NRRA remains top issue for NAPSLO

Nonadmitted & Reinsurance Reform Act 

This remains the top legislative priority for NAPSLO and unfortunately the end of the 110th Congress is in sight and the Bill has passed in the House (HR 1065), but stalled in the Senate (S929). In addition to NAPSLO’s recent efforts with the Senate Banking Committee during NAPSLO’s Day on the Hill on April 22, there has been other activity by others involved. 

The NAIC wrote to Sen. Jack Reed (D-RI) proposing changes to the Bill as written. Changes include the removal of the Reinsurance section, additional broker and company reporting requirements, authority for states to limit lines of insurance written in the surplus lines market, and changes to the definition of Home State. 

NAPSLO has been told by Senate Banking Committee Member during Legislative Day that if S929 is not passed by the August 1 it is unlikely the bill will be approved in this Congress.

If the NRRA does not pass into law in this Congress, we start over again in the 111th Congress in early 2009 where it must again pass in the House. We will have a new administration and other high profile insurance initiatives with which to contend. 

Insurance Competition Act

S618 would amend the McCarran-Ferguson Act to give the Federal Trade Commission authority to regulate insurance industry competition issues. Among other unexpected consequences, this could eliminate common forms and create uncertainty of where regulation of Surplus Lines lies.

The Judiciary Committee held hearings March 7 and no further action has taken place. The industry, including NAPSLO, opposes this legislation. 

National Insurance Act (OFC) 

There has been no activity on the Optional Federal Charter bills (HR 3200 & S40), however it is very much at the forefront of the debate over the Federal insurance regulation. Introduced in 2007 in the Senate and the House, it has been referred to the Senate Banking Committee and an informational hearing was held last fall.

HR 3200 contains a few differences from S40, none of which appear meaningful to NAPSLO members. The surplus lines language NAPSLO suggeted was not included in S40.

For broker members, the significant issue remains the deficient Surplus Lines language as it applies to taxes and licensing, with no solution to a single jurisdiction for regulation of a SL transaction, as contained in 1065/929.

For company members, OFC may hold many challenges, which are not yet clear. There is no provision in either Bill for streamlining surplus lines insurer eligibility, nor a provision for an exempt commercial policyholder. There is a provision in both allowing a holding company to own both state and national chartered companies.

Office of Insurance Information

In April, Representative Paul Kanjorski introduced HR 5840, calling for the formation of the Office of Insurance Information. The OII would: have the ability to collect and disseminate insurance information; advise the Treasury Department on major domestic and international policy;  establish Federal insurance policy; and, establish consistency of state laws international insurance trade agreements. State laws in conflict would be preempted.

Establishment of the OII would be an incremental move toward an Optional Federal Charter bill.

Increasing Insurance Coverage for Consumers Act of 2008

HR 5792 is intended to modify the current Federal Risk Retention Act to permit the purchase of commercial lines property coverage, presently excluded from eligibility. This change would apply to Risk Retention Groups (RRGs) and Risk Purchasing Groups (RPGs). However, it appears the RRG’s would be restricted by their states of domicile to large commercial insureds. RPGs would have no such restriction. 

There are provisions for improving the regulation of RRGs, including:  uniform corporate governance standards; strengthened safety and soundness requirements; Enhanced disclosures; Stringent financial standards, and establishment of fiduciary duty.

The Surplus Lines reaction to this tends to be negative, with the thinking that this siphons business from our industry. 

NAPSLO Legislative Day

NAPSLO held our second annual NAPSLO Legislative Day on April 22. Approximately 18 NAPSLO staff, Board and Committee members participated in the all day session.

The group met with 18 members of the Senate Banking Committee or their staff. As a result of the meetings, we are able to meet directly with Senators in more instances than last year; NRRA (S929) is better known, better understood, and the questions were better thought out and demonstrated an understanding of the issues.