and analysis and disclosure
- Supervisory peer reviews
- Independent third party reviews and supervisory on-site inspections