One of biggest uncertainties in international insurance regulation could be decided in the United States’ favor after all, according to credit rating agency Fitch Ratings Ltd., which projects that the state-based U.S. regulatory regime will be found “equivalent” under the European Union’s Solvency II initiative.
U.S. insurers and reinsurers that do business in Europe have been watching the Solvency II process closely in recent years, particularly given warnings from EU officials that, without a federal regulator for the insurance industry, they may not be able to extend equal treatment to companies who are based on this side of the Atlantic.
Though the United States is not in the first wave of nations being assesses for equivalence, Fitch believes the U.S. risk-based solvency regime ultimately will be seen to give policyholders equivalent protection as Solvency II and that “despite fundamental differences in the underlying methodologies, we expect this to result in equivalence recognition from the European Union,” Business Insurance magazine reported Nov. 1.
