As they previously announced they would do, the U.S. Treasury and U.S. Trade Representative have officially signed an agreement with the United Kingdom to provide insurance regulatory continuity after the country exits the European Union.
The Trump Administration also issued a U.S. policy statement regarding implementation of the U.S.-UK “covered agreement,” which is similar to one the U.S. previously signed with the European Union in 2017.
The agreement, like the one with the EU, affirms the U.S. state-based system of insurance regulation and increases growth opportunities for U.S. insurers, according to the Trump Administration.
“We look forward to working with the UK to continue to deepen our bilateral regulatory cooperation with a view to the promotion of financial stability, investor protection, and fair, orderly, and efficient markets post Brexit,” said Treasury Secretary Steven T. Mnuchin.
United States Trade Representative Robert Lighthizer said the deal “will allow U.S. insurers and reinsurers to maximize business opportunities and cut red tape for their cross-border operations.”
While the U.S insurance community is split over the wisdom of U.S. covered agreements with foreign countries, with state regulators worrying they infringe on their authority, critics have been somewhat muted since this latest pact mirrors the U.K.- EU agreement that is already in place.
The National Association of Insurance Commissioners (NAIC ), which represents state insurance regulators and has been one of the strongest critics, said it did not object to this pact. “As we have previously noted, the UK is an important market for the U.S. and is currently included in the existing U.S./EU covered agreement. Given these unique circumstances, despite our concerns with the covered agreement mechanism, we do not object to its use in this instance to replicate consistent treatment for the UK,” the organization said.
Louisiana state Sen. Dan Morrish, president of the National Council of Insurance Legislators, which has also been critical in the past, echoed the comments by state regulators, saying that “it is only fair that the U.K. is not penalized for leaving the European Union.”
Another critic, the National Association of Mutual Insurance Companies (NAMIC), used the signing to make a point. “Ultimately, we think this was a missed opportunity for the U.S. to codify the administration’s interpretation of what the text of the covered agreement means. After all, if the UK can’t officially sign-off on our interpretation of the document’s meaning, doesn’t that call into question the agreement’s ability to solve the problems it purports to solve?” said Jimi Grande, NAMIC senior vice president of government affairs.
Not all in the industry are wary of covered agreements. “We applaud U.S. and U.K. negotiators for prioritizing the stability of the insurance marketplace ahead of next year’s Brexit,” said Steve Simchak, vice president and chief international counsel for the American Insurance Association, which represents carriers. “This agreement goes a long way toward limiting any disruption to the insurance marketplace. We appreciate the emphasis put on keeping it consistent with the existing Covered Agreement with the European Union and the engagement of state insurance commissioners during the negotiating process.”
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