WASHINGTON–Legislation to reform regulation of the surplus lines and reinsurance markets is scheduled for House floor action Monday under expedited procedures, according to congressional staffers and industry lobbyists.

Officials of the Council of Insurance Agents and Brokers delivered a letter to all 435 House members today urging their support for the legislation.

“The early passage of this bill will significantly improve the chances that this legislation will be signed into law in this session of Congress,” the letter said. It was signed by Ken Crerar, president of the CIAB, and Joel Wood, senior vice president affairs.

While the legislation has overwhelming support from industry officials, a similar measure that passed the House last year on a 417-0 vote died in the Senate. Also, scattered opposition to the measure has been voiced, notably by groups in Florida and Georgia.

H.R. 1065, the Nonadmitted and Reinsurance Reform Act of 2007, gives the home state regulator of the insurer primary oversight of multistate surplus lines risk.

Under the bill, the home state regulator would also be responsible for allocating any taxes collected on the coverage to the other involved states. The legislation also makes it easier for sophisticated purchasers to access the surplus lines market.

Primary sponsors of the legislation are Representatives Dennis Moore, D-Kan., and Ginny Brown-Waite, R-Fla.

“Surplus lines reform has been embraced by all the major stakeholders–insurers, agents, brokers, policyholders and even most of the state regulators,” the CIAB letter said.

“With respect to surplus lines, the core reform put in place by the legislation would ensure that only one set of state regulatory rules apply to policies that insure exposures in multiple states–those of the policyholder's 'home state,'” the letter said.

“That reform is a market imperative to eliminate unnecessary regulatory duplication and complication which does nothing to protect the policyholder,” the letter continued. “In fact, when insurers fled Florida after the last round of hurricanes there, the only place that many Florida homeowners could find wind coverage was in the surplus lines marketplace.”

The measure also seeks to streamline the reinsurance market in a similar manner by giving sole regulatory authority for determining whether or not a particular insurer qualifies for credit for reinsurance to the ceding insurer's home state.

Similar legislation, S. 929, was introduced in the Senate in February by Florida Senators Bill Nelson, D, and Mel Martinez, R.

A timetable to Senate action is unclear. Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, said at a February event in Washington that the panel he heads would be taking a “good look” at the legislation this year.

According to Joel Wood, senior vice president of government affairs, Council of Insurance Agents and Brokers in Washington, D.C., “We've been working hard, and a number of senators have expressed interest in helping move the legislation.” He declined further comment.

The Senate bill, however, will likely need upgrading. That's because the bill on the House floor Monday includes a revised definition of a “qualified risk manager” sought by officials of the Risk and Insurance Management Society.

Language in the Senate bill was used in last year's House bill. The new language replaces the definition of who qualifies as a risk manager capable of purchasing insurance in the surplus market with a sliding scale of education and experience.

The new language establishes five ways a risk manager would be qualified to buy insurance for their firm through the nonadmitted market, according to RIMS officials.

This bill “has enjoyed wide, deep and bipartisan support from the leadership of the House Financial Services Committee,” the CIAB letter said.

Special Reports /

House Gears For Action On Surplus Lines

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