That's because the proposed deal is very good for foreign insurers, Snyder said, because they have been advocating for this for a long time, particularly European insurers.

The effort to get uniform reinsurance collateral standards has been underway for more than 14 years.

The 2014 FIO annual report released today noted that non-U.S. reinsurers “play a critical role” in the U.S. reinsurance market, accounting for 60 percent or more of reinsurance premium ceded by U.S.-based insurers.

Moreover, the report said, “Europe's Solvency II insurance regulatory regime will call for evaluation of regulatory treatment of reinsurers in non-EU jurisdictions, including such collateral requirements.

The report also notes that state insurance regulators support reinsurance collateral reform, as recognized by their unanimous vote approving the new model law in November 2011.

The report released today said that 23 states have adopted some measures to reform the requirements relating to collateral for reinsurance. “Among those states, however, authorization to accept less than 100 percent collateral has not been uniform in structure or implementation,” the report said. “Other concerns include that the Model Reinsurance Collateral Law relies heavily upon assessments of reinsurers' creditworthiness by credit rating agencies, rather than on risk-based empirical factors.”

“These observations support Treasury's view that in the context of international prudential matters regarding the business of insurance, questions concerning reinsurance collateral should be uniformly addressed on the national level,” the report said.

But Snyder — speaking on behalf of U.S. insurance companies, reinsurance companies and agents and brokers — said the U.S. should drive a hard bargain. In return, the U.S. should be granted mutual and permanent recognition for U.S. insurers and reinsurers in Europe, Snyder said.

That's because the proposed deal is very good for foreign insurers, Snyder said, because they have been advocating for this for a long time, particularly European insurers.

Snyder said U.S. insurers and reinsurers will also be watching closely to ensure that the agreement contains the principles that are the keys to the 2011 model law.

They are that a foreign reinsurer certified by a state will be required to post collateral in an amount that corresponds with its assigned rating (0 percent, 10 percent, 20 percent, 50 percent, 75 percent or 100 percent) in order for a U.S. ceding insurer to be allowed full credit for the reinsurance ceded.

The second is that state regulators have designated the country of domicile of the foreign reinsurer as qualified for the flexible collateral requirements.

The 2011 model law replaced a model law that mandated that, in order for U.S. ceding companies to receive reinsurance credit, the reinsurance be either ceded to U.S. licensed reinsurers or secured by collateral representing 100 percent of U.S. liabilities for which the credit is recorded.

McRaith talked about the issue during a panel discussion bringing together federal and state insurance regulators to discuss issues important to NAMIC members Tuesday.

Those participating in the roundtable included John Huff, director of the Missouri Department of Insurance, Financial Institutions & Professional Registration and the regulator designated to be the NAIC's advisory representative to the FIO; Ben Nelson, NAIC CEO; and Thomas R. Sullivan, senior advisor-insurance for the Board of Governors of the Federal Reserve System. Officials familiar with the FIO process clarified McRaith's comments by saying that actual negotiations toward a covered agreement cannot be launched before Congress has been notified.

The pact would be based on the NAIC Credit for Reinsurance Model Law and Regulation, which was approved by the NAIC in November 2011 after 11 years of effort.

McRaith said in his NAMIC comments that negotiating bilateral trade agreements in concert with the USTR is part of the FIO/Treasury powers under the 2010 Dodd-Frank Act.