Covered Agreement is a Win for U.S. Insurers, Consumers, and the U.S. Regulatory System

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Leigh Ann Pusey, President and CEO of the American Insurance Association (AIA), will testify today that the recent international agreement on insurance and reinsurance prudential measures is a win for the U.S. system of insurance regulation, the U.S. insurance industry and consumers.

Leigh Ann Pusey, President and CEO of the American Insurance Association (AIA), will testify today that the recent international agreement on insurance and reinsurance prudential measures is a win for the U.S. system of insurance regulation, the U.S. insurance industry and consumers. Ms. Pusey will appear at a hearing of the U.S. House Financial Services Housing and Insurance Subcommittee entitled “Assessing the U.S.-EU Covered Agreement.” The hearing will examine the Bilateral Agreement between the European Union and the United States of America on Prudential Measures Regarding Insurance and Reinsurance which was recently agreed to by the United States and European Union on January 13, 2017.

A statement from Ms. Pusey follows:

“AIA thanks Chairman Duffy and Ranking Member Cleaver for convening this hearing about how the U.S.-EU Covered Agreement will benefit insurers. The Agreement provides U.S. insurers and reinsurers operating in the European Union with the badly needed certainty that they will no longer face discriminatory regulatory measures, and assures strong consumer protection. It is not only a win for the insurance industry; but is also international affirmation and recognition of our state-based insurance regulatory system.

Since the European Union’s Solvency II Directive was activated on January 1, 2016, U.S. (re)insurance groups that do business in the European Union have faced increasingly discriminatory regulations from EU Member State governments. Unnecessary regulatory divergence between the United States and European Union quickly turned into market access barriers as U.S.-based reinsurers were told they could not offer reinsurance to the EU and insurance groups were threatened with onerous, duplicative regulatory requirements.

By affirming the U.S. system of insurance supervision, the covered agreement will reintroduce a level playing field for U.S. insurers and reinsurers competing in the EU, requiring that regulatory treatment of U.S. groups in the EU will be no less favorable than the treatment received by European insurers. The affirmation of the U.S. state-based system is also a victory for U.S. consumers, policyholders, and regulators.

We thank the Treasury Department and United States Trade Representatives for their tireless efforts and U.S. state insurance commissioners who played a significant role advising the U.S. negotiators every step of the way. The Covered Agreement is a crucial step forward in addressing the modern issues that face global insurance markets. With continued support, its benefits can continue to grow.”

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