Covered Agreement Insurance: What You Need to Know

Covered agreement insurance is a form of reinsurance that is regulated by the National Association of Insurance Commissioners (NAIC). A covered agreement refers to an agreement between the United States and another country for the regulation of insurance and reinsurance companies. The covered agreement aims to create a level playing field for American insurance companies in the global insurance marketplace.

This type of insurance is particularly relevant to international insurance and reinsurance companies operating in the United States. Covered agreement insurance ensures that foreign insurance companies are treated equitably and have access to the same opportunities and privileges as domestic companies.

Background on the Covered Agreement

The covered agreement was established after a dispute between the United States and the European Union regarding how American insurance companies operating in Europe were treated. The European Union had strict regulations that made it difficult for American insurance companies to compete in the European market.

The covered agreement was signed in 2017 between the United States and the European Union, and was later expanded to include Japan and Switzerland. Under the agreement, foreign insurance companies are granted “national treatment,” which means that they are entitled to the same treatment as domestic companies.

How Covered Agreement Insurance Works

Covered agreement insurance works by providing reinsurance to foreign insurance companies operating in the United States. Reinsurance is a type of insurance that insurance companies purchase to protect themselves against large losses.

Covered agreement insurance is unique because it is regulated by the NAIC. The NAIC is a group of state insurance regulators who work together to create and enforce insurance regulations across the United States. The NAIC also works with foreign regulators to ensure that insurance companies are operating within the boundaries of the covered agreement.

Benefits of Covered Agreement Insurance

One of the main benefits of covered agreement insurance is that it provides foreign insurance companies with the same opportunities and privileges as domestic companies. This helps to create a level playing field in the global insurance marketplace, which is beneficial for both American insurance companies and foreign insurance companies.

Another benefit of covered agreement insurance is that it helps to promote the growth of the insurance industry in the United States. By providing foreign insurance companies with the opportunity to operate in the United States, the insurance industry is able to grow and thrive.

In Conclusion

Covered agreement insurance is an important form of reinsurance that is regulated by the NAIC. It provides foreign insurance companies with the same opportunities and privileges as domestic companies, which helps to create a level playing field in the global insurance marketplace. By promoting the growth of the insurance industry in the United States, covered agreement insurance benefits both American insurance companies and foreign insurance companies alike.