New York and London partner Tom Dawson was recently quoted in Law360 article titled “US, EU Insurance Talks Could Undermine States’ Authority.”
The U.S. and European Union recently launched so-called “covered agreement” negotiations that may result in EU recognition of the US system of re/insurer solvency regulation and may scale back or eliminate collateral requirements for EU-based reinsurers dealing with U.S. insurance companies. State insurance regulators and some in Congress are concerned with the degree to which such treaties could undermine state regulation of insurance. Under the landmark Dodd-Frank legislation, the Federal Insurance Office has the authority to determine that a state insurance law should be preempted by a covered agreement, if the law is inconsistent with the covered agreement and other conditions are met.
Tom stated, "To the extent the negotiators adopt a zero collateral position that is inconsistent with the NAIC’s Credit for Reinsurance Model Law, that would be a big political statement to make."
"The federal negotiators would be saying, 'We're just going to override this state construct that's been painstakingly negotiated over a period of many years and involved a lot of players,’” he added.