House Seen Moving Quickly On Re/Surplus Lines Reform Bill

Washington

The U.S. House of Representatives plans to speed up consideration of a measure to reform regulation of surplus lines insurance and reinsurance, industry lobbyists say.

The bill–H.R. 2571–will be taken up under expedited procedures.

The lobbyists who commented made their remarks in briefing members of the Risk and Insurance Management Society attending the group's annual "RIMS on the Hill" legislation seminar, a few days before the Obama administration unveiled its principles for financial services reform.

The lobbyists included Libby Baney, an advisor at B&D Consulting; Kevin McKechnie, executive director of the American Bankers Insurance Association; and Tracey Laws, senior vice president and general counsel of the Reinsurance Association of America.

The surplus lines bill expected to receive prompt consideration in the House is similar to legislation that passed the House in 2007.

But companion legislation has not been introduced in the Senate. Ms. Baney said that Sen. Evan Bayh, D-Ind., has agreed to be a primary sponsor of such legislation in the Senate, as have Sen. Bill Nelson, D-Fla., and Sen. Mel Martinez, R-Fla.

After introduction in the Senate and passage in the House, the next likely step is a hearing in the Senate, Ms. Baney said.

Ms. Laws said surplus lines and reinsurance reform legislation has broad support within the industry as well as Congress, and that the National Association of Insurance Commissioners has acknowledged the need for reform.

One of the most important provisions for reinsurers, she said, is the one limiting the authority of state regulators to exercise "extraterritorial jurisdiction" over reinsurers based in their state in cases where those reinsurers engage in transactions outside that state.

The Nonadmitted and Reinsurance Reform Act is, in part, aimed at making access to the surplus lines market more efficient for consumers and the brokers and agents who assist them. In addition, the bill could help standardize state regulations facing the surplus lines industry, according to industry advocates.

The Senate took up a similar bill in 2007, but no action was taken in the Senate prior to the end of the 110th Congress, requiring that the bill be reintroduced in the 111th Congress in order to be considered.