US belatedly moves on Solvency II equivalence - FREE

US belatedly moves on Solvency II equivalence - FREE

The US is pursuing negotiations with EU insurance regulators to “level the regulatory playing field for US-based insurers and reinsurers”, Reuters has reported.

The US Treasury Department has reportedly sent letters to congressional committees to announce its intentions, seeking “certain prudential measures”.

The Obama administration will consult Congress throughout the negotiation process, aiming for – unspecified – “tangible benefits” for US insurers and consumers.

The EU previously said in April it would push harder to persuade the US to relax rules for foreign reinsurers.

European re/insurers underwriting in the US have been frustrated at facing onerous compliance costs of both US reinsurance collateral rules and the EU's own capital requirements.

On the US side, the re/insurance industry has been annoyed by a perceived lack of interest by US lawmakers, dragging their feet in relation to adopting equivalency arrangements with the EU ahead of January 2016’s introduction of Solvency II in Europe.

“The European Commission is waiting for a specific agreement from the US to start that process. It would make this market more attractive, otherwise companies might be subject to retaliatory regulatory initiatives in the EU,” the president of the Reinsurance Association of America (RAA), Frank Nutter, told Reactions in October.

No further details have been published on the scope of the present US negotiations with the EU.

"What we look for is mutual recognition of the two systems rather than imposing one on the other because they are very different insurance markets and regulatory systems,” said Robert Gordon, senior vice president for policy and research at the Property Casualty Insurers’ Association of America (PCI), speaking to Reactions.

The US has previously pledged to reach some sort of regulatory equivalency with the EU over Solvency II.

“Once Solvency II is in place, individual countries could have collateral requirements, and require the localisation of capital,” Nutter added, speaking at the PCI industry body’s annual meeting in Florida last month.

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