EU Directive May Impact U.S. Reinsureds U.S. insurance companies that buy reinsurance from companies in Germany, Sweden or Great Britain may have more than hard market conditions to consider once an EU “directive” is implemented in the second quarter of this year.
The European Union directive, which creates guidelines for insolvency procedures for insurance companies in EU countries, may cause reinsurance buyers to reconsider ceding business to companies that arent among the financially strongest players in those countries or from those reinsurers that also include direct writings among their coverage offerings.
The directive was issued in April 2001, and all EU countries must implement the procedures outlined in the directive by April 30, 2003. Essentially, it creates a system for reorganization and winding up proceedings for defunct insurance and reinsurance companies throughout the EU.
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