Without a single dissenting vote, the U.S. House of Representatives passed legislation last week providing a blueprint for streamlined regulation of the surplus lines and reinsurance industries. The roll-call vote was 417-0.

Rep. Michael Oxley, R-Ohio, chairman of the House Financial Services Committee, called the result "an historic moment in the evolution of insurance regulatory reform efforts." Passage came as the House pulled out all the stops to finish necessary work as lawmakers prepare to recess to return home and campaign for reelection.

The bill, however, faces an uncertain future in the Senate, which has not held hearings on either the legislation or the issue of regulating those lines.

With Congress scheduled to recess until a lame duck session starting Nov. 13, and planning to meet for only three weeks--that week and two weeks in December--the chances for passage this year are slim. However, the overwhelming House vote sets the stage for action in the new Congress next year, according to insurance lobbyists.

Indeed, the likelihood of ultimate passage for the bill has been increased, because "perhaps the most consequential part of the debate has been the positive involvement of the National Association of Insurance Commissioners," according to Joel Wood, senior vice president of government relations at the Council of Insurance Agents and Brokers. "Rather than an impulsive 'no' on a federal preemption issue, the commissioners have been very helpful to the process."

Mr. Wood said the reason for this, in his view, "is that the NAIC understands a federal tool is needed to fix this very broken area of state regulation."

"This is an important milestone toward ultimately improving the operation and regulation of the surplus lines market," said William Newton, president of the National Association of Professional Surplus Lines Offices.

Richard Bouhan, NAPSLO executive director, predicted that "if enacted into law, this legislation will help ease the insurance crisis in states still suffering from the impact of natural disasters."

"This bill's common-sense, pragmatic approach is just what we need to get the ball rolling on real reform of insurance regulation," added Robert A. Rusbuldt, chief executive officer of the Independent Insurance Agents and Brokers of America.

Mr. Rusbuldt said his group believes the bill "not only eliminates duplication in surplus lines regulation, but it can also serve as a shining example of how responsible insurance reform can occur--by using targeted federal legislation to address areas of concern while retaining the strengths of the current regulatory system."

Ben McKay, senior vice president of government affairs at the Property Casualty Insurers Association of America, called the vote "a victory for those who believe the state-based regulatory system can be reformed without being abandoned."

He added that "while providing a simple remedy to a problem that has existed for decades, [the bill] sends a clear message to state regulators that Congress is willing to streamline the regulatory morass if states are unwilling to do so themselves."

Rep. Oxley, who will be retiring after this term, noted in his remarks during the debate that "insurance reform is never easy and never quick," but that the bill "will improve the availability and affordability of insurance and take one giant step forward toward" broader reform.

Ranking minority member Rep. Barney Frank, D-Mass., commended the bipartisan nature of the bill, which was introduced by Reps. Ginny Brown-Waite, R-Fla., and Dennis Moore, D-Kan.

Other speakers supporting the legislation included Capital Markets and Insurance Subcommittee Chairman Richard Baker, R-La., who shepherded the bill through the committee; Rep. Debbie Wasserman-Schultz, D-Fla., who helped break a potential impasse on the bill last week in the Judiciary Committee; and Rep. Mike Fitzpatrick, R-Pa.

Rep. Baker said the bill is "a very important step, but it should be viewed only as that--a regulatory first step."

Special Reports /

House Passes Surplus Lines, Reinsurance Regulation Reform Legislation

Related Stories

Recommended For You