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EU-U.S. Insurance Project

The Way Forward 

July 2014 Update

Objectives and Initiatives for the Future

The EU-U.S. Insurance Project began in January 2012 with the objective of enhancing understanding and 

cooperation for the benefit of insurance consumers, business opportunity and effective supervision. In December 

2012, following a year of collaboration, the Project published the EU-U.S. Dialogue Project Technical 

Committee Reports Comparing Certain Aspects of the Insurance Supervisory and Regulatory Regimes in the 

European Union and the United States. The Report was accompanied by an initial Way Forward document

which outlined a set of objectives and initiatives to be pursued through 2017. 

In light of recent developments in the EU and the United States, and of progress to date on the Project, the 

Steering Committee has revisited and updated the Way Forward and hereby reaffirms its commitment to the 

Project.

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. Encourage all constituents to join the International Association of Insurance Supervisors (IAIS) Multilateral 

Memorandum of Understanding and support IAIS efforts to expedite the process, recognizing that the necessary 

validation process may mean considerable delay before the majority of U.S. states and EU Member States can 

become signatories. 

b. Assess the effectiveness of existing bilateral Memorandums of Understanding (and other substantively 

equivalent agreements regardless of title) on exchanges of information between U.S. states and federal agencies

and EU Member States for purposes of identifying critical elements and best practices related to sharing of 

confidential information.

c. Identify by end 2014 the merits of an additional trans-Atlantic bilateral agreement, including the optimal

structure(s) of such an agreement to further facilitate the exchange of confidential information through a covered 

agreement or other mechanisms identified by the Steering Committee. 
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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. The U.S. side to report on the integrated effect of the total system of insurance supervision in the U.S. that 

reflects the state and federal levels. Inasmuch as both sides are primarily concerned with the application of 

group-wide supervision to those larger insurers/groups that write on a cross-border basis in each other’s 

jurisdiction, the analysis will focus, where appropriate, on those states/Member States that are group-wide 

supervisors for such firms.

b. Share best practices/experiences of cooperation and coordination amongst supervisors from key colleges (e.g.,

in the 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.

c. Promote harmonization of Own Risk and Solvency Assessment (ORSA) reports and establish common ORSA 

reporting elements which could be used by EU and U.S. groups.

d. Promote effective college procedures to maximize the benefit to participating supervisors (e.g., 

responsibilities / decision-making, data needs and exchange/reporting, group capital discussions).

e. 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.

f. Work towards achieving greater comparability between groups in relation to an overall group solvency 

assessment.

g. By end 2014, evaluate the use of a covered agreement to achieve the group supervision objectives stated 

above. 

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. Provide a forum for the periodic bi-lateral exchange of views among experts from U.S. state and federal 

agencies and the EU with regard to the ongoing efforts of the IAIS to develop basic capital requirements, a highloss absorbency requirement, and an insurance capital standard. 

 

1 The term “authority” incorporates the powers and ability of supervisory authorities to enforce laws.
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b. Establish a transparent calibration including a time horizon on a risk-by-risk 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 U.S. side 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 Commissioners (NAIC) public statements commit to 

periodically re-examine the issues of uniformity and collateral levels.

b. The U.S. side to outline in relation to the 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 including in implementation.

c. The EU, and Treasury/FIO with the consultation of state insurance regulators, to take initial steps toward a 

covered agreement by end 2014 that for the U.S. would be based on the NAIC Credit for Reinsurance Model 

Law and Regulation.

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. The EU to further examine and learn from NAIC experience in terms of centralized database and analysis.

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

c. Mutually explore greater consistency and compatibility in group reporting and analysis both in terms of 

substance and frequency of reporting.

d. Explore possibilities to exchange data, e.g., regarding investments or reinsurance, to identify common and 

interlinked risk exposures.

e. In order to facilitate the aforementioned items, 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).
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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. The 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.

b. The U.S. side to consider whether to include effective and efficient supervision of colleges in the accreditation 

program.

c. The EU and the U.S. side 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. The EU to examine and learn from U.S. side 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.

b. On-going EU-U.S. dialogue to enhance understanding and consistency, in particular once the EU's

Supervisory Review Process document is available with respect to the frequency, methodology and specific 

requirements for an on-site monitoring and examination.

c. Promote enhanced cooperation through:

i. Greater collaboration in the development of supervisory plans, including coordination of on-site 

examinations and information sharing

ii. Streamlining the supervisory processes to avoid duplication

d. The EU to consider the need for more consistent professional standards surrounding the credentials of 

actuaries, and requirements for actuarial opinions to be made public.