It deals with three main provisions; Reinsurance, group control and information exchange: yes. The agreement was negotiated in accordance with the Treaty on the Functioning of the EU and the US Dodd-Frank Wall Street Consumer Reform and Protection Act. It is legally binding and can be denounced subject to the mechanism of the agreement with a period of 180 days. In this context, on 13 January 2017, the US Secretary of the Treasury, the USTR and the European Commission announced the successful conclusion of the covered agreement, which included three aspects of prudential supervision: reinsurance, group control and the exchange of information between supervisory authorities. With respect to reinsurance, the covered contract removes local guarantees and requirements for presence as the terms of a reinsurance contract. Therefore, it prohibits an American regulator, an EU, from accepting to reinsurers either guarantees or local presence requirements that it does not impose on a local US company that accepts the reinsurer as a condition of a reinsurance contract, and vice versa. There are certain financial and contractual conditions that need to be met, but this should not be a problem for international insurance companies. In the United States, state reinsurance lending laws have in the past required non-U.S. reinsurers to reserve 100% guarantees in the United States for risks reimbursed by U.S. insurers. Global reinsurers have long complained about warranty requirements. In 2011, NAIC adopted changes to its Reinsurance Models credit that allow certain non-U.S.-based reinsurers in a « qualified jurisdiction » to reinsurize U.S. liabilities with reduced warranties.
Only four EU jurisdictions have been recognised as « qualified legal systems » – France, Germany, Ireland and the UNITED Kingdom (the list also includes Bermuda, Japan and Switzerland, which are not EU Member States). The reduced warranty requirements of revised reinsurance models became mandatory for all states as of January 1, 2019 under the NAIC accreditation program. On December 18, 2018, the Trump administration signed a bilateral agreement on prudential insurance issues between the United States and the United Kingdom (the United States and the United Kingdom). Covered agreement). This is a pro-Brexit version, mentioned only for the UK, of the agreement signed with the European Union in September 2017, which came into force on 4 April 2018. The UK The covered deal will apply when Brexit is effective and the deal comes at a time when uncertainty over Brexit and its potential impact on the global financial services sector will apply. Although the text of the covered agreement is final and binding, the agreement provides for a mechanism through which the parties meet regularly to discuss their effectiveness and to consider whether changes are needed. It is difficult to say with certainty whether the Uk will be able to secure a covered agreement with the United States or the terms of an agreement.
The consensus is that an agreement is more than likely, but the UK`s agreement with the EU could complicate a deal with the US. Historically, the United States has been more important than the EU for the development of the London market and the Us may be focusing again. The United Kingdom has a recognized regulatory system and will likely provide the equivalence of Solvency II, but the alignment of British regulations with the United States may be wise.