Upon reflection of NAPSLO's more than 40-year history ofproviding networking opportunities, regulatory and legislativeadvocacy, and education and career development programs, I believethe industry's future is very bright and well-positioned forcontinued growth and opportunity.

According to the 2014 A.M. Best Surplus Lines—Segment Review,the excess and surplus lines market is strong and stable, with an8.4% increase in direct written premium in 2013 and 10 years of nofinancial impairments, with 100% of surplus lines carriers rated as"secure."

The Surplus Lines Stamping Office of Texas report for 2014 alsodemonstrates top line growth. That report indicates total surpluslines premium reported to the 14 states with stamping officesduring the year was nearly $24.2 billion, representing an increaseof 7.6% over 2013, and total filings with stamping offices up 6.9%over the previous year. I anticipate this growth will also beevidenced in the forthcoming 2015 A.M. Best report.

While these are good indicators of the industry's solid footing,NAPSLO continues to focus on several key regulatory and legislativeinitiatives that promote operational efficiencies for the surpluslines market. We are pleased with significant progress towarduniformity among all states in the regulation and taxation ofsurplus lines premium facilitated by the Nonadmitted andReinsurance Reform Act (NRRA). The 2015 departures of Louisianafrom the Nonadmitted Insurance Multistate Agreement, and NorthDakota and Kansas from the Surplus Lines Insurance MultistateCompliance Compact, further improves the number and premium volumeof states fully implementing the home state tax approach. Thisbrings the total of jurisdictions retaining 100% of the taxes theycollect to 47, representing more than 86% of the nationwide surpluslines premium.

The passage of the National Association of Registered Agents andBrokers Reform Act of 2015 (NARAB) was a significant step towarduniformity for multistate licensing. Similar to the NRRA, NARAB'snational licensing standards also will continue to promote andpreserve the state-based insurance regulatory system.

NAPSLO's advocacy for the surplus lines market is focused andpositioned to further strengthen and secure its future, which isimportant for the P&C insurance industry. There is significantopportunity for NAPSLO members to serve as the safety valve forinsurance risks that the standard market can't or won't underwrite.Their expertise and service is in demand and makes them importantallies for retail agents and insurance buyers in need of innovativesolutions to the most complex insurance risks.

Ask the Expert:

Q: During this next Congressional term, what isues willbe of greatest focus for NAPSLO?   
Kelley: NAPSLO is also working on behalf of itsmembers to advocate for passage of The Flood InsuranceModernization and Market Parity Act of 2015. This flood legislationwill provide needed clarity for lenders that they may acceptprivate flood insurance solutions from surplus lines insurers, justas they had prior to the Biggert-Waters Act of 2012. The surpluslines industry has long-served as a successful supplemental marketto the National Flood Insurance Program (NFIP). The new legislationintroduced in June 2015 defines private flood insurers to includeeligible surplus lines insurers using consistent terminologycodified in federal law through the NRRA. 

Brady R. Kelley, executive director, NAPSLO is responsiblefor the overall management of NAPSLO's staff activities, servicesto members and business operations. Before joining NAPSLO, he waschief financial and business strategy officer for the NationalAssn. of Insurance Commissioners with oversight of the financedivision, products and services division, technical servicesdivision and financial regulation standards and accreditationprogram. Contact him at [email protected].