Authorities from the United States and the European Union will sign an agreement Friday that was 20 years in the making to streamline regulations on international insurance and reinsurance companies, and free up capital for investments.
"The agreement represents a major step forward in US-EU cooperation on insurance and reinsurance," according to a joint statement. The governments said the deal, negotiated by former US president Barack Obama's administration and announced just before he left office in January, will offer "enhanced regulatory certainty" to the companies, reducing red tape "while maintaining robust consumer protections."
Insurers now "will only be subject to worldwide prudential insurance group oversight by supervisors in their home jurisdiction" rather than in the country where they are operating, the statement said. In addition, the pact reduces collateral requirements for reinsurers, which the EU said increases the investment capacity of the firms.
"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," the EU said in a statement. The governments said the deal will facilitate exchange of information among supervisors, which will help boost consumer protection.
The terms of the five-year deal will be effective immediately, but provisionally, as the European Parliament and Council must approve the agreement.