Terry Fleming, director of theDivision of Risk Management, Montgomery County, Md., and immediatepast president of the Risk and Insurance Management Society,cautions that the Neal Bill, introduced by Rep. Richard Neal, D-MA,and Senator Robert Menendez, D-NJ, could mean hardening rates inthe future.

If passed, the legislation would place significant restrictionson domestic insurers that cede reinsurance to their foreignaffiliates.

The scope of the bill would impact a majority of the insuranceindustry, but would particularly hit consumers in areas of thecountry subject to natural disasters and terrorism risks.

“From a capacity standpoint, if we take away one of the toolsfor reinsurers, it’s going to reduce their ability to sharerisk—and therefore would have a deleterious effect on capacity,”says John Phelps, board liaison to RIMS’ External Affairs Committeeand director of business risk solutions for Blue Cross and BlueShield of Florida.

Fleming believes the Super Committee that is working on thebudget for Congress is considering adding the Neal Bill. If thathappens, he says, “it will reduce capacity somewhat forreinsurance—and that will be passed on to customers, I’m sure.”

While he is not sure about the scope of the impact, one thing iscertain: “It will make coverage more expensive.”