Licensing In Focus

As surplus lines associations push for federal legislation reforming and modernizing regulation of the surplus insurance market, they are keeping a close eye on state producer licensing issues, representatives say.

Mark Rothert, senior vice president of the Western Region for the American Association of Managing General Agents, said "there are some changes the NAIC [National Association of Insurance Commissioners] is talking about in regards to uniformity in producer licensing, continuing education and other regulatory issues that cross over state lines."

As his group meets with state regulators, according to AAMGA Executive Director Bernd Heinze, "our goal is to educate them on the unique and innovative marketplace of the wholesale industry, and to allow consumers to have greater access and protections to the innovative lines of business that managing general agents like [Mr. Rothert] offer."

Richard Bouhan, executive director of the National Association of Professional Surplus Lines Offices, Ltd. in Kansas City, Mo., said NAPSLO plans to work toward passage of insurance producer licensing reform legislation that eliminates red tape and facilitates the easy acquisition of nonresident licenses for surplus lines brokers.

NAPSLO wants to "make certain that the surplus lines community has a voice in the implementation and governance of this process."

AAMGA said it specifically supports legislation recreating a National Association of Registered Agents and Brokers. Such a bill (H.R. 5611) passed the House last Sept. 17--too late for action in the Senate. The bill would set up a national system to create uniform nonresident agent licensing.

NAPSLO also wants a more efficient "national" licensing system for surplus lines brokers, and is asking the NAIC to withdraw its position that nonresident surplus lines brokers also must have a nonresident agent or broker license before the state can issue a nonresident surplus broker license.

"The result of this 'requirement' is that a surplus lines broker, operating on a nationwide basis, may have to secure and maintain up to 150 separate licenses to conduct surplus lines business," explained Steve Stephan, director of government relations for NAPSLO. "Nonresident surplus lines licenses were not available, except in six states, until after the enactment of the Gramm-Leach-Bliley (GLB) Act in 1999, which was, in part, aimed at solving this lack of nonresident license availability," he said.

"Unfortunately, as the NAIC and the states have implemented the nonresident surplus lines license provision of GLB, the 'cure' has become worse than the disease," he added. "NAPSLO wants to have the intent of GLB be fulfilled, and the requirement for multiple nonresident licenses be eliminated."