Surplus Lines/Re Bill Introduced In Senate

NU Online News Service, June 26, 3:01 p.m. EDT

WASHINGTON-Legislation streamlining and reforming state regulation of surplus lines insurance and reinsurance was introduced Thursday in the Senate.

The legislation would create a uniform regulatory system while preserving the role of the state regulator.

It has broad, bipartisan support from both the industry and members of Congress. Companion legislation is likely to pass the House under expedited procedures within the next month.

The legislation, S. 1363, was co-sponsored by Florida senators Bill Nelson, D, and Mel Martinez, R, as well as Sen. Evan Bayh, D-Ind., and Sen. Mike Crapo, R-Idaho.

The Risk and Insurance Management Society voiced strong support for the measure, the Non-Admitted and Reinsurance Reform Act of 2009, to the U.S. Senate.

"RIMS believes the Non-Admitted and Reinsurance Reform Act of 2009 would make insurance more available and affordable by reducing insurers' regulatory costs that are passed on to consumers," said Deborah M. Luthi, a member of the RIMS board of directors and director of enterprise risk management services at Matheson.

"RIMS is pleased the Senate version now incorporates the RIMS-approved definition of a 'qualified risk manager.' RIMS urges the Senate to pass this legislation as soon as possible," she said.

Joel Wood, senior vice president for legislative affairs for the Council of Insurance Agents and Brokers, said: "Having the bill in the hopper in the Senate gets us back to the position we were in last year (before the financial meltdown sucked all the oxygen out of the Senate Banking Committee), and we're obviously extremely grateful for the support of these four members of the Senate, all respected members of the Banking Committee."

John Wood, president of the National Association of Professional Surplus Lines Offices, Ltd., said, "We look forward to Senate consideration of this needed piece of insurance reform legislation."

He said the bill would "help consumers by making property/liability insurance more readily available and improving the efficiency of the surplus lines insurance market."

Kurt Bingeman, co-chair of the governmental affairs committee of the American Association of Managing General Agents, added: "As business and personal interests in the USA have expanded beyond single-state lines, insurance producers and their clients require clear and non-conflicting guidance in order to transact quickly and with assurances that they have complied with the appropriate rules and can efficiently meet their tax liabilities."

He added that the bill is a "critical step" in meeting this goal.

Richard Bouhan, NAPSLO executive director, said enactment of the bill would simplify the tax remittance and compliance responsibilities surplus lines brokers must discharge.

It would also "bring efficiency and cost reduction of regulatory compliance in placements with multistate exposures," he said.

The reforms contained in the legislation "would benefit not only the brokers and underwriters who provide surplus lines insurance but also consumers who ultimately pay the price for the inefficiencies," Mr. Bouhan said.