NAPSLO Actively Monitoring State Court Rulings

In addition to efforts to secure passage in Congress of legislation reforming and modernizing regulation of the surplus insurance market, NAPSLO representatives said several state issues are also on the group's legislative agenda for 2009.

One issue will be resolving problems created for the E&S insurance industry segment by the Essex v. Zota Florida Supreme Court decision, which seems to make the surplus lines industry subject to the section of the Florida Insurance Code that regulates insurance contracts and forms.

NAPSLO is seeking a legislative solution to the decision's effect, said Steve Stephan, director of government relations.

Mr. Stephan said NAPSLO is working with state and other national associations, the Florida Insurance Department and with Florida legislators "to clarify that the surplus lines market has the freedom of form it requires to fulfill its role as a supplemental market for Florida insurance buyers unable to find coverage through standard, admitted markets."

He said NAPSLO will also continue to monitor the Silvers v. State Board of Equalization case in California. He noted that if the plaintiff prevails in this case, NAPSLO believes surplus lines premiums will be subject to the state's 2.5 percent premium tax, in addition to the 3 percent surplus lines tax that the law now requires be assessed to surplus lines policyholders.

"Such double-taxation would be disastrous for buyers of surplus lines insurance [and] the overall California surplus lines market," he said. "NAPSLO will take whatever action it can to help secure a positive decision for the surplus lines industry in this litigation."

On the federal level, Mark Rothert, president of Ron Rothert Insurance Services in Portland, Ore., who is also the senior vice president of the Western Region for the American Association of Managing General Agents, said AAMGA opposes any attempt to repeal the McCarran-Ferguson Act, as well as any calls in Congress to add wind coverage to the National Flood Insurance Program.

"We very much support the continuation of the program but believe that wind coverage is already available in the private sector or through existing state-supported pools," Mr. Rothert said.