Insurance associations representing brokers who sell excess and surplus lines say they will move aggressively this year to secure passage in Congress of legislation reforming and modernizing regulation of the surplus insurance market. The associations will seek support from state agencies as well.
"We're working very hard to secure passage of legislation that brings the sales and regulatory process for surplus lines agents and brokers into the 21st century," said Mark Rothert, president of Ron Rothert Insurance Services in Portland, Ore.
Mr. Rothert is also the senior vice president of the Western Region for the American Association of Managing General Agents, as well as board liaison to the Governmental Affairs Committee of AAMGA, based in King of Prussia, Pa.
"We're putting together a strong grassroots effort by asking our members to contact their representatives in the House and Senate about bills introduced in the two houses that accomplish our goals," he said.
Richard Bouhan, executive director of the National Association of Professional Surplus Lines Offices, Ltd. in Kansas City, Mo., also said his group's top priority in the upcoming Congress will be to enact surplus lines reform legislation–aimed at streamlining premium tax payments and simplifying compliance requirements on the placement of multistate risks.
He noted that these reforms were contained in Title I of the Nonadmitted and Reinsurance Reform Act, which passed the House unanimously in both the 109th and 110th Congresses. (Last year's House bill, H.R. 1065, was passed by the House in February 2008. The same bill, titled H.B. 5637, passed the House in 2007.)
A similar bill was introduced in the Senate–S. 929–but action was delayed after it got caught in the financial turmoil last September. Congress, forced to focus on creating the Troubled Asset Relief Program, recessed last October with much unfinished business.
Earlier this month, NAPSLO reported that Rep. Scott Garrett, R-N.J., and Rep. Dennis Moore, D-Kan., both members of the House Financial Services Committee, said they would introduce the Nonadmitted and Reinsurance Reform Act of 2009 by month's end.
Mr. Bouhan said NAPSLO expects the 111th Congress to "engage in a vigorous debate over restructuring financial services regulation, which will include a discussion of a much larger federal role in regulating property-casualty insurance."
He added that NAPSLO members and staffers "will convey to members of Congress the important role surplus lines plays in assuring consumers have insurance coverage available to them and work to assure that this important supplemental market is preserved in any federal overhaul of financial services regulation."
In addition to NAPSLO's direct action in the legislative process, membership involvement in the legislative scene is essential if the group's message is to be heard, said NAPSLO President John Wood, who urged his membership to keep abreast of the events in Washington and to be proactive in letting their representatives know their views.
"In order for NAPSLO to be effective on a national scale, all members should take the initiative to educate themselves on the issues and work with NAPSLO to coordinate contacts with their national representatives," Mr. Wood said.
"The nation faces the worst economic crisis since the Great Depression, and the new administration and Congress are considering significant alterations in the current regulation of financial services, including p-c insurance," said Mr. Wood, who is also president of Specialty Risk Associates, a Shreveport, La.-based wholesaler. "These changes could have a profound impact on NAPSLO's membership, and NAPSLO is prepared to effectively enter into this important debate."
AAMGA's Mr. Rothert reported that members of Congress and lobbyists have told his group that "it is a little up in the air" as to exactly when Congress will deal with surplus lines reform–especially with lawmakers focused on fixing the economy. "It is our intent to be on top of everything as best as we possibly can," Mr. Rothert said. "We support either S. 929 or something new. It is our intent to be at the forefront of efforts to modernize the system."
AAMGA also wants to see the equivalent of last year's version, H.B. 1065, reintroduced in the House as soon as possible. "We've been speaking with a number of interested congressmen about this," he said.
Mr. Rothert reported that AAMGA is also working with NAPSLO as well as lobbyists for the Council of Insurance Agents and Brokers as part of a consortium of interested insurance associations. "There is broad support within the industry for these bills," he noted.
He cautioned that in all likelihood a new series of hearings will have to be scheduled in the House on the legislation–or, if not in the House, at least in the Senate.
The passage of necessary surplus lines modernization legislation "has been and will remain the AAMGA's top priority," he said.
Meanwhile, reform efforts will continue in conjunction with state regulatory officials. AAMGA plans to "continue our work with the National Association of Insurance Commissioners and the National Council of Insurance Legislators on modernizing state regulation with respect to taxation of multistate surplus lines risk," he said.
At NAPSLO, Steve Stephan, director of government relations, said his group will continue to urge that the NAIC and NCOIL endorse the surplus lines interstate compact–known as SLIMPACT–to create an efficient, transparent and auditable system for payment of surplus lines premium taxes, particularly on multistate risks.
"SLIMPACT is compatible with and could be implemented in conjunction with the surplus lines reform legislation being proposed in Congress."
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