Federal legislation that would establish national standards for state regulation of the surplus lines and reinsurance markets made its second appearance into Congress today.
Rep. Ginny Brown-Waite, R-Fla., and Rep. Dennis Moore, D-Kan., reintroduced the “Nonadmitted and Reinsurance Reform Act of 2007,” which aims to provide a uniform system of surplus lines premium taxation, elimination of duplicative compliance requirements for multi-state surplus lines transactions and direct access to the surplus lines market for large commercial insurance buyers. The bill would also allow ceding insurers and reinsurers to resolve disputes pursuant to contractual arbitration clauses.
The bill is similar to the “Nonadmitted and Reinsurance Reform Act of 2006” (H.R. 5637) that Rep. Moore cosponsored with Rep. Brown-Waite in the last legislative session. While the bill received strong support in the Financial Services Committee and was approved in the full House by a vote of 417-0 last year, it was not brought up for consideration in the Senate.
“I am proud to join my friend and colleague, Congresswoman Brown-Waite, in reintroducing this important legislation to eliminate the problem of conflicting and inefficient state laws regarding non-admitted insurance and reinsurance,” Rep. Moore said. “Making the insurance market fairer and simpler benefits us all. With such broad, bipartisan support in the past, I’m confident that this legislation, which is long overdue, will again receive very strong support in the House and I hope that the Senate will join us in passing this legislation.”
Richard Bouhan, executive director of the National Assocation of Surplus Lines Offices praised the legislation, saying it “is a needed piece of insurance reform legislation that will improve efficiency of the surplus lines insurance market and make property/liability insurance more readily available to consumers.”
NAPSLO President William Newton added the reform legislation will ultimately benefit consumers. “This legislation will simplify the regulation of the excess and surplus lines business without diminishing consumer protections and provide consumers with more opportunities to secure property/liability insurance in areas where natural disasters have made insurance availability scarce,” Newton said.
“As I noted last year when similar legislation passed the House unanimously, non-admitted insurance reform is a pro-consumer piece of legislation,” Rep. Brown-Waite said. “Simplifying and streamlining the insurance market will bring savings to consumers and companies doing business across state lines.”
Bouhan said that NAPSLO’s “top legislative priority” in this Congress is the passage of the “Nonadmitted and Reinsurance Reform Act” and added, “we are pleased that the first step has been taken, in the 110th Congress, to enact this legislation. NAPSLO hopes the House, again, endorses the bill and the Senate takes it up, shortly.”
Agents and brokers also endorsed the legislation and urged swift action by both the House and Senate.
“This surplus lines legislation is an absolutely critical market reform that corrects serious flaws in state regulatory systems,” said Ken A. Crerar, president of The Council of Insurance Agents and Brokers. “Even state regulators acknowledge that their conflicting regulations are causing a serious problem they have been unable to reconcile. Federal action in this case is the only answer. Getting the Moore/Brown-Waite bill to the finish line is our highest legislative priority this year.”
“The nonadmitted marketplace continues to function as a crucial ‘safety valve’ for the entire insurance market,” said Tom Koonce, Independent Insurance Agents and Brokers of America assistant vice president for federal government affairs. “The existing state-based regulatory system has some inefficiencies that disrupt the nonadmitted marketplace regarding the allocation and remittance of premium taxes, licensing of nonresident surplus lines brokers, and duplicative regulation of the nonadmitted market. This legislation will correct this.”
Insurers too hailed the bill’s second round in Congress, calling the legislation a first step toward modernizing the insurance regulatory environment.
“This legislation is a vital first step toward reforming and streamlining an increasingly burdensome state regulatory system,” said Ben McKay, Property Casualty Insurers Association of America, senior vice president, federal government affairs.
“This bill will create greater legal and regulatory certainty for surplus lines writers, which will benefit insurers, businesses and the economy,” McKay added. “This legislation proposes 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 act on their own.”
“Surplus lines brokers and admitted insurance companies share the same frustrations with doing business in inconsistent and disparate regulatory systems,” said Drew Cantor, AIA vice president and director, federal affairs. “We believe that comprehensive reform of the current regulatory regime is critically need.”
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