Why foreign rules matter to US clients
In the United States insurance is regulated by the states. The NAIC notes that every state, the District of Columbia and the five U.S. territories have a department of insurance. Once your business, property, employees or customers are abroad, other systems apply. Local law usually decides who may insure a risk located in that country, what the policy must contain and how a claim is handled. This overview introduces the main frameworks international clients of Polis Re encounter. It is general information, not legal advice.
European Union: Solvency II
Solvency II is the EU's prudential regime for insurers and reinsurers. It was adopted as Directive 2009/138/EC of 25 November 2009, and EIOPA says the regime entered into force in January 2016. It replaced a patchwork of national rules with a risk-based approach built on three pillars:
- Pillar I, quantitative requirements: market-consistent valuation of assets and liabilities, and capital requirements that rise with the risks an insurer takes.
- Pillar II, governance: risk management, internal control and the Own Risk and Solvency Assessment (ORSA).
- Pillar III, reporting and disclosure: regular reports to supervisors and public solvency reports.
The framework has been reviewed. Directive (EU) 2025/2 amends Solvency II, and EIOPA states that the new rules take effect on 30 January 2027. For policyholders the practical point is that an EU-authorized insurer has to hold capital against its actual risk profile and publish information about its solvency. Read that report before you place a large risk.
European Union: the Insurance Distribution Directive
The Insurance Distribution Directive (IDD), Directive (EU) 2016/97, governs how insurance is sold. Its original text set a transposition deadline of 23 February 2018. Key features:
- It applies to all distributors: insurance intermediaries, ancillary intermediaries and insurers that sell directly.
- Sales staff must keep up their competence with at least 15 hours of professional training or development per year.
- Non-life products come with a standardized insurance product information document (IPID).
- Some small ancillary sellers are exempt, for example where the premium does not exceed EUR 600 per year on a pro rata basis, if all the conditions are met.
EIOPA
The European Insurance and Occupational Pensions Authority was established as part of reforms to the structure of financial supervision in Europe. A 2009 recommendation proposed a European System of Financial Supervisors comprising three European Supervisory Authorities, and EIOPA is the one for insurance and occupational pensions. It acts as an independent advisory body to the European Commission and works to make national supervision consistent. Day-to-day supervision of individual insurers stays with national authorities.
United Kingdom
After Brexit, the UK runs its own regime. Insurers are prudentially regulated by the Prudential Regulation Authority (PRA), part of the Bank of England, which supervises insurers to check whether they are protecting policyholders adequately. The PRA has been reforming the inherited rules under the name "Solvency UK." The Financial Conduct Authority (FCA) oversees how insurance products are sold and how customers are treated.
China
China's insurance sector is supervised by the National Financial Regulatory Administration (NFRA). According to its published mandate, the NFRA conducts unified supervision of the financial industry except the securities sector. It authorizes insurance institutions and supervises their corporate governance, risk management, capital adequacy, solvency and business operations. It also handles financial consumer protection, including complaint handling and dispute resolution. Companies operating in China should check whether a locally issued policy is required and how it fits with any global master policy.
Comparison
| Jurisdiction | Main supervisor | Capital framework | Sales conduct |
|---|---|---|---|
| United States | State insurance departments, coordinated through the NAIC | State risk-based capital | State producer licensing and market conduct rules |
| European Union | National authorities, with EIOPA coordinating | Solvency II | Insurance Distribution Directive |
| United Kingdom | PRA (prudential), FCA (conduct) | Solvency UK | FCA rules |
| China | NFRA | NFRA solvency rules | NFRA consumer protection rules |
Practical tips for international programs
- Ask whether each country requires a locally admitted policy, and how the master policy responds where it does not.
- For large or unusual risks, reinsurance and fronting arrangements are common. See our treaty reinsurance and facultative reinsurance pages.
- Check the insurer's published solvency report and financial strength rating, not just the price.
- Policies are issued by licensed insurers and placed through licensed producers in the relevant jurisdiction. Contact Polis Re through our contacts page to discuss placement support.