Surplus Lines Reform Bill Approval Viewed as Significant Step

Kansas City, MO —  July 31, 2006 - The approval by the House Financial Services Committee of the Non-Admitted and Reinsurance Reform Act of 2006 (H.R. 5637) is being viewed as a significant step toward positive insurance regulatory reform by the National Association of Professional Surplus Lines Offices, Ltd., which had notified the Committee of its strong support for the bill.

NAPSLO testified in support of the bill before the House Financial Services Committee, Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises in June and following the approval by the subcommittee on July 19, sent a letter to the full committee expressing its strong support and offering to work to help get the bill approved.

“NAPSLO is pleased to offer our full support for this timely piece of legislation, and we look forward to working with the Committee as well as with the entire House of Representatives as this important initiative moves through the legislative process,” NAPSLO Executive Director Richard Bouhan said in a letter to the full committee.

The bill, introduced by Reps. Ginny Brown-Waite (FL) and Dennis Moore (KS) in June, would improve and streamline the regulation of non-admitted insurance and reinsurance. The approved amended version tightens the definition of a "qualified risk manager" and also directs the Government Accountability Office to conduct a study of the bill’s impact on "the size and market share of the nonadmitted market" 18 months following enactment of the bill. 

Many of the bill's other provisions, including the creation of a uniform system of premium tax allocation and remittance, uniform standards for producer licenses, one-state compliance on multi-state surplus lines risks, and direct access to the surplus lines market for sophisticated purchasers are concepts long endorsed by NAPSLO and promoted with members of Congress during meetings over the past two years.

“H.R. 5637 harmonizes many of the inconsistencies in the surplus lines marketplace in areas such as premium tax allocation and remittance, licensing standards, and due diligence requirements, without undermining the consumers' ability to make informed purchasing decisions or circumventing any state department of insurance's ability to police the surplus lines activity within their jurisdiction,” Mr. Bouhan said.

BACKGROUND
Founded in 1974, NAPSLO is a national trade association representing the surplus lines insurance industry. NAPSLO acts as a source of information for the media, Congress, state governments, and other segments of the insurance industry explaining the vital role the surplus lines industry plays for consumers and in the nation’s economy.  Surplus lines insurance is a specialized segment of the insurance business that is also referred to as non-admitted, specialty and/or excess lines.  Risks are placed with the surplus lines market when they cannot be placed in the admitted/licensed market. NAPSLO membership consists of wholesale surplus lines insurance agents/brokers and surplus lines insurance companies and the Association has member offices in the U.S, Canada, Germany, England and Bermuda.