The US and the European Union have signed an agreement to update international insurance and reinsurance regulations and free up capital for investments.
The deal, previously negotiated by former US president Barack Obama’s administration, will provide “enhanced regulatory certainty” to insurers by reducing red tape “while maintaining robust consumer protections.”
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“[The agreement] is a win for the United States, its insurance industry, and US policyholders,” said US Treasury secretary Steven Mnuchin.
Mnuchin explained that by reducing the regulatory restrictions companies face, the agreement “enables American companies to be more competitive in the EU, enhances opportunities for US insurers and reinsurers at home and abroad, and furthers the administration’s goal of sustained economic growth.”
The two governments issued a joint statement, saying that insurers “will only be subject to worldwide prudential insurance group oversight by supervisors in their home jurisdiction” under the new deal.
The agreement also reduces the collateral requirements for reinsurers.
“EU reinsurers estimate that they have about $40 billion of collateral posted in the US, which could instead be invested to create jobs and growth,” a statement from the EU read.
Both governments also said that the deal will enable information exchange among supervisors, improving consumer protection in the two regions.
The European Parliament and Council must first approve the pact before it becomes official.
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