“The previous $15 million capital and surplus requirement has been in place since the ’90s, so is not near as meaningful in guaranteeing financial solvency of surplus line insurers today. This is a needed inflationary increase.”
—Ted Pierce, executive director of the Surplus Line Association of California, commenting on a surplus line capital requirement bill Gov. Arnold Schwarzenegger recently signed into law. The new law requires the total capital and surplus requirements for nonadmitted insurers in California to be at least $45 million, up from $15 million. The law requires $25 million of this amount to be held in forms that meet the requirements of Department of Insurance statutes relative to the general investment law. AB 1708 also authorizes the balance of the required minimum capital to be held in instruments that are allowable under either the General Investments Law or the Excess Funds Investments Law.
No Demonstrated Need
“Such a requirement would be inconsistent with how utilization review is conducted in other areas of medicine and not in line with best practices nationwide. The proponents of this measure have not demonstrated a need for this disparity in treatment.”
—Gov. Arnold Schwarzenegger, on why he vetoed a workers’ compensation measure (AB 933) that would have required a physician who conducts a utilization review of workers’ comp medical treatment to be licensed in California.
“Californians need an insurance commissioner who is independent of insurance industry influence and both candidates should call on the insurance industry to stay out of this race.”
—Douglas Heller, Consumer Watchdog executive director. Heller’s group believes that the insurance industry is planning to spend between $5 million and $10 million to defeat California insurance commissioner candidate Dave Jones and elect his opponent Mike Villines through the JobsPAC committee. Villines says any money given to him by insurance organizations has been returned.
“The KPMG survey findings reflect an expectation that many of the challenges insurance executives have faced in terms of financial performance over these past two years will likely persist. In addition to the economic challenges, executives have clearly told us that regulatory changes, including the recently passed Dodd-Frank reform package, add to the complexity of the landscape they must navigate.”
—Scott Marcello, KPMG’s national leader for Financial Services and Insurance, commenting on a survey his company conducted for its 22nd Annual Insurance Industry Conference. U.S. insurance executives reported that despite improving market conditions, they remained concerned about their company’s performance and the industry’s ability to generate underwriting profit. Only 41 percent of executives surveyed expect their company to perform above expectations next year.
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