The federal surplus lines bill sitting in the Senate committee got a boost of support today from a property owner's group that said passage is needed to protect capacity for catastrophe insurance.
The National Catastrophe Policyholders Coalition, representing a group of 12 developers, lenders and realtors, urged Senate Banking Committee Chair Christopher Dodd, D-Conn., to swiftly consider the "Nonadmitted Lines and Reinsurance Act of 2007″ (S 929 and HR 1065) and move it to the full Senate for passage.
The bill, the group said in its letter, "represents an important step for increasing catastrophic insurance capacity."
The group said catastrophe insurance can be difficult and expensive to obtain for "commercial and multifamily properties" after a major natural catastrophe, because admitted insurers seek to reduce their exposure. When this happens, these businesses must turn to the nonadmitted market for their insurance needs.
The "nonadmitted insurance carriers serve a vital role by filling the insurance capacity gap caused by the reduced admitted carrier insurance presence," the letter said.
If enacted, the bill would allow for a more efficient process for nonadmitted carriers to offer insurance in a state, proponents said. It would also give owners of commercial and multifamily property access to insurance that is required by their lenders, the group said.
"Given the fragile state of the commercial and multifamily lending and capital markets, this consideration assumes heightened importance," the group said.
Under the bill, which passed the House of Representatives last summer, the home state of the nonadmitted or wholesale line insurer has jurisdiction over the multistate carrier, including the collection of taxes.
The bill has not been scheduled for a hearing in the committee.
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