Michael McRaith, director of the Federal Office of Insurance (FIO), is moving aggressively to reduce the differences between European and U.S. insurance regulatory and supervisory schemes.
McRaith met last Wednesday with officials of the European Insurance and Occupational Pensions Authority (EIOPA) and industry officials in Washington said he told them before he left that he hopes to have a template in place by November for smoothing over differences between the two regulatory schemes.
The meeting, held in Frankfurt, was also attended by Susan Voss, Iowa commissioner and immediate past president of the National Association of Insurance Commissioners (NAIC), and Terri Vaughan, NAIC executive director.
According to industry lawyers and lobbyists, a key stumbling block is the different rules foreign reinsurers must use when they enter the U.S. market.
The problem was supposed to have been solved by passage last November by the full NAIC of a landmark model law that seeks to reduce reinsurance collateral requirements for non-U.S. reinsurers domiciled in qualified jurisdictions.
Apparently, however, NAIC action has not done the trick.
Industry lawyers and lobbyists familiar with McRaith’s visit said they believe the U.S. will likely to have to agree to some uniform collateral requirements for foreign insurers beyond the ability of the NAIC to enforce in order to facilitate an even playing field for U.S. insurers doing business in Europe.
Meanwhile, rumors are circulating in official circles in Washington that the Obama administration will release over the August congressional recess, the long-delayed report on insurance modernization that the FIO and McRaith have been working on.
Difficulties in working together between the FIO and the U.S. Trade Representative (USTR) over who will primarily represent the U.S. on international insurance issues such as prudential regulation and an even playing field with regard to Solvency 2 capital are delaying the report, according to industry lobbyists and officials.
Industry lobbyists and lawyers say McRaith is working to reduce the logjam between the FIO, which is based in Treasury, and the USTR.
McRaith issued a statement through the EIOPA after the meeting in which he said that “The insurance dialogue between the EU and the U.S. is critical to the promotion of transatlantic understanding and cooperation, and to the promotion of greater consistency and alignment in insurance regulation. We look forward to continuing our work with our EU counterparts and U.S. state regulators for the benefit of insurance consumer protection and business opportunity in both jurisdictions.”
The Treasury Department today declined to confirm any details of the meeting or McRaith’s statement. They had no statement.
According to Gabriel Bernardino, chairman of EIOPA, the EU and the U.S have launched the talks in order to increase mutual understanding and cooperation with a view to identifying the main commonalities and differences of the two insurance regulatory and supervisory regimes.
“This dialogue will allow regulators at both sides of the Atlantic to find areas where further compatibility and convergence will be possible and could pave the way for future decisions,” Bernardino said.
He focused on the progress in the analysis of the EU and U.S. regulatory and supervisory systems. This analysis is related to seven key areas: professional secrecy; group supervision; solvency & capital requirements; reinsurance and collateral requirements; supervisory reporting, data collection & analysis and transparency to the market; supervisory peer reviews; independent third party review, and supervisory on-site exams/inspections.