Explanatory Memorandum to COM(2017)499 - Amendment of decision on signing and provisional application of the agreement with the USA on prudential measures regarding insurance and reinsurance - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2017)499 - Amendment of decision on signing and provisional application of the agreement with the USA on prudential measures regarding ... |
|---|---|
| source | COM(2017)499  |
| date | 12-09-2017 |
# Reasons for and objectives ofthe proposal
The Council Decision of 21 Aprn 2015 authorised the Uommission to start negotiations with the United States of A merica (US) for the conclusion of an Ag reement on insurance and reinsurance. Pursuant to this decision and the negotiating directives, the European Commission negotiated a Bilateral Agreement with the US on prudential measures regarding insurance and reinsurance in the course of 2016.
This Bilateral Ag reement covers three areas, group supervision, reinsurance and exchange of information b etw een supervisors.
" It sets out the conditions for group supervision in both Parties of their respective insurance and reinsurance groups. EU and US insurance and reinsurance groups active in both jurisdictions will not be subjectto certain requirements with respect to group supervision for their worldwide activities, but supervisors retain the ability to request and obtain information about worldwide activities which could harm policyholders or financial st abili ty .
" It lays down the prudential conditions to be applied for the removal of local presence and collateral requirements for reinsurers regulated and supervised in the other Party.
" It contains provisions and, in an annex, a model memorandum of under standing for the exchange of information b etw een supervisory authorities in the EU and the US. s u p e r v i s o ry authorities will be encouraged to use these provisions to ensure a high standard of professional secrecy in any exchange of confidential information necessary for carrying out their general supervisory activities.
The A greement thereby lays down an appropriate prudential framework to be applied to insurers and reinsurers from both Parties.
This proposal for an amemdentto Council Decision of 27 May 2017, which constitutes the legal instrument for the signature and provisional application of this Bilateral Ag reement, clarifies that the / \g reement can be signed in LTnglish and is drawn up in the 23 EU , anguages by the EU and should be authenticated by the Parties by exchange of diplomatic notes.
# Consistency with existing policy provisions in the policy area
EU , egislation in the area of insurance lays down a prudential framework for the protection of policyholders and for financial st abili ty. This A greement further contributes to ensuring a high level of policyholder protection in the EU, notably via increased cooperation and exchange of information b etw een supervisors, whilst also ensuring that both Parties duly regulated and supervised insurance and reinsurance undertakings are not subject to undue burden.
Council Decision authorising the opening of negotiations on behalf of the European Union with the United States of America for the conclusion of an agreement on reinsurance, 31 March 2015, ST 7320
2015 INT.
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# Consistency with other Union policies
In line with the objectives of the Investment Plan for Europe and the Capital M arkets Union, this Ag reement will facilitate investment by reinsurers .
This A greement is without prejudice to negotiations on a Transatlantic Trade Investment Partnership with the US.
2. LEGAL BASIS, SUBSI DIARITY AND PROPORTIONALITY
# Lega I basis
The legal basis for the Union to act is Article 207 TFEU read in conjunction with Article
218(5) TFEU.
# Subsidiarity (for non-exclusive competence)
This initiative falls under the exclusive competence of the Union. The subsidiarity principle therefore does not apply.
Proportion
a I ity
This EU action, laying down prudential rules for insurers and reinsurers, is in line with the principles of LJirective 2009/138/EC of the European Parliament and of the uouncil ( Solvency II ) and does not go beyond what is necessary to achieve its aims.
3. STAKEHOLDER CONSULTATIONS
# Stakeholder consultations
The negotiations were conducted in consultation with M ember States through the relevant Council special committee (the Council W o r k i n g Pa rty on Financial Services) and M ember States were regularly informed about the progress of the negotiations. The E u r o p e a n
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Parliament has also been informed aboutthe progress of the negotiations .
Industry stakeholders on both sides have voiced their support for this Ag reement and in particular with respect to the supervision of cross~border insurance and reinsurance groups and for the removal of reinsurance collateral requirements.
# Collection and useofexpertise
Prior to the start of this negotiation, the EU and the US have been closely following developments in each others Jurisdictions, exchanging information on regulatory developments, and have identified specific aspects of each others regulatory systems as potentially problematic for insurers or reinsurers operating in the ot h e r J u r i s d i ct i o n .
EU reinsurers estimate that they have about $40 billion of collateral posted in the USA, which could be used more effectively in other investments. I he opportunity cost is estimated at around $400 million per year.
OJ L 335, 17/12/2009, P. 1.
The Council Special Committee was consul ted on 14 March, 13 June, 29 June, 7 S e pte m b e r, 30 September, 18 0 cto b er, 9 November, 29 Nov ember, 9 D e cem b er, 16 D ecember and 19 D ec e mb e r 2016 as well as on 10 J a n u a r y 2017.
The Chair and M embers of the European Parliaments ECON C ommittee were debriefed in camera on 29 June, 11 0 cto b er, 16 Nov ember and 30 Nov ember 2016.
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This was in particular conducted through the E LJ-US Dia logue project, which brought to g et h e r EU and US officials as well as EU and US supervisory authorities.
The E uropean Insurance and Occupational Pensions A u t h o r i ty participated as an observer to these negotiations.
No i m pact on the EU b u d g et.
5. OTHERELEMENTS
# Implementation plans and monitoring, evaluation and reporting arrangements
The A greement provides for the set_up of a Joint Vvommittee, which will provide a forum for the EU and the US to consult and to exchange information on the administration of the Ag reementand its proper implementation.
Member States will also need to undertake the necessary actions to ensure implementation of this Ag ree m ent.
# Detailed explanation ofthe specific provisions ofthe proposal
Article 1 of this proposal amends the Council Decision of 27 May 2017 authorising the signing of this Agreement to introduce an Article 3a setting out that the Agreement shall be signed in L_ n g I i s h and that the r\g reement is also drawn up by the EU in the 22 oth er EU languages. These additional language versions should be authenticated by an exchange of diplomatic notes b etw een the United States and the European Union. It also provides that all authenticated versions shall be of equal value.
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