"Uncovering the Agreement," Insurance Day April 29, 2016
In a piece for Insurance Day, Goldberg Segalla partner Frederick J. Pomerantz examines how this summer’s looming referendum on the British exit from the European Union and the November presidential elections in the United States could impact the potential for an EU-US “covered agreement” on reinsurance collateral — and the implications for US surplus lines insurers in the London Market.
“There are a number of issues that arise from a possible UK withdrawal from the EU, including any effect a covered agreement between the EU and the US might have on UK insurers and the possible impact on Lloyd’s syndicates that have received ‘certified reinsurer’ status, including the possible loss of certification or other negative consequences,” writes Fred, a member of the firm’s Global Insurance Services and Insurance Regulatory Practice Groups.
“Another critical issue is what impact a UK withdrawal might have on the surplus lines industry in the US, especially given the fact the largest surplus lines insurers in the US market based on direct premiums written in 2015 were Lloyd’s syndicates, which claimed a 20.3% share of the market with $8.16 billion in direct written premium.”
As Fred notes, a number of factors could impact the issue, including whether a covered agreement would be limited to reinsurance collateral, and whether a vote in favor of the UK leaving the EU would “profoundly affect” the London insurance market and put billions of dollars in premiums at risk.
Then there is the 2016 US presidential election, to be held November 6. “Since its passage, Republicans have vowed to repeal the Dodd-Frank Act,” Fred writes. “This raises a separate question of how any repeal might impact the regulation of the reinsurance and surplus lines industries that are currently regulated by the Non-admitted and Reinsurance Reform Act. Once this is clear, uniformity and equivalence in regulation cannot help but have an impact on the surplus lines industry.”
Read the entire article here:
- Frederick J. Pomerantz, “Uncovering the Agreement,” Insurance Day, April 28, 2016 (subscription required)