08 June 2017
Reporter: Mark Dugdale

US-EU covered agreement moves closer to implementation


The European Council has authorised the signing of the US-EU covered agreement on insurance and reinsurance, paving the way for its passage on one side of the Atlantic, at least.

The competitiveness council adopted the decision to sign the covered agreement at a meeting on 29 May.

It provides for provisional application of some of the agreement’s provisions, pending the completion of the procedures necessary for its conclusion. The European Council has also requested the consent of the European Parliament for conclusion of the agreement.

According to the European Council, the US-EU covered agreement, which includes provisions on reinsurance, group supervision and the exchange of information, will “provide legal certainty for EU and US insurers and reinsurers in the application of regulatory frameworks”.

It will also “enable improved protection for policyholders and other consumers through cooperation between supervisors and the exchange of information”.

The US-EU covered agreement, consensus on which was achieved in January between the EU and the US Treasury and the US Trade Representative (USTR), will eliminate collateral requirements, resulting in additional capital, increase reinsurance capacity, and streamline the dispute process, according to the Risk Management Society.

Crucially, EU supervisors will acknowledge and affirm the US insurance regulatory framework, promising to allow US insurers and reinsurers to compete in their markets without rules being imposed on them under Solvency II.

The US-EU covered agreement has not been without criticism, most notably from the National Association of Insurance Commissioners (NAIC), which was an observer to negotiations.

The NAIC has raised concerns about not being able to vote on the decision to go ahead with the US-EU covered agreement, and around transparency, and is concerned about the provision in the agreement for foreign jurisdictions to have regulatory authority over a US company.

Speaking at the Captive Insurance Companies Association International Conference in March, Skip Myers, partner of the insurance group at Morris, Manning & Martin, confirmed that the NAIC is looking at the agreement and is preparing amendments to submit to the US Treasury.

Other bodies, including the Reinsurance Association of America, believe the agreement brings some predictability to their members’ participation in the European markets, and vice versa, according to Myers.

Jim McIntyre, founder of McIntyre & Lemon, added that, while the agreement might not have any direct effect on captive insurance, it could eliminate some barriers and stabilise pricing, which are both positive for captive insurers.

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
UK’s ILS legislation to be in place for January renewals
17 October 2017 | London | Reporter: Jenna Lomax
Malcolm Newman, CEO of Scor’s London hub and sponsor of the London Market Group’s (LMG) ILS Taskforce is “cognisant of the time pressures if ILS applications are to be made in time for 1 January renewals”
Centaur Fund Services adds ILS head
16 October 2017 | Bermuda | Reporter: Becky Butcher
Centaur Fund Services has appointed IC Condat as its head of insurance linked-securities (ILS), based in the firm’s Bermuda office
Roundstone and HUB team up on captive programme
16 October 2017 | Ohio | Reporter: Becky Butcher
Roundstone Management and HUB International have partnered up to create self-funded medical captive programmes
Sun Life and Pareto launch stop-loss group captive
13 October 2017 | Massachusetts | Reporter: Becky Butcher
Sun Life and Pareto Captive Services have teamed up to establish a new stop-loss group captive solution, Legend Re
DARAG names new CEO of its Italian operation
13 October 2017 | Milan | Reporter: Becky Butcher
European run-off insurance company DARAG has appointed Tullio Ferrucci as CEO of DARAG Italia, following the acquisition of ERGO Assicurazioni
Cybercrime losses set to increase, says cyber risk expert
12 October 2017 | London | Reporter: Becky Butcher
Losses from cybercrime are only likely to increase because of far-reaching global connectivity, warned James Trainor, Aon’s senior vice president of cyber solutions
Axial Benefits Group complete captive deal
12 October 2017 | Massachusetts | Reporter: Becky Butcher
Axial Benefits Group has completed a medical stop-loss transaction with QBE North America to enhance its healthcare purchasing coalition operations