For the first time ever, United States and European Union officials have issued a joint statement declaring insurance regulatory modernization a priority. Officials set as a goal identifying ways to create a “true level playing field” across the Atlantic in insurance.

The statement was issued May 13 in Brussels, Belgium by something called the Transatlantic Economic Council. Created at the April 2007 EU-US Summit by European Commission President José Barroso, German Chancellor Angela Merkel and President George W. Bush, the Transatlantic Economic Council was meeting for the second time following an inaugural November 2007 session in Washington.

“We have urged our financial markets regulators to make significant strides by the end of 2008 to identify the steps that need to be taken to create a true level playing-field for EU and US insurance companies in each other’s jurisdictions,” the statement said.

The statement was welcomed by insurers on both sides of the Atlantic, with the Comité European des Assurances and the American Council of Life Insurers calling for a bilateral insurance forum to convene before the end of the year. “The high level of importance shown by including insurance in the top tier of issues being discussed by our respective leaders this week confirms our commitment to pressing forward with regulatory reforms in the U.S., both in the states and through establishment of a federal regulatory option,” ACLI President Frank Keating said in a statement.

European delegates to the TEC included European Commission Vice President Günter Verheugen and Commissioners Peter Mandelson, László Kovács, Meglena Kuneva and Charlie McCreevy. U.S. representatives included Agriculture Secretary Ed Schafer, Labor Secretary Elaine Chao, U.S. Trade Representative Susan Schwab, and presidential adviser Dan Price.

What It Means to Agents:  This is another piece in the puzzle of why there is such an aggressive push on behalf of establishing a federal insurance regulator in Washington, D.C. Major banks plus a handful of large insurance carriers with significant overseas insurance operations stand to benefit greatly by cutting deals in Europe. To do so, European officials want to avoid dealing with our state-based insurance regulatory system. This is why the Treasury Department is calling for the transfer of insurance regulatory authority from the states to the federal government.

The question in this is: who benefits, and who loses? This comment from a Treasury official is instructive:

“Large U.S. insurance firms operating in Europe [our emphasis added] fear the EU will find the U.S. insurance supervisory regime not equivalent and that they in turn will face uncertainties and higher costs in continuing their European operations. This is a matter requiring intensive discussion,” said Deputy Assistant Treasury Secretary Mark Sobel in a recent U.S. Chamber of Commerce event in Washington.

Bottom line: This is all about the “big boys.” In this process, there is no concern whatsoever about small and mid-sized domestic U.S. insurance carriers, Main Street insurance agents or U.S. consumers – all of whom could become ‘collateral damage.’ Note the use of the term “level playing field.” The big boys use this to refer to the U.S. and Europe. When independent insurance agents use the term, we are referring to a level playing field between agents and their competitors.

Why the Sudden Hurry? The unusual urgency that we’ve been seeing to nail down details of this U.S. – EU arrangement before the end of the year may be due to a desire to do as much of this as possible while the Bush Administration is still in office. This could also explain Rep. Paul Kanjorski’s sudden rush to create a federal Office of Insurance Information, granting the Treasury Secretary broad powers to preempt state insurance regulations and state insurance law in international matters.

And it might also account for other areas of regulatory modernization where impatience is suddenly being encouraged -- almost as if people are being stampeded, without being told where they are being stampeded to.

Second Meeting of Transatlantic Economic Council to Further Strengthen EU/US Economic Integration (EU Press Release 5/8/08)

May 20, 2008