AIA Welcomes Progress on Covered Agreement Negotiation; Urges Completion

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Following the conclusion of the latest round of covered agreement negotiations between the United States and European Commission, the American Insurance Association (AIA) welcomed the progress being made and urged successful completion of the negotiations in the near future.

Following the conclusion of the latest round of covered agreement negotiations between the United States and European Commission, the American Insurance Association (AIA) welcomed the progress being made and urged successful completion of the negotiations in the near future.

The European Union’s Solvency II Directive became effective on January 1, 2016. In the absence of the U.S. regulatory system being deemed “equivalent” to Solvency II, U.S. insurance groups with operations in the EU have faced discriminatory treatment. AIA believes that the covered agreement can be the mechanism through which there can be prudential recognition between the two systems, eliminating recent EU barriers both to cross-border reinsurance trade and to the operations of U.S. insurance groups with commercial presence in the EU.

Representatives from the United States Trade Representative, the United States Treasury Department, and the European Commission met in Brussels on October 31 through November 1.

A statement from Steve Simchak, AIA Director of International Affairs, follows:

“Viewing a covered agreement as a necessary tool for addressing the negative implications of Solvency II for U.S. (re)insurance groups, we welcome the latest round of negotiations. A successful covered agreement must give U.S. insurance groups certainty that they will not face discriminatory treatment from EU regulators now and in the future. We remain very concerned that European regulators continue to treat U.S. insurance groups less favorably than they treat European insurers and insurers from other countries. Non-discriminatory regulatory treatment is a foundation of international commerce, and it should be reinforced in prudential measures by the covered agreement.

AIA respectfully urges a conclusion to the negotiations in the near future so that U.S. insurers no longer face discriminatory measures while operating in Europe.    We also hope that consultations on the potential outcome will be held with stakeholders prior to the conclusion of negotiations. It is our continued hope that an agreement will be reached soon to the benefit of both jurisdictions.

We appreciate the hard work that officials on both sides are putting into the process, and look forward to learning more about the specifics of the negotiations.”

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