Legislation reforming regulation of the surplus lines and reinsurance markets was introduced last week in the U.S. Senate–but a modified version is likely to be released next month, National Underwriter has learned.
The legislation–sponsored by Sens. Bill Nelson, D-Fla., and Mel Martinez, R-Fla.–is seen by most industry officials as a placeholder, likely to be updated and reintroduced by Sen. Martinez and other members of the Senate Banking Committee.
The follow-up measure is expected to be introduced by a senior, unidentified member of the Senate Banking Committee by mid-April, according to congressional sources.
The new Senate bill, for example (outlined in the accompanying infographic), does not contain language in similar legislation introduced in the House on Feb. 15 that modifies the definition of a sophisticated buyer. Sponsors of that bill are Reps. Dennis Moore, D-Kan., and Ginny Brown-Waite, R-Fla.
The House bill has since been amended to change the definition of a "qualified risk manager" at the request of members of the Risk and Insurance Management Society, according to a member of the RIMS board–Terry Fleming, director of risk management for Montgomery County, Md.
It replaces language dealing with who is defined as a qualified risk manager capable of purchasing insurance in the surplus market to a sliding scale of education and experience, "which would accommodate most RIMS members," Mr. Fleming said.
The language in legislation that passed the House overwhelmingly last year, and which is also in the Senate legislation introduced by Sens. Nelson and Martinez, would have qualified less than 50 percent of RIMS members to have their company in the surplus lines market, according to Mr. Fleming.
The new definition in the House bill sets up a sliding scale list of the five ways a risk manager would be qualified to buy insurance for their firm through the nonadmitted market, according to Mr. Fleming.
Under the new definition, he noted, a "Qualified Risk Manager" must have either:
o A bachelor's degree or higher in risk management, business administration, finance, economics or "any other field accepted by a state to demonstrate minimum competence," along with three years experience or a designation.
o Seven years experience and a designation.
o Ten years experience.
o A graduate degree in risk management, business administration, finance, economics or other criteria "as specified by a state."
Joel Wood, senior vice president of government affairs at the Council of Insurance Agents and Brokers, said he didn't want to overplay the impact of the latest bill, but "there is relevance in that this legislation would improve access to surplus lines products, which is a critical part of the commercial marketplace."
"We're continuing to talk with other members of the Senate Banking Committee to roll out this legislation more fully in the coming months," he added.
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