NAPSLO states support for automatic export feature of deregulation

March 30, 1999 - The National Association of Professional Surplus Lines Offices (NAPSLO) announced it is advocating the inclusion of an automatic export provision in deregulation of commercial lines proposals considered by state legislators.

The NAPSLO Board of Directors approved a resolution stating that while NAPSLO has reservations about the details and consequences of commercial lines deregulation, it advocates automatic eligibility for export (or waiver of diligent search) for exempt (Exempt Commercial Policyholder) transactions in the interest of consumer choice.

"If states approve deregulation of commercial lines of insurance, then we believe that surplus lines companies should be deregulated also," said NAPSLO President Orville D. Jones. "Including the automatic export feature would allow qualified buyers to use the non-admitted market without being subject to the diligent search requirement."

Virtually every state requires a diligent search of the admitted market to determine that a risk can't be written by that market before using the non-admitted market. In addition, policy rates and forms for the admitted market often must be approved by state regulators while non-admitted companies have freedom of rate and form to allow them to design policies to meet the specific needs of the consumer's hard to place risk.

Under a number of deregulation proposals under consideration by states, admitted companies can quote and accept risks for Exempt Commercial Policyholders without regulatory oversight and approval of rate and form. Exempt Commercial Policy holders, or "sophisticated buyers," are defined in the proposals as those insurance buyers whose annual aggregate insurance premiums are greater than an established threshold, which range from $25,000 to $500,000.

"Including the automatic export provision in a deregulation package would give consumers equal access to the deregulated admitted market and the deregulated surplus lines market," said Jones. "This gives consumer the broadest possible choice of markets to fulfill needs."