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Legislative Report
Alaska Alaska Bulletin 08-08 contains surplus lines premium codes for surplus lines monthly summary premium reports effective as of Dec. 12, 2008. The premium reporting forms have been updated and are on the Alaska Division of Insurance website.
Arkansas Arkansas SB 806, a bill that would require surplus lines brokers to provide claim information to policyholders, has been signed into law.
California California has proposed to adopt section 16031, also known as the Emergency Response Initiative Trailer Bill. The bill requires an assessment on residential and commercial fire and multiperil polices to fund services such as fire protection. The assessment also applies to surplus lines insurance and is to be collected by the surplus lines brokers.
California Section 1765 will require training for surplus lines producers, including non-resident producers. The SLA website at www.sla-cal.org should have information about the training in the near future.
Connecticut Connecticut ADC 38a-740-6 is a notice of intent to amend the regulations to permit electronic filing of surplus lines insurer's annual statements.
Connecticut SB 961 is a bill that would require Medical malpractice data reporting by surplus lines insurers.
Florida FL (HB 853 and SB 1894) - The legislation proposed as a solution for Essex v. Zota case passed the House Banking Committee without amendments. In the Senate Banking and Insurance Committee hearing on March 25, however, an amendment was tacked on, over the objection of industry lobbyists, adding numerous consumer protection provisions that were not previously applicable to surplus lines insurance. With respect to the issue of retroactive application of the bill, the Senate amendment was intended to permit the existing lawsuits based upon Zota to proceed, but cut off lawsuits filed after the bill becomes law. Unfortunately there was some concern that the language of the amendment would have the unintended effect of applying the consumer protection provision enumerated in the bill retroactively to 1988. This apparent drafting error was mentioned at the hearing, but the amendment nevertheless passed 5-4. The Senate Judiciary Committee struck the amendment and added a subsequent amendment at a hearing on April 1. The Judiciary Committee amendment contains many of the same consumer protections, but clarifies the retroactive application of the bill. The substitute amendment is available to download.
The amendment is supported by the Florida Surplus Lines Association, the American Insurance Association, the Property Casualty Insurers Association of America, and the Florida Insurance Council.
Florida HB 1157 is a bill that would convert the Florida Hurricane Catastrophe Fund into a state-run residential hurricane insurer. The program initially would provide hurricane coverage on all residential structures valued at up to $2 million, with private insurers, including, Citizens Property Insurance Corporation, providing coverage for all other perils. The legislation establishes a transition intended to reestablish Citizens as the insurer of last resort in all-other-perils coverage, following transfer of Citizens hurricane exposure to the Florida Hurricane Protection Program.
Florida HB 1171 is a bill that would permit non-assessable policies for residential property to be exempt from rate limits and rate reviews by the state. These policies would be exempt from the emergency assessment from the Florida hurricane catastrophe fund and Citizens Property Insurance Corporation. NAPSLO objected to a similar bill last year because surplus lines insurers are already exempt from rates and this bill appears contrary to the intent of the Cat Fund and Citizens laws. The bill did not advance last year, presumably because it would impact the number of policies subject to assessments.
Florida SB 410 is a bill that requires that any line of insurance offered in any state must be offered in Florida. The bill does not address surplus lines insurance, but mentions only "an insurer."
Hawaii Hawaii HB 1074 would prohibit a surplus lines broker from writing life insurance, accident and health insurance and annuity products.
Louisiana Legislation proposing to allow only one deductible per year for homeowners insurance has been drafted and the state reportedly intends for it to apply to surplus lines insurance. It has not been introduced so there is no bill number at this time. NAPSLO, the Louisiana Surplus Lines Association, and the AAMGA jointly submitted a letter objecting to the application of the proposed law to surplus lines insurers.
Louisiana Bulletin 08-01 eliminated a cap on taxi rates, but acknowledged that the code required taxi rates be filed by surplus lines insurers. NAPSLO has requested that the legislation be amended to remove the filing requirement for surplus lines insurers.
Missouri Missouri SB 464 would create a two-year license for surplus lines brokers and amend the quarterly reporting requirements for surplus lines brokers.
Mississippi Mississippi SB 2858 extends the repealer of the immunity for the Board of Directors of the stamping office. It has been sent to the Governor for signature. The immunity for the board would be extended to 2012.
New Jersey The Piermount Iron Works v. Travelers case, 963 A.2d 818 (NJ 2009) reversed a lower court decision and held that the cancellation and non-renewal laws were not applicable to a surplus lines insurer.
New Jersey proposed amendment to AC 11:17B-3.1 provides that the prohibition on broker fees continues to apply to personal lines insurance, but this amendment would permit brokers to charge fees for services rendered in connection with commercial lines policies. Policy Fee restriction, unrelated to a service fee, continue to apply to surplus lines.
New York The department has drafted producer compensation transparency disclosure guidelines (Jan. 29, 2009 draft). The guidelines specifically exempt surplus lines wholesalers from the disclosure requirements.
New York S290 is a bill that would impose coverage terms and limits upon public vessel liability insurance. It is intended to apply to surplus lines insurance.
The Excess Lines Association of New York has set a meeting with the Department of Insurance on April 24 to discuss amending Regulation 41 to provide that declinations are valid for the greater of a certain number of months or the term of the policy. ELANY is also proposing other reforms to reduce regulatory burdens on brokers. The next export list hearing scheduled by the department is Aug. 6, 2009.
Oklahoma Oklahoma SB 700 is a bill that would allow for compulsory auto liability insurance for commercial auto to be issued by surplus lines insurers.
Oklahoma SB 1022 is a bill that amends the Medical Malpractice closed claim reporting requirements. The definition of "insuring entity" in the bill includes "an unauthorized insurer that provides surplus lines coverage."
Rhode Island Rhode Island Reg. 11 has been proposed to provide that brokers no longer have to file the affidavits with the Department. The affidavit must be completed, and are subject to audit by the Department, but filing is no longer required.
Texas Texas HB 3978 is a bill proposing the implementation of a surplus lines export list.
Washington Washington HB 1568 would amend several portions of the surplus line code. The bill adds detail regarding the bonds, the license application and license renewals. The bond requirements continue to be imposed on non-resident surplus lines brokers. This would appear to preclude the state from being certified by the NAIC as Gramm Leach Bliley compliant.
Medicare Secondary Payer A recent change in the Medicare law (42 USC 1395 y(b)(8)) would require reporting from liability insurers, including no-fault auto liability, self insurers, and workers compensation insurers when claim payment are made to injured persons who are eligible for Medicare. The law would require reporting for liability insurers beginning July of 2009. The language of the bill does not expressly apply to surplus lines insurers or expressly exempt surplus lines insurers. At least one surplus lines insurer has concluded that the new reporting requirements would apply to surplus lines insurers. NAPSLO will follow the developments as it is potentially burdensome for surplus lines insurers to determine which claimants are Medicare eligible and then file a report.
The following links provide more information on the topic:
The NAIC Multi-State Tax Working Group held a call on Feb 26, 2009 to discuss a survey of the states regarding various regulatory issues involving surplus lines insurance. The survey should be released to the regulators soon. The survey is intended to identify which regulatory matters are set by statute and which matters are set by department policy. The issues that are set by department policy could possibly be addressed by a uniform tax reporting form while those that are set by statute would require an act of the legislatures. One of the goals of this group is to investigate the feasibility of a uniform tax reporting form.
Surplus Lines Law Group The Surplus Lines Law Group, an informal group of in-house attorneys, compliance professionals and outside counsel that reviews current legal issues in the surplus lines arena, met March 27 in San Francisco. An agenda of the meeting is available to view and if you would like to be put on a mailing list for notice of future surplus lines law group meetings, please contact Steve@napslo.org. |
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