Taking care of business

NAPSLO’s Wesson says association focused on regulation, education and young people

Federal regulation reform of the surplus lines industry, education for its members and recruiting talented young people into the business have been critical issues for the National Association of Surplus Lines Offices this past year, says retiring President Mac Wesson. In this exclusive interview with Insurance Journal’s Stephanie Jones, Wesson discussed why it was important for the association to have a hired-gun in Washington, D.C., tackling issues critical to the surplus lines industry and its members. NAPSLO will hold its annual convention in Chicago, Sept. 13-16.

What have been the main issues that you’ve concentrated on during your year as NAPSLO president?
Mac Wesson: Probably the most significant is our decision to retain a lobbying firm in Washington, D.C. Even though that decision was made prior to my taking over as president, it was really put into action at the beginning of my year. That’s significant because there is, as you know, significant federal legislation being considered, which impacts our industry. We felt like it would be wise and in the best interest of our members to have on the ground eyes and ears watching the process unfold so that we could be aware of all things happening with first-hand knowledge. We also created a PAC (political action committee) at the beginning of my year.

Tell me a little bit more about the surplus lines reform legislation, HB 5637, and what NAPSLO would like to see.

Wesson: It’s interesting how it all developed. It of course was the product of the House Financial Services Subcommittee. It was interesting that it focused and focuses on surplus lines insurance and reinsurance. But what it effectively says is that for the purposes of transacting surplus lines business, the laws and regulations of the insured’s home state of domicile will govern the transaction. It also speaks to things such as the payment of taxes on multi-state risks. It calls for a single payment to a single state based on the insured state of domicile. It does things that are actually very good for NAPSLO and our members but at this stage of the game it has a long way to go.

On the overall debate over federal versus state regulation, there are a couple of other bills or ideas being considered. Does NAPSLO weigh in on those?

Wesson: Well, the bills that you are talking about I think is the Smart Act, that was introduced in the House a year or more ago, which effectively is the application of federal standards on the state regulatory system. The other that is percolating in the Senate is the Optional Federal Charter Bill, called the National Insurance Act. Those are similar in the sense that there is a federal influence over the business, but are very different in the way they influence the business. Essentially the Smart Act preserves the state regulatory model, but overlays federal standards for which the states are to follow. Optional Federal Charter offers insurers the opportunity to obtain a national charter and to be regulated by a national regulator. Those are very different in the way they would approach the regulatory aspect of our business. We have expressed a preference for the Smart Act because we believe that the state regulatory system, while it certainly needs to be made more efficient and certainly does have challenges that need to be addressed, is the best environment for surplus lines people to operate in.

What other issues will NAPSLO work on next year?
Wesson: Well, we always have a very strong interest in the educational aspect of our association. And as a matter of fact we have expanded, or made plans to expand our involvement in that regard. That will always be a major focal point of our association because it’s very important. We also continue to have great success with our internship program, where we provide opportunities, typically for college students studying risk management and insurance, to have hands-on experience during their summer with both our carrier and broker members.

Do you see the surplus lines industry growing in people?
Wesson: Well, you only need to look at the growth of the surplus lines industry itself, both in terms of raw dollars and in terms of the percentage that it represents to the total P/C industry to see that it is in fact growing. Now we are somewhere in the $35 billion premium range … about 15 percent of the overall P/C industry. Both of those numbers are up from prior years. That would suggest to me that to fuel that growth, you need to have resources and one of the most important resources are people.

Do you see more young people interested in surplus lines?
Wesson: Actually I do, which is very gratifying. We have always felt like we have a great deal to offer. The surplus lines business has overcome the perception of being a lower class form of citizenry than our admitted brothers, but I think the reality is that it is being seen now by young people as a very vibrant, very entrepreneurial way to establish oneself in the business. Yes, I do see young people flocking to it, which is very, very good.

How would you sum up your year, maybe in a few words?
Wesson: It has gone by very fast and has been very rewarding. The NAPSLO staff has just been fantastic. I guess the most rewarding thing about it all is that it has been a fulfilling year. We have taken care of business and have done so in a very orchestrated and coordinated and cooperative way, and that is gratifying.