House: Prompt Action On SL/Re, Agent Licensing Bills

NU Online News Service, June 26, 3:53 p.m. EDT

WASHINGTON-Bills modernizing and reforming regulation of the surplus lines and reinsurance industries and streamlining nonresident insurance agent and broker licensing could be acted on by the full House next month, according to industry officials.

The bills are the Non-Admitted and Reinsurance Reform Act of 2009, H.R. 2571, and the National Association of Registered Agents and Brokers Reform Act, H.R. 2554. They were introduced in May.

The bills could be dealt with under expedited procedures on the House floor as early as the week of July 6, when Congress returns to work from its brief Independence Day recess, according to some industry lobbyists.

But others are more cautious, saying action is more likely to take place sometime in July.

According to Washington officials of trade groups with interest in the bills, the two ranking members of the House Financial Services Committee–Rep. Barney Frank, D-Mass., chairman, and Rep. Paul Kanjorski, D-Pa., chairman of the panel's key Capital Markets Subcommittee–have agreed to allow the bills to proceed to the floor without the need for committee action.

The reason the bills are being allowed to bypass committee is that they are the same as bills passed by the full House last September, and because they have broad, bipartisan support, the lobbyists said.

Joel Wood, senior vice president of the Council of Insurance Agents and Brokers, cautioned that nothing is a given on Capitol Hill, but added, "It's just that we feel good that House FSC leaders have been supportive once again of moving the surplus lines legislation.

"Were it not for the financial meltdown, we were in a pretty good position to see the bill through to enactment last year, but understandably we couldn't get the requisite oxygen in that environment," he said.

The surplus lines and reinsurance legislation bill was also introduced in the Senate Thursday as S. 1363. There is no companion legislation in the Senate for the NARAB bill.

The surplus lines and reinsurance legislation would allow brokers representing large policy holders to go directly to the nonadmitted market to purchase insurance; require all surplus lines carriers to meet certain financial, capital and other criteria in order to be eligible to provide surplus lines insurance in states; and preempt state insurance regulators from intervening in reinsurance agreements of ceding insurers domiciled in other states.

It also contains a provision inserted in the bill in the last Congress at the request of members of the Risk and Insurance Management Society that broadened the definition of a "qualified risk manager" employed by an insured in order for the insured to have access to the nonadmitted market.

The NARAB measure would create a National Association of Registered Agents and Brokers, facilitating streamlined nonresident insurance agent and broker licensing.

The measure preserves state insurance regulation and consumer protection provisions–but would require agents applying for membership to submit to a criminal background check. Currently only 17 states require federal criminal background checks for producers.

Regarding the surplus lines and reinsurance measure, Richard Bouhan, executive director of the National Association of Professional Surplus Lines Offices, Ltd., said, "We are pleased to hear the House will be fast tracking H.R. 2571 and hope to see it pass overwhelmingly again this session.

RC Chaffin, eastern region vice president of the American Association of Managing General Agents, said the trade group "has been working alongside other industry groups in drafting, providing information to legislators and ensuring the positive momentum to get surplus lines reform passed remains a top priority on the Hill."

He explained that H.B. 2571 will help modernize "our industry's ability to comply with all appropriate rules and tax reporting requirements in all 50 states."

Charles Symington, senior vice president of government affairs for the Independent Insurance Agents and Brokers of America, said the IIABA is hopeful that the House can take up these two noncontroversial pieces of legislation by the August district work period.

"In particular, the NARAB II legislation introduced by Rep. David Scott, D-Ga., and Rep. Randy Neugebauer, R-Texas, would be a strong step forward in dealing with the problem of overlapping nonresident agent licensing requirements," Mr. Symington said.

Cliff Wilson, president of the National Association of Insurance and Financial Advisors, said passage of NARAB II would streamline the rules for agents doing business in more than one state and therefore "would significantly improve the agents' ability to continue to serve their clients wherever they reside."