Our Positions | Covered Agreement

The Dodd-Frank Wall Street Reform and Consumer Protection Act empowered the U.S. Treasury Department, the United States Trade Representative and the newly formed Federal Insurance Office to negotiate and enter into international “covered agreements” related to insurance prudential measures.

A covered agreement is a specific type of international agreement defined by the Dodd-Frank Act as a written agreement between the U.S. and one or more foreign governments or regulatory entities that addresses insurance “prudential measures” and "achieves a level of protection for insurance or reinsurance consumers that is substantially equivalent to the level of protection achieved under state insurance or reinsurance regulation." Where a state law is inconsistent with a "covered agreement," and provides less favorable treatment to foreign (re)insurers than U.S. companies, the FIO director may preempt conflicting state law.

NAMIC has concerns about covered agreements for several reasons. First the language of federal law is very broad and encompasses all insurance prudential measures. Second, there seems to be no required federal or state legislative enactment, approval, or even required review in advance of signing a covered agreement. Congress is given the authority to review after the agreement has been signed but they would have to pass a law to override the terms of the agreement to reject its terms. Finally, there is the possible preemption of state law by a covered agreement under certain circumstances. All of this is allowed without any legislative enactment.

NAMIC Position

Except in the case of extreme circumstances, NAMIC does not support the use of “covered agreements” to pre-empt state law and override the state legislative process. The decision that such an extreme circumstance exists should not be made without appropriate due process, including consultation with state legislative and regulatory authorities, approval by Congress, and public hearings and comment procedures.

NAMIC News on Covered Agreement


Erin Collins
Senior Vice President - State and Policy Affairs