On February 16, 2017, the House Financial Services Subcommittee on Housing & Insurance held a hearing entitled “Assessing the U.S.-EU Covered Agreement.” The hearing was the first opportunity for Committee members—or any members of Congress—to hear and express views and concerns on the Covered Agreement, which would establish standards (as between the U.S. and EU) on collateral requirements for reinsurance, insurance group supervision and confidentiality. It also marked the first time former Director of the Federal Insurance Office Michael McRaith testified since leaving his post on Inauguration Day.
In his testimony, McRaith defended both the substance of the agreement as well as the inclusive approach his office took during the negotiations. Wisconsin Commissioner of Insurance Ted Nickel also testified and expressed a contrary view on both points, claiming that the agreement undercuts the state-based regulatory structure and asserting that perspectives of state regulators were not fully considered. The topic will continue to be a focus during the 90-day congressional “lay-over” period that began January 13, 2017. For background on the initial Covered Agreement notice, see our November 2015 update.
While the views of legislators are important, the agreement does not require, nor does the statutory process provide for, congressional approval; inaction during the layover period is all proponents of the Covered Agreement need from Congress. From there, it is an open question on what further action is needed from the Trump administration to effect the Covered Agreement. While it would fit the theme of the White House’s campaign to re-negotiate deals and treaties to improve the positioning of the U.S., stakeholder opinions on the agreement vary, and senior GOP Financial Services Committee support for the Covered Agreement makes the politics harder to score than just “globalism vs. America First.”
The House Financial Services Committee was just one of four committees the agreement was submitted to, along with the House Ways & Means, Senate Finance and Senate Banking & Urban Affairs Committees. No other activity has been announced at this point, but we can expect more discussion in the future.
McRaith will be speaking at this year’s Networks Financial Institute Insurance Public Policy Summit on March 15, 2017. For more information and to register for the NFI Summit, visit the Networks Financial Institute website.