Washington DC
18 May 2017
Reporter: Becky Butcher

RIMS expresses support towards US-EU covered agreement


The Risk Management Society (RIMS) has written to Steven Mnuchin, secretary of the US Treasury, expressing its support for the recently proposed US-EU covered agreement on reinsurance.

The letter, submitted by RIMS president Nowell Seaman on 11 April, extolled the benefits to RIMS members, including the elimination collateral requirements, resulting in additional capital; the increase of reinsurance capacity; the requirement for the appointment of insurance commissioners for service; and streamlining the dispute process by clarifying jurisdiction and payment of final judgements.

It stated: “Although risk managers are not directly affected by the agreement, they will benefit indirectly via additional capital that would otherwise be tied up in collateral requirements as well as from increased reinsurance capacity.”

“This could have a positive impact on competition and prices for reinsurance. Risk managers would also benefit in the event of disputes with a non-local assuming insurer. By requirements to be eligible for the benefits of the agreement, such insurers must appoint insurance commissioners for service of process, agree to the jurisdiction of US courts, and agree to recognise and pay final judgments of US courts.”

The agreement, which was finalised in January but has yet to be signed, provides a mutual agreement of prudential supervision in the EU and the US, which will eliminate the increasing barriers to US groups operating in Europe.

Under the agreement, EU supervisors will acknowledge and affirm the US insurance regulatory framework, promising to allow US insurers and reinsurers to compete in their markets without the regulations being imposed on them under Solvency II. In exchange, EU insurers and reinsurers will receive fair reciprocal treatment and be able to compete in US markets.

The agreement covers a number of areas of prudential insurance oversight, including reinsurance, group supervision and the exchange of insurance information between supervisors.

According to a joint statement from EU and US representatives, insurers operating in the other market will only be subject to worldwide prudential insurance group oversight by the supervisors in their home jurisdiction.

The RIMS president added: “For risk professionals to support their organisations’ expansion into global markets, it is important that RIMS advocates for regulation that facilitates opportunities for our members’ to effectively achieve their objectives. RIMS is encouraged by the US-EU covered agreement on reinsurance and looks forward to working with the Department of the Treasury to help bring this agreement to fruition.”

More news
The latest news from Captive Insurance Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
Customer service is key to captive redomestications
23 August 2017 | Charlotte | Reporter: Becky Butcher
Customer service is key to attracting potential captive insurers to a particular jurisdiction, according to Leanne Refalko, senior captive insurance specialist at the North Carolina Department of Insurance
Hawaii appoints new insurance administrator for commerce
23 August 2017 | Honolulu | Reporter: Jenna Lomax
The state of Hawaii has promoted Andrew Kurata to acting insurance administrator for the department of commerce and consumer affairs insurance division
Experts react to Avrahami
23 August 2017 | Washington DC | Reporter: Becky Butcher
The US Tax Court’s decision to back the Internal Revenue Service in its dispute with Benyamin and Orna Avrahami over their micro captive should encourage those involved in similar arrangements to revisit them
NCCIA: North Carolina’s captive figures almost doubled in 2016
22 August 2017 | Charlotte | Reporter: Becky Butcher
The number of North Carolina’s licensed captive companies grew by 91 percent last year, while approved protected cells and series saw an increase of over 50 percent
NCCIA praises captive industry for work
22 August 2017 | Charlotte | Reporter: Becky Butcher
The North Carolina Captive Insurance Association Annual Conference kicked off this week with Thomas Adams, president and CEO, thanking those in the industry who have helped make the state’s captive market the success it is today
Willis Towers Watson reinforces employee benefit captive consulting
22 August 2017 | London | Reporter: Mark Dugdale
Willis Towers Watson has hired Paul Devitt as director in its global services and solutions consultancy practice, where he will focus on employee benefit captive consulting
Disappointing outcome for micro captives in Avrahami
22 August 2017 | Washington DC | Reporter: Becky Butcher
The US Tax Court has backed the Internal Revenue Service’s decision to deny Benyamin and Orna Avrahami access to the Internal Revenue Code Section 831(b) election for certain financial years