NAIC: Seek a Better Deal With the EU
The National Association Insurance Commissioners (NAIC) wants lawmakers in Congress to seek a new covered agreement with the European Union governing how insurance is regulated between the United States and the European Union (EU). A covered agreement, negotiated by the U.S. Treasury Department and its Federal Insurance Office (FIO), was reached with the EU and submitted to the House Financial Services Committee on January 13. The agreement is not subject to congressional approval and becomes effective after a 90-day review period before Congress.
On Feb. 16, the House Financial Services subcommittee on Housing and Insurance held a hearing to discuss the agreement, about which there was disagreement.
“This covered agreement is not the answer, and we urge the Trump administration to reopen negotiations with the EU to obtain a better deal for the United States,” said Ted Nickel, NAIC president and Wisconsin Commissioner of Insurance. “State regulators can support an agreement which achieves clear and permanent mutual recognition for our time-tested U.S. insurance regulatory system, includes meaningful state regulator input and transparency.” Nickel has said most state regulators were not allowed to participate in the process.
National Association of Mutual Insurance Companies (NAMIC) President and Chief Executive Officer Charles Chamness said the agreement could be better. He was critical of the section that removes U.S. collateral requirements for EU reinsurers, if they meet all the other qualifying requirements to do business in the United States, saying it “particularly disadvantages smaller insurers, which are more reliant on reinsurance” and that “the small insurance companies will not have the same negotiating power as larger companies.”
Former FIO Director Michael McRaith defended the agreement, as did the American Insurance Association (AIA). Lee Ann Pusey, AIA president and CEO, calling it a “win-win” that protects the industry and “the U.S. system of insurance regulation.”
Rep. Blaine Luetkemeyer (R-MO), a former insurance agent, criticized both trade groups for their differences over the agreement and congratulated McRaith for his work. “Today we have an example of the problem we have in the insurance industry. We have two groups representing two different groups of insurance companies that disagree,” he said. “I will tell you from my perspective they had better get on the same page. I am up to here with this dysfunctional infighting.”
PIA commented following the hearing. “The fact that two groups representing insurance companies disagree substantively on the value of the covered agreement demonstrates that the agreement can be improved,” said Lauren Pachman, PIA National counsel and director of regulatory affairs. “Such differences could have been reconciled in advance, had state insurance regulators been fully included in the negotiating process. Although the agreement appears to respect the Unites States’ state-based system of insurance regulation, the valid concerns expressed by smaller insurers should be addressed.”