House Passes Uniform Surplus Lines Insurance Reform
The U.S. House of Representatives passed H.R. 1065, the Nonadmitted and Reinsurance Reform Act of 2007, legislation that if enacted, will help increase the efficiency of the existing state-based insurance regulatory system, supporters say.
H.R. 1065 is virtually the same legislation as H.R. 5637, a bill introduced in the 109th Congress that passed the House on a bipartisan and unanimous vote of 417-0. H.R. 1065 passed the House late yesterday on a voice vote.
“Non-admitted insurance reform is a pro-consumer piece of legislation,” said Ginny Brown-Waite, R-Fla, who sponsored the bill. “H.R. 1065 makes it clear that the state where the policyholder resides should be the state that is in charge of regulation. … Simplifying and streamlining the insurance market will bring savings to consumers and companies doing business across state lines.”
Insurers, agents and brokers have long supported the legislation, and hailed yesterday’s passage.
“We appreciate the expedited passage of this legislation by the House and believe that the quick passage of this pragmatic approach to insurance regulatory reform is exactly what we need to get the ball rolling on real reforms ,” says Robert Rusbuldt, Big “I” CEO. “We believe it not only eliminates duplication in surplus lines regulation, but that it can also serve as a shining example of how responsible insurance reform can occur — by using targeted federal legislation to address areas of concern while retaining the strengths of the current regulatory system.”
H.R. 1065 was submitted by Reps. Dennis Moore, D-Kan., and Ginny Brown-Waite, R-Fla. Cosponsors included Financial Services Ranking Member Rep. Spencer Bachus, R-Ala., and Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises Chairman Paul Kanjorski, D-Pa. House Financial Services Chairman Barney Frank, D-Mass., and Deborah Pryce, R-Ohio, also assisted in passing the bill.
The bill would establish national standards for how states regulate the surplus lines market and reinsurance and would create a uniform system of surplus lines premium tax allocation and remittance, one-state compliance on multi-state surplus lines risks, and direct access to the surplus lines market for sophisticated commercial purchasers.
The Senate version of the bill, S 929, was introduced in March by Florida Senators Mel Martinez and Bill Nelson and has been referred to the Banking, Housing and Urban Affairs Committee.
“This approval is an important step toward ultimately improving the operation and regulation of the surplus lines market,” said National Association of Professional Surplus Lines Offices President William Newton. “NAPSLO is pleased that the House of Representative has approved H.R. 1065 and we are hopeful the Senate will also approve a bill.”
For surplus lines insurers, the legislation will create greater legal and regulatory certainty for that would benefit insurers, businesses and the economy, said Property Casualty Insurers Association of America’s Ben McKay, senior vice president, federal government affairs.
“The bill creates a simple solution to a decades-long problem, and it also makes it clear to state regulators that Congress will streamline the regulatory morass if the states do not take initiative on their own,” McKay said. “We believe the bill is a great step forward.”
The bill also contains reinsurance provisions which charge the ceding insurer’s home state regulator with making the so-called “credit for reinsurance” determinations. It also would prohibit state insurance regulators from applying its laws to reinsurance agreements of ceding insurers domiciled in other states.
“Surplus lines brokers and admitted insurance companies share the same frustrations with doing business in inconsistent and disparate regulatory systems,” said Leigh Ann Pusey, American Insurance Association, chief operating officer and senior vice president, government affairs. “The reforms in H.R. 1065 aim to improve availability for customers in this market segment.”
Source: NAPSLO, PCI, IIABA, AIA