As Congress moves toward the end of its 2015 session,and most state legislative sessions have concluded, NAPSLOcontinues to closely monitor a number of legislative issues thatimpact the surplus lines industry.  

Keri Kish, NAPSLO director of government relations, says thatNAPSLO continues to rely on its Regulatory Principles and GuidingPrinciples on Uniformity to direct the Association's advocacyefforts. "The Legislative Committee and the NAPSLO Board ofDirectors adopted these principles as a roadmap in regulatory andlegislative work," Kish says. "Both documents help set prioritiesfor our advocacy and monitoring of state and federallegislation." 

Working with legislators and regulators to preservethe intent and mandates ofthe Nonadmitted and Reinsurance Reform Act (NRRA)continues to be an area of emphasis for NAPSLO. According to ScottCuller, NAPSLO legislative committee co-chair and regionalpresident, Markel Wholesale, NAPSLO saw three major NRRAstate uniformity victories this year. Kansas, Louisiana and NorthDakota all passed legislation to implement the 100% home statetaxation approach.  

"We are really pleased that these three states arejoining the 38 other states thatcalculate surplus lines tax at the home state's tax rateon 100% of the premium and retain 100% of the taxin the home state," Culler says. "We continue to believe that thisuniformity is the only viable solution and most efficientapproach for our industry. We're especially grateful forthe hard work by the Louisiana Surplus Line Association to helpwith this legislation in Louisiana, which authorized thecommissioner to withdraw from NIMA."  

The NRRA celebrated its fifth anniversary in July, along withthe Dodd Frank Act (DFA). Kish says that while no significantattempts have occurred to repeal the DFA in its entirety, NAPSLOcontinues to remind members of Congress that the NRRA is a successstory and must be kept intact in the future, should there be aneffort to repeal portions of the DFA. "We are seeing improvedmodernization and simplification of the regulation and taxation ofthe surplus lines transaction," Kish says. "We will continue totalk about these successes in Washington and work to protect theNRRA." 

Culler says that the NRRA was a major focus for NAPSLO duringits May Legislative Fly-In event in Washington D.C. "We had 32NAPSLO members and staff in D.C. to meet with key legislators andtheir senior staff. We were able to use that time to talk with themabout the success of the NRRA and ask for their continued supportof it," Culler says. 

Kish says NAPSLO strongly believes that tax sharing addsunnecessary administrative burden and increased compliance costs tothe industry and insureds, which far exceed the amount of taxes tobe reallocated among the participating states. NAPSLO's analysis oftax sharing and letters to state insurance commissioners areavailable on the Legislative Advocacy page of the NAPSLO website. 

NAPSLO members also thanked members of Congress for theirpassage of the National Association of Registered Agents andBrokers (NARAB II) during their 2015 Fly-Inmeetings. NARAB became law on Jan. 12, 2015. Kish saidthat the insurance industry lobbied many years for NARAB in aneffort to provide the national framework for uniformity in agentand broker licensing. 

Lana Parks, NAPSLO legislative committee co-chair and president,The Parks Group, says that although the NARAB legislation indicatesthe President will appoint members of the Board within 90 days fromthe day it was signed into law, no names have been sent to theSenate for confirmation at this time.  

Once established, the Board will consist of eight regulators andfive industry members, with three of the industry membersrepresenting the P&C industry. "We will remain focused onensuring the voice and perspective of surplus lines licensees isrepresented during the implementation of NARAB and development ofNARAB's national licensing standards," Parks says.  

She also says that revisions to the definition of private floodinsurance remain at the forefront of NAPSLO's legislative advocacyefforts. "We are pleased that the recently filed FloodInsurance Modernization and Market Parity Act provides clarity tolenders that they may accept private flood solutions from thesurplus lines market," Parks says. "This isn't a change,but it is just animportant  clarification. Surplus lines insurershave traditionally served as a supplement to the NFIP, and NAPSLOhas worked to help alleviate confusion that was introduced with theBiggert-Waters Act of 2012. We have offered NRRA-compliant languageas part of this proposed legislation. It has strong support fromboth the insurance and banking industry so we're hopeful it will bepassed by Congress." 

According to Culler, the reauthorization of the Terrorism RiskInsurance Act (TRIA) was another important issue for NAPSLOmembers this year. The U.S. Senate approved legislation toreauthorize TRIA when it authorized NARAB II in January. TRIA wasallowed to expire in late-2014, but the six-year extension wasretroactive and enacted a similar program with just a few changes.Those included: 

• Federal share reduces from 85% to 80% (by 1% peryear) 

• Program trigger increases from $100 million to $200M (by $20million per year) 

• Industry's aggregate retention increases from current $27.5billion to $37.5 billion (by $2 billion per year) and treasury'srecoupment rate increases from 133% to 140%.

 "NAPSLO continues to monitor the work of the U.S.Department of Treasury, the NAIC and individual states for guidanceand resources to assist NAPSLO members in implementing thechanges," Culler says.  

In addition to its advocacy work on federal legislativeand regulatory issues, NAPSLO continues to enhance itsmonitoring of state issues. With the 2014 addition ofJohn Meetz as State Relations Manager, Kishand Meetz are able to dedicate additionalattention to the myriad state legislative sessions and closelymonitor issues impacting surplus lines to be aware of anyunintended consequences. 

Kish said that many state legislatures underwent a great deal ofturnover during November 2014 elections and most opened with afocus on budget issues. "A number of states also introducedinsurance-related bills during their sessions. There are new lawsand regulations proposed nearly daily during state sessions. Wewatch these very closely and report out to members on any issues,but members can track these as well by signing up forour Statenet Tracking System alerts," Kishsaid.  "You can customize the reports by state and thereis no charge to NAPSLO members to sign-up, which members can dofrom the NAPSLO website." 

Parks said that she believes the advocacy provided by NAPSLO,often in partnership with other industry trade associations, is oneof the most valuable benefits of NAPSLO membership. "The issuesthat our industry faces at both the federal and statelevels are very complex. We have an exceptionallygood team of people, including NAPSLO staff, ourWashington D.C. consultants and a really dedicated LegislativeCommittee, working to stay abreast of what's happening day-in andday-out that impacts our businesses," Parks said. "The value ofthat expertise and communication is enormous." 

For more information about any of NAPSLO's Legislative and PACinitiatives, visit the Legislative pages of the NAPSLOwebsite.