NAPSLO officials are voicing strong support for the enactment offederal legislation that would create a national clearinghouse thatwould serve as a one-stop licensing system for agents and brokersoperating outside of their home state.

The legislation, H.R. 1115, would create the NationalAssociation of Registered Agents and Brokers. It passed the Housewith strong support earlier this month, and is now awaiting Senatefloor action. The Senate bill is S. 534.

“While Congress is facing difficult budget challenges thisfall, one would hope that a non-controversial bill with widespreadindustry support such as NARAB II will be brought to a vote andpassed during this Congress,” says David E. Leonard, co-chair ofNAPSLO's Legislative Committee and chairman of the RSUI Group inAtlanta.

Enactment of the legislation “will greatly increase theefficiency and compliance of the licensing process,” Leonard notes.“It will eliminate burdensome multi-state requirements while at thesame time preserving important state regulatory authority andconsumer protections.”

Moreover, it will generate greater efficiency in the licenseprocess, he adds, “and that means better service and lower costsfor the insurance consumer.”

The bill creating NARAB is just one of the legislative issues onwhich NAPSLO officials and the trade group's members arefocusing.

They are also working to ensure nationwide uniformity in therules needed to comply with the federal Nonadmitted &Reinsurance Reform Act (NRRA) and support home state taxation asthe favored system for sharing taxes generated under NRRA.

Under this system, surplus lines taxes are calculated at thehome state's tax rate on 100 percent of the premium and retained100 percent by the home state.

“With 46 states representing more than 80 percent of nationwidepremium already following this approach, NAPSLO believes home statetaxation is the only viable and uniform national solution,” saysKeri Kish, NAPSLO's director of government relations.

Leonard adds that NAPSLO “has said in the past and we continueto believe that the cost of tax sharing greatly exceeds thebenefits of re-allocation of surplus lines tax dollars among thestates that are participating in a tax-sharing arrangement. Whilewe think there is minimal benefit to states from tax sharing, wesee real additional costs to consumers.”

As for eligibility standards, states are slowly moving toimplement the NRRA insurer eligibility requirements, according toJames Drinkwater, a NAPSLO board member and president of theBrokerage Division of AmWins, Charlotte, N.C.

“I believe the states should continue to provide an advisorylist of eligible foreign insurers in order to provide a level ofconfidence for the consumer on such placements,” saysDrinkwater.

He believes “it will be a significant burden” for surplus lineslicensees to be totally responsible for the financial review ofnon-admitted insurers.

Drinkwater says the first move should be to eliminate zeroreport filings for entity and individual surplus lines licensees inthe significant number of states that maintain that requirement: “Iknow NAPSLO has been working on elimination of zero reports forsome time, and looks like some states may be coming around to thatway of thinking soon.”

The best-case scenario in this area, he says, would beuniformity of timelines and data required for reporting andpayment: “I think we are a long way from that due to the vast arrayof current requirements of each state.”

He said that from AmWINS' perspective, actually paying taxesmore frequently lends itself to more efficiency–monthly orquarterly.

“But I imagine small wholesalers would prefer annual,”Drinkwater adds. “Larger states for us that are annual make itdifficult to reconcile from the filers end as well asaccounting.”

Moreover, “we need electronic payments to be available in everystate; this is a much more efficient approach and provides asignificant cost savings.”

Kish adds that NAPSLO is working with other insurance tradeassociations, with the National Association of InsuranceCommissioners (NAIC) and its Surplus Lines Task Force regarding theneed for the uniform implementation of the NRRA's insurereligibility standards nationwide.

“We believe there is still tremendous opportunity to improveuniformity in a number of areas, such as tax forms, filingrequirements, filing dates and procedures,” says Kish. “We continueto promote and work to preserve the uniformity and efficienciesintended by the NRRA.”

Kish notes that since the NRRA became effective, many stateshave abolished certain eligibility requirements and so-called“white lists” and that some states have converted the latter tovoluntary lists. “NAPSLO believes these actions are consistent withand support the intent of the NRRA and applauds the hard work ofstates as they work to comply with the law,” she says.

Kish cautions that not all states have discontinued theirrequirement that a carrier must be on an approved list. NAPSLO, shesays, continues to work to encourage these states to fullyimplement the NRRA. She cited Louisiana, which removed its “whitelist” in favor of a voluntary list this past legislativesession.