State Issues

NAIC

The interstate compact drafting group made minor revisions at the last meeting in Washington in late September.  The group will ask NCOIL for a resolution endorsing the compact at the November meeting in Las Vegas.

NAPSLO Executive Director Richard Bouhan and Director of Government Affairs Steve Stephan met witih Kansas Insurance Commissioner Sandy Praeger, the incoming President of the NAIC, in Topeka in late October.  Topics discussed included the NonAdmitted and Reinsurance Reform Act and the draft Interstate Compact.  

The NAIC Surplus Lines Task Force met by phone in late September and one of the items on the agenda was the adoption of the following charge for 2008:

Consider a uniform method of allocating surplus lines and independently procured insurance premium tax on multi-state risks and any other surplus lines issues.” 

With the change of leadership at the NAIC, NAPSLO is asking for the reinstatement of the “in person” meetings of the Surplus Lines Task Force at the quarterly NAIC meetings. NAPSLO is also asking for the NAIC to reconsider its position regarding endorsement of the interstate compact as a project for the Surplus Lines Task Force. 

Federal & State

NAPSLO is drafting a response to a U.S. Treasury Department questionnaire soliciting comments about financial regulation.   The following question was of particular interest:  

“Should the states continue to have a role in insurance regulation? Insurance regulations are already somewhat bifurcated between retail and wholesale companies (e.g., surplus lines carriers) Does the current structure work?  How could the structure be improved?

California

California Insurance Code Section 1765 was amended to require that as of Jan. 1, 2008 all individuals transacting insurance in California through the surplus lines market will be required to be individually licensed as a surplus lines broker. 

Florida

The Florida Services Office is building a reporting and reconciliation platform for agent/insurer data.  NAPSLO has stated that it would rather see non-admitted insurers left out of data regulation requirements.  The more surplus lines is treated like

Kansas  

Kansas bulletin 2006-02 required an insurer to report suspected fraud into the automated anti-fraud reporting system.  The insurance department has expressed the opinion that these requirements apply to surplus lines carriers. 

Kentucky

Kentucky is proposing to amend the KRS 304.9-105 so that an individual applying for an agent’s license may be insured by an unauthorized insurer with an A rating from the A.M Best Co.  The existing law required insurance from an authorized carrier.   There have been some objections to the requirement of an “A” rating.

Louisiana

Louisiana held hearings to implement regulation 82 regarding the Insure Louisiana Incentives Program. The program provides funds to companies willing to begin writing insurance in Louisiana. A Surplus lines Company could only qualify for the funds if it converted to an admitted carrier.   Six companies have reportedly applied for benefits under the program. 

Louisiana Directive 184 requires surplus lines carriers to provide 60-day advance notice of withdrawal from the state. Directive  184 contained provisions that are not applicable to surplus lines.  Numerous parties have objected to Directive 184, and the Department has given some indication that it was willing to discuss the problems with the Directive.   

Louisiana Regulation 94 exempted surplus lines from requirements that premium discounts be granted for wind mitigation improvements.    Although an exemption from regulation is generally good news, this could be an indication that Louisiana considers all regulation to apply to surplus lines, unless specifically exempted.  If freedom from form and rate regulation were settled policy, there would be no need to exempt surplus lines from a regulation regarding premium discounts.  Last term legislation was discussed to exempt surplus lines from all laws except those specifically applicable to surplus lines, but it did not pass. 

Minnesota

The Minnesota Revenue Department is looking into forming a stamping office.  Some representatives plan on visiting the Illinois Stamping Office in December to view stamping office operations.  NAPSLO and several other stamping offices met with representatives from Minnesota at the NAPSLO convention to discuss their plans.  

New York

New York late notice of claim legislation contains provisions that may inadvertently impact surplus lines.   It applies to policies “issued or delivered” in the state, which the department has repeatedly asserted means surplus lines.  One section of the bill may require homeowner polices to include workers compensation benefits.  NAPSLO has contacted other trade associations and interested parties to provide uniform opposition to the legislation. 

New York has issued proposed excess line placement governing standards that would change the amount of funds required to be held in trust by alien excess lines insurers and association of insurance underwriters and to require a report certified by an actuary.