On January 13, 2017, the US Treasury reported to Congress that
Treasury and the US Trade Representative (USTR) had successfully
concluded negotiations with the EU on a Covered Agreement (the
Agreement) that would presumably open the markets for US and EU
insurers and reinsurers, and potentially preempt state laws on
collateral for reinsurance. In this alert, we explore what
happened, what happens next (and when) and what this could mean for
insurers and reinsurers in the US and EU.
What is a "covered agreement"?
Historically, state insurance laws have required non-US
reinsurers to deposit collateral in the US sufficient to fully
secure future liabilities to US insurers, and for many years the EU
and other countries have strongly objected to these laws as trade
barriers. Perceiving a lack of progress by the states to modify
their reinsurance collateral laws to ease these burdens on non-US
reinsurers, Congress, in Title V of the Dodd-Frank Act,
