In 2012 a formal dialogue was initiated between the EU and the US 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 (2012) which outlined a set of objectives and initiatives to be pursued to 2017.
An updated version of the Way Forward Document (2014) was published by EIOPA on 1 August 2014. This is as a result of developments in both the EU and US since 2012, together with the project’s progress to date. The updated strategy includes new initiatives that will contribute to achieve the overall goals of the project.
The following key areas are identified in the Way Forward Document (2014) :
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.
Objective: Establish a robust regime for group supervision, under which there is:
- a clear designation of tasks, responsibilities and authority1 amongst supervisors, including a single group/lead supervisor;
- 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;
- greater cooperation and coordination amongst supervisory authorities within colleges; and
- efficient enforcement measures at the group and/or solo level that allow for effective supervision of groups.
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.
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 risk-based determination for all reinsurers in relation to credit for reinsurance.
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.
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.
7. Independent third party review and supervisory on-site examinations
Objective: Ensure consistency and effectiveness in the supervision of solo entities and groups.