Negotiations between the US and the European Union (EU) for a "Covered Agreement" addressing reinsurance, group supervision and information exchange concluded on January 13, 2017. The agreement goes into force seven days following written certification by each side to the other that they have completed their respective requirements and procedures.
Under the Dodd-Frank Act, one of the US requirements was that the Covered Agreement must be sent to Congress for review for 90 days. The language was sent to Congress, hearings and other discussions were held, and the 90-day waiting period expired on April 13, 2017. Until this summer, there had been no further visible action by the US government to finalize the Covered Agreement.
On July 14, 2017, the US Department of the Treasury and the Office of the US Trade Representative issued a press release stating their intention to sign the Covered Agreement between the US and the EU "in the coming weeks." The press release also noted that the US Administration intends to issue a policy statement on implementation of the Covered Agreement. No further public action has been taken by the administration and that policy statement has not yet been issued. The Covered Agreement becomes effective seven days after both the EU and the US issue written notifications certifying that that they have completed the respective internal requirements or procedures. Neither the US nor the EU have issued that notice to each other.
It appears that there have been some behind the scenes discussions between April and July involving the National Association of Insurance Commissioners (NAIC). Notably, the July US press release also expressly indicates that the Covered Agreement "benefits the U.S. economy by affirming America's state-based system of insurance regulation. . ." Also on July 14, the NAIC President, Ted Nickel (Wisconsin Insurance Commissioner), issued a statement expressly noting the NAIC's appreciation that, in its statement, Treasury "affirmed the primacy of the state insurance regulation and intend[s] to clarify key elements of the agreement".
Commissioner Nickel's statement also noted the significant role that US state regulators will play in implementation of the Covered Agreement. Nickel said the NAIC will issue a full statement on the Covered Agreement once the US implementation policy statement is issued and the agreement is signed.
The final steps for EU review of the Covered Agreement are approvals by both the EU Council and the European Parliament. The EU Council approved the Covered Agreement on May 29, 2017, and indicated that the Covered Agreement would be submitted to the European Parliament for approval. There has been no indication of when the European Council will consider the Covered Agreement. The EU will not be able to send to the US the EU's written certification that the EU has completed its internal requirements until this final European Parliament approval is issued.
Following publication of the final Covered Agreement negotiated language, Germany's BaFin wrote to the US FIO that BaFin would not impose its local presence requirement on US reinsurers in Germany, unless the EU or the US indicates that the Covered Agreement will not come into effect. To date, there is no indication that the BaFin position has changed.