The United States and the European Union signed a covered agreement to address the U.S. lack of equivalency related to the bloc’s Solvency II directive for the insurance industry.

The bilateral agreement between the jurisdictions was reached in the waning days of the Obama administration  and has been under review by the Trump administration, which was being lobbied by the National Association of Insurance Commissioners  and some federal legislators to revisit certain provisions of the agreement.

“The agreement represents a major step forward in U.S.-EU cooperation on insurance and reinsurance, conveying benefits to EU and U.S. insurers and reinsurers operating across the Atlantic, by offering them enhanced regulatory certainty, while maintaining robust consumer protections,” the jurisdictions said in a joint statement on Friday.

The covered agreement addresses three areas of prudential insurance oversight: reinsurance, group supervision and the exchange of insurance information between supervisors.

From a reinsurance perspective, the agreement will lead to the elimination of collateral and local presence requirements for EU and U.S. reinsurers operating in each other's markets, according to the statement.

From a group supervision perspective, U.S. and EU insurers operating in the other’s markets will only be subject to worldwide prudential insurance group oversight by supervisors in their home jurisdictions, according to the statement.

The agreement also encourages insurance supervisory authorities in the U.S. and the EU to continue to exchange supervisory information on insurers and reinsurers that operate in the U.S. and EU markets and includes model information sharing memorandum of understanding provisions.

Without a signed agreement, U.S. companies would have been unable to renew or write new business  in the European Union without first establishing a local presence in each EU member state in which they intended to write business.

The U.S. and EU will now move toward implementation, including through a joint committee established by the agreement. The European Union will also follow the necessary steps, involving the Council and the European Parliament, to formally conclude the agreement.

Stef Zielezienski, the American Insurance Association’s senior vice president and general counsel in Washington, applauded the agreement signing in a statement on Friday.

“When negotiations began, U.S. insurance and reinsurance groups were facing growing obstacles to their ability to do business in Europe, but this agreement removes those barriers — affirming not only each other’s regulatory systems, but also their commitments to nondiscriminatory treatment and open, reciprocal, competitive insurance markets,” he said.

"The agreement recognizes the soundness of the U.S. state-based insurance regulatory system and allows U.S.-supervised insurers to compete in Europe on the same basis as European insurers,” Evan G. Greenberg, chairman and chief executive officer of Chubb, said in a statement on Friday. “The agreement also reflects U.S. recognition of the soundness of the EU regulatory environment and will allow EU-based reinsurers to operate under the same conditions as U.S. companies. We applaud the spirit and intent of this agreement, which is a de facto acknowledgment by the European regulatory community that there is indeed more than one way to regulate the insurance industry.”