The EU and the US are due to sign a landmark bilateral agreement on insurance and reinsurance.
Following over 20 years of discussions and a year of formal negotiations between the European Commission and the US Department of the Treasury and Office of the Trade Representative, the signatures will mark the final step for them.
The agreement will boost consumer protection by facilitating the exchange of information between EU and US supervisors and cut costs and red tape for EU insurers and reinsurers active in the US. The agreement also brings prudential benefits. EU insurers and reinsurers will only have to prepare one risk and solvency assessment (ORSA) in light of their specific risk profile which can then also be used by US supervisors. The signature allows parts of the agreement to become immediately applicable on a provisional basis.
In line with the objectives of the Investment Plan for Europe and the Capital Markets Union, the agreement will sanction reinsurers to boost their investment capacity. EU reinsurers estimate that they have about $40bn of collateral posted in the US, which could instead be invested to create jobs and growth. The opportunity cost is estimated at around $400mn per year.
The European Parliament and the Council will need to approve the conclusion of the agreement.
In a joint statement, the EU and the US said: “The agreement represents a major step forward in US- EU cooperation on insurance and reinsurance, conveying benefits to EU and US insurers and reinsurers operating across the Atlantic, by offering them enhanced regulatory certainty, while maintaining robust consumer protections.”