The 2010 surplus lines modernization act is not interfering withthe ability of state regulators to access financial data forsurplus lines reinsurers regulated by other states, the FederalInsurance Office says in a new report.

Insurance industry trade groups which had lobbied for the lawfor perhaps a decade said they were pleased with the findings.

Bernie G. Heinze, executive director of the American Associationof Managing General Agents (AAMGA) said theassociation was pleased to learn of theconclusions reached by FIO relating to Part II of the NRRA.

"From the inception of the examination by Congress into thescope of the NRRA as first proposed, we have maintained that thesystem of state regulation to access reinsurance information forregulated companies has – and continues – working as expected forthe benefit of consumers, the competitive market and regulators,"Heinze said. "The NRRA is operating as designed, to afford aconsistent and reliable framework for reinsurers and theirrespective domiciliary state regulators to ensure financialsolvency."

The report was mandated by the Dodd-Frank Act financial servicesreform law.

The DFA contains a provision, the Nonadmitted and ReinsuranceReform Act, which modernizes and reforms oversight of thenon-admitted or surplus lines industry. The law gives oversight ofa surplus lines insurer to the domiciliary state.

Because the law gives total oversight of a surplus lines insureror reinsurer to the state where the insurer or reinsurer is based,there had been some concern voiced by regulators before the law waspassed that they would lose their ability through the new law toaccess vital reinsurance data for underwriters outside theirstate.

FIO concludes Part II of the NRRA "has not had anadverse impact on the ability of state regulators to accessreinsurance information for regulated companies." It added that FIOwill continue to monitor this matter and any potential issues thatmay arise, and that it will provide an updated report in 2015.

The provision of the NRRA, Part II, assigns the responsibilityfor regulating the financial solvency of a reinsurer to thedomiciliary state and generally bars other states from requiringthe reinsurer to provide additional financial information.

But it does not prohibit a non-domiciliary state regulator fromcontinuing to obtain a copy of financial statements reinsurers'file with their domiciliary state regulators.

FIO said that in preparing the report, it consulted theReinsurance Association of America, which said as of July 1, 2013,its members were unaware of any situation in which a stateregulator has been unable to obtain information in which it had aninterest.

FIO said that through the same period, state regulators did notexpress any concern with respect to the impact of the provisions inPart II of the NRRA and the ability to promptly to receive fromanother state regulator needed financial information with respectto a reinsurer.

The report said that only a few state regulators mentioned anyconcern about the potential impact of Part II of the law, but thatconcern was based "in terms of speculation that in some casesinformation may not be made available in the future."

The report said that, "No currently known factually bases wereadvanced for this potential future concern."