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December 2012

EU-U.S. Dialogue Project: The Way Forward

Objectives and Initiatives for the Future

The EU-U.S. Dialogue Project began in January 2012 with the objective of 

enhancing understanding and cooperation for the benefit of insurance 

consumers, business opportunity and effective supervision. With the 

involvement of technical experts in both jurisdictions, the Project 

produced a draft factual Report on commonalities and differences between 

the jurisdictions in key areas of supervision. The Report, which was 

released for public comment in September 2012, has been updated and is 

being released in conjunction with this document. A detailed project plan 

will be developed in early 2013 and will be updated periodically as the 

following common objectives and initiatives are pursued over the next five 

years. The Steering Committee reaffirms its commitment to the EU-U.S.

Dialogue Project and will continue to oversee its progress.

1. Professional secrecy/confidentiality 

Objective: Promote the free flow of information between EU and U.S.

supervisors under conditions of professional secrecy by removing the 

barriers to the exchanges of information. 

a. Investigate and pursue the possibility of having a Multilateral 

Memorandum of Understanding (MMoU) to eventually be entered into by 

all U.S. states and all EU Member States 

i. If needed, establish an overview of EU Member States’/U.S.

states’ legal and practical framework for professional secrecy

b. Explore the ability to make existing U.S. State law and processes 

regarding professional secrecy/confidentiality more explicit in relation to 

exchanges of information with non-U.S. supervisory authorities

c. Encourage the expanded use of MoUs as confidence-building measures 

and in order to formalize frameworks for information sharing across 

jurisdictions

d. Encourage all constituents to join the International Association of 

Insurance Supervisors (IAIS) MMoU, and support IAIS efforts to expedite 

the process, recognizing that the necessary IAIS review and approval 

process may mean considerable delay before the majority of U.S. states 

and EU Member States can become signatories
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2. Group supervision

Objective: Establish a robust regime for group supervision, under which 

there is:

1) a clear designation of tasks, responsibilities and authority1 amongst 

supervisors, including a single group/lead supervisor;

2) a holistic approach to determining the solvency and financial 

condition of the group that is consistent with the way companies 

manage their business, that avoids double counting of regulatory 

capital and that monitors risk concentrations, considers all entities 

belonging to the group and is complementary to solo/legal entity

supervision;

3) greater cooperation and coordination amongst supervisory 

authorities within colleges; and

4) efficient enforcement measures at the group and/or solo level that 

allow for effective supervision of groups. 

a. Share best practices/experiences of cooperation and coordination 

amongst supervisory authorities (e.g. in form of a regular forum or a 

workshop), including the clear designation of tasks and responsibilities, 

which should foster harmonization of group supervision over time

b. Promote harmonization of Own Risk and Solvency Assessment (ORSA)

reports and establish an ORSA report template which could be used by 

EU and US groups alike, e.g. a modular approach with a joint section to 

be equally used by both sides and other, more specific sections with 

EU/U.S. particularities

c. Promote effective college procedures to maximize the benefit to 

participating supervisors (responsibilities/decision-making, data needs 

and exchange/reporting, group capital discussions etc.)

d. Discuss supervisory expectations with regard to governance (both 

corporate and internal governance) and achieve a common list of 

indispensable governance elements to be part of Enterprise Risk 

Management (ERM)

e. Work towards achieving greater comparability between groups in 

relation to an overall group solvency assessment

 1 The term “authority” incorporates the powers and ability of supervisory authorities to enforce laws. 
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3. Solvency and capital requirements

Objective: Further develop an approach to valuation which more 

accurately reflects the risk profile of companies, is sufficiently sensitive 

to changes in that risk profile and which has capital requirements that 

are fully risk-based, based on a clear and transparent calibration and 

that cover similar categories and subcategories of risks to which 

companies are exposed.

a. Identify categories and subcategories of risks for prioritization of further 

work

b. Establish a transparent calibration including a time horizon on a risk-byrisk basis

i. Establish separate technical workstreams on catastrophe, market

and operational risks and discuss the calibration approach 

including the type and granularity of data to be used in the 

calibration process with a view to achieving further convergence 

on these quantifiable risks

c. Work towards a consistent approach to solvency, i.e. capital requirements, 

valuation and technical provisions, viewed on an overall basis

i. Analyse how technical provisions are calculated in both regimes

d. Examine the interaction of solvency and capital requirements with other 

supervisory tools such as financial analysis when looking at b and c above

4. Reinsurance and collateral requirements

Objective: Work to achieve a consistent approach within each 

jurisdiction and examine the further reduction and possible removal of 

collateral requirements in both jurisdictions in order to ensure a riskbased determination for all reinsurers in relation to credit for 

reinsurance.

a. The EU to provide an analysis of the possibility of concluding a bilateral 

agreement with the US under Article 50 of the Reinsurance Directive 

(Directive 2005/68/EC), which is currently applicable in the EU

b. The EU to analyse how the agreements envisaged under the Reinsurance 

Directive differ from the articles on Commission decisions on equivalence 

in the Solvency II Directive (Article 172 of Directive 2009/138/EC)

c. The U.S. to outline what possibilities exist for revising the current Model 

laws on credit for reinsurance, including for foreign and domestic 

reinsurers, and for reviewing the relationship with the accreditation 

program to the extent that the National Association of Insurance 
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Commissioners (NAIC) public statements commit to periodically reexamine the issues of uniformity and collateral levels

d. The U.S. to outline in relation to the eleven states that have passed the 

NAIC Model laws, what the status of these laws are (i.e. whether they are 

currently in operation) and how they differ

e. The Federal Insurance Office to respond to suggestions regarding its 

authority under the Dodd-Frank Wall Street Reform and Consumer 

Protection Act relating to entering into Covered Agreements

5. Supervisory reporting, data collection and analysis 

Objective: Pursue greater coordination in relation to the monitoring of 

the solvency and financial condition of solo entities and groups through 

the analysis of supervisory reporting. The exchange of information is 

facilitated by the joint exchange of best practices for analysis and an 

evolution towards a greater consistency of reporting. 

a. EU to further examine and learn from NAIC experience in terms of 

centralized database and analysis

b. U.S. to examine and learn from EU experience in terms of group reporting 

and analysis

c. Mutual exploration of greater consistency and compatibility in group 

reporting and analysis

d. Explore possibilities to exchange data, e.g. regarding investments or 

reinsurance, to identify common and interlinked risk exposures

e. In order to facilitate items mentioned in a, b and c: explore platforms for 

data sharing, common data standards/taxonomies e.g. extended business 

reporting language (XBRL), data elements and global standards such as 

common issuer coding (legal entity identifier) 

6. Peer reviews

Objective: Ensure the consistent application of prudential requirements 

and commitment to supervisory best practices through different peer 

review processes that ensure an independent view of the jurisdiction 

being examined.

a. Establish a “Network of Supervisors” for key colleges to facilitate general 

learning/sharing of experiences in order to promote efficiencies in 

operational processes, best practices among, and effectiveness of 

supervisors in, colleges
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b. EU to elaborate and implement a sound process to oversee the tasks 

carried out by the competent national authorities with regard to 

supervisory activities (e.g. on- and off-site examinations, supervisory 

plans), including quality and timeliness of actions taken, to promote 

effective and efficient supervision

c. For the U.S., to consider whether to include effective and efficient 

supervision of colleges in the accreditation program; both, the EU and the 

U.S. to coordinate the evolution of operational processes and best 

practices in colleges to promote consistency of group supervision across 

jurisdictions and avoid duplication

7. Independent third party review and supervisory on-site examinations

Objective: Ensure consistency and effectiveness in the supervision of 

solo entities and groups. 

a. Investigate the possibility of building common principles to promote 

greater consistency and effectiveness in risk-based and targeted 

supervision

b. EU to examine and learn from U.S. experience regarding tools used in 

the supervisory process (such as the NAIC Examiners Handbook) and 

both to continue mutual exchanges going-forward in the development 

of the supervisory process

c. On-going EU-U.S. Dialogue to enhance understanding and consistency, 

in particular once the EU's Supervisory Review Process (SRP) document 

is available with respect to the frequency, methodology and specific 

requirements for an on-site monitoring and examination 

d. Promote enhanced cooperation through

i. Greater collaboration in the development of supervisory plans, 

including on-site examinations

ii. Streamlining the supervisory processes to avoid duplication

e. Consider opportunities for effective collaboration in the supervision of 

transatlantic groups, i.e. share information and coordinate 

examinations

f. The U.S. to investigate ideas/approaches to require the function of an 

internal audit 

i. U.S. will determine which U.S. insurance groups with 

transatlantic operations already maintain an internal audit 

function