	Introduction

U.S. insurers and Congress face new policy issues and questions related to the opportunities and risks presented by the growth in the international insurance market and trade in insurance products. Although the risks of loss and the regulation may be local, the business of insurance, as with many financial services, has an increasingly substantial international component as companies look to grow and diversify. The International Association of Insurance Supervisors (IAIS) was created more than 20 years ago, largely under the impetus of the U.S. National Association of Insurance Commissioners (NAIC), to promote cooperation and exchange of information among insurance supervisors, including development of regulatory standards. The postcrisis 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) altered the U.S. insurance regulatory system, particularly as it relates to international issues. With the states continuing as the primary insurance regulators, following Dodd-Frank, the Federal Reserve exercised holding company oversight over insurers who owned a bank subsidiary or who were designated for enhanced supervision (popularly known as systemically important financial institutions or SIFIs) by the new Financial Stability Oversight Council (FSOC). Dodd-Frank also created a new Federal Insurance Office (FIO). The FIO is not a federal insurance regulator, but is tasked with representing the United States in international fora and, along with the United States Trade Representative (USTR), can negotiate international covered agreements relating to insurance prudential measures. The new federal involvement in insurance issues, both domestic and international, has created frictions both among the federal entities and between the states and the federal entities, and has been a subject of both congressional hearings and proposed legislation. In addition, it requires the submission of the agreement and a layover period of 90 days, but does not require congressional approval. State Role

As discussed above, the FIO and the USTR jointly negotiate covered agreements, with the states having a consultative role set in the statute. U.S.-EU Covered Agreement

On September 22, 2017, the United States and European Union signed the first bilateral insurance covered agreement. The Administration submitted the final text to Congress on December 11, 2018, starting the 90-day layover period for Congress to review the agreement prior to signature. In the case of insurance, the U.S. representation at the IAIS includes (1) the NAIC, which collectively represents the U.S. state regulators, but has no regulatory authority of its own; (2) the 56 different states and territories, which collectively regulate the entire U.S. insurance market, but individually oversee only individual states and territories; (3) the Federal Reserve, which has holding company oversight only over designated systemically significant insurers and insurers with depository subsidiaries; and (4) the FIO, which has authority to monitor and report but no specific regulatory authority. Congress could enact legislation directly affecting the agreement, conduct hearings or other oversight mechanisms, or allow the covered agreement to take effect without direct action. Congress may choose to address these issues in multiple ways including, for example,
amending Dodd-Frank and the statutory role of FIO and the USTR in international insurance negotiations; legislating an increased role for states in U.S. representation to international insurance regulatory entities; endorsing international insurance standards and legislating their adoption by states; encouraging additional covered agreements to address the countries not covered by the current ones; or encouraging the inclusion of insurance services as part of negotiations of potential free trade agreements. Economic Growth, Regulatory Relief, and Consumer Protection Act ( P.L. The Federal Reserve and the Department of the Treasury are to complete an annual report and to provide testimony on the ongoing discussions at the IAIS through 2022, and the Federal Reserve and FIO are to complete a study and report, along with the opportunity for public comment and review by the Government Accountability Office (GAO), on the impact of international capital standards or other proposals prior to agreeing to such standards. 3861 would have amended the Dodd-Frank Act provisions creating the Federal Insurance Office, generally limiting the focus and size of FIO.
The growth of the international insurance market and trade in insurance products and services has created opportunities and new policy issues for U.S. insurers, Congress, and the U.S. financial system. Insurance regulation is centered on the states, with the federal government having a limited role. Although the risks of loss and the regulation may be local, the business of insurance, as with many financial services, has an increasingly substantial international component as companies and investors look to grow and diversify.
The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act
The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank; P.L. 111-203) enhanced the federal role in insurance markets through several provisions, including the Financial Stability Oversight Council's (FSOC's) ability to designate insurers as systemically important financial institutions (SIFIs); Federal Reserve oversight of SIFIs and insurers with depository affiliates; and the creation of a Federal Insurance Office (FIO) inside the Department of the Treasury. Alongside FIO, Dodd-Frank defined a new class of international insurance agreements called covered agreements for recognition of prudential measures which the FIO and the United States Trade Representative (USTR) may negotiate with foreign entities. Although not a regulator, FIO has the authority to monitor the insurance industry and limited power to preempt state laws in conjunction with covered agreements. Dodd-Frank requires congressional consultations and a 90-day layover period for covered agreements, but such agreements do not require congressional approval.
International Insurance Stakeholders and Concerns
The international response to the financial crisis included the creation of a Financial Stability Board (FSB), largely made up of various countries' financial regulators, and increasing the focus of the International Association of Insurance Supervisors (IAIS) on creating regulatory standards, especially relating to insurer capital levels. The Federal Reserve and the FIO have assumed roles in the IAIS, whereas previously the individual states and the U.S. National Association of Insurance Commissioners (NAIC) had been the only U.S. members. Any agreements reached under the FSB or IAIS would have no legal impact in the United States until adopted in regulation by federal or state regulators or enacted into federal or state statute. Congress has little direct role in international regulatory cooperation agreements such as those reached at the FSB or IAIS, but past hearings and proposed legislation has addressed these issues.
The federal involvement in insurance issues has created frictions both among the federal entities and between the states and the federal entities, and it has been a subject of congressional hearings and legislation. The first covered agreement, between the United States and the European Union (EU), went into effect on September 22, 2017. The agreement was largely rejected by the states and the NAIC, with the insurance industry split in its support, or lack thereof, for the agreement. Treasury and USTR announced a second covered agreement, with the United Kingdom (UK), on December 11, 2018.
Congressional Outlook
The recently negotiated U.S.-UK covered agreement is currently in the 90-day layover period giving the 116th Congress the opportunity to conduct oversight or pass legislation affecting the agreement. Past Congresses have been interested in revisiting the Dodd-Frank authorities that created covered agreements and the current Congress may consider similar legislation. The potential impact of international organizations and standards on the U.S. insurance markets and the potential for new trade agreements may also be of congressional concern.