US to seal insurance deal with EU

World’s two largest insurance markets are to negotiate covered agreement on insurance aiming to overcome regulations, boost benefits

Photo by: Reuters
Photo by: Reuters

The US Treasury and US Trade Representative announced plans on Friday to negotiate a covered agreement on insurance with the European Union, a move it said will "level the regulatory playing field for US-based insurers and reinsurers."

Insurers and regulators from the European Union have long expressed frustration at US reinsurance collateral requirements - they not only must comply with EU solvency rules but must also meet additional requirements when underwriting in the United States.

The EU said in April it would push harder to persuade the United States to free up the billions of euros in collateral it requires foreign reinsurers to set aside against policies.

European reinsurers, such as Munich Re and Hannover Re of Germany and syndicates on the market run by Lloyd's of London Ltd, are put at a disadvantage to American rivals by increasing capital costs and making premiums more expensive.

The US Treasury Department said it sent letters to various congressional committees to announce its intentions. The administration will consult with Congress throughout the negotiation process.

The Treasury said it was seeking "certain prudential measures" that would provide "tangible benefits" for US insurers and consumers. It did not provide details on what these measures would be.