U.S. Reinsurance Reform Not Welcomed in TTIP

Written by | Wednesday, August 27th, 2014

Negotiators lobbying for better U.S. market access for EU reinsurers have relinquished negotiations over the Transatlantic Trade and Investment Partnership (TTIP) demonstrating that the agreement is unlikely to do away with rules forcing the industry to post as much as 100-percent collateral against their American liabilities. Instead, European negotiators are hoping to come up with a separate pact to eliminate state-level collateral requirements for EU insurers, who cover, for instance, also natural catastrophes. EU reinsurers do not have the same requirement as in EU28, only France and Portugal impose collateral requirements on American reinsurers. The EU Commission is pushing for a negotiating mandate from the Council of Ministers, independent from TTIP, to use a future “covered deal” with US regulators to remove the claims. The Commission already has a broad mandate for TTIP from EU national states but it does not wish any delays in TTIP to halt progress due to reinsurance.  

With its currently being negotiated, the TTIP has been coined as a “landmark” agreement that will remove a variety of barriers to market access on both sides of the Atlantic in many industries. Yet, the United States has not been very keen to include financial services in the deal. The U.S. argues that it is not ready to accept European “regulatory coherence” in the financial sector. It says that supervisory cooperation should not be included in the agreement especially as Washington has introduced global banking standards faster than Brussels. Brussels, however, says that it will do its best to persuade Washington to have the finance sector on agenda as well. The EU promised that after having removed the topic off the agenda, it would bring it back if the U.S. changed its mind on regulatory coherence. Despite the ambitious plans to finalize TTIP talks by the end of this year, analysts do not think that the deadlock over the financial sector can be overcome.

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