May 2009 Full Newsletter
President’s Message
John F. Wood
NAPSLO President
The surplus lines industry was elated to hear of the legislative victory in Florida remedying an adverse court decision and is encouraged about prospects at the federal level that the NonAdmitted Reinsurance Reform Act (NRRA) will soon be reintroduced and approved by the U.S. House and Senate.
While our primary legislative focus over the past few years has been at the federal level securing approval of the NRRA, we became involved in Florida because the situation concerned an issue that challenged our freedom from form regulation, one of the tenets of our industry, as established in NAPSLO's Regulatory Principles.
The legislation, passed unanimously by both the Florida House and Senate, affirms the industry's exemption from regulation of forms and policies that was challenged by the Florida Supreme Court's ruling in Essex v. Zota, which said that surplus lines was exempt from the rating section of Chapter 627 of Florida's statutes (Insurance Rates and Contracts), but was subject to the chapter's other provisions, including form filings.
The success of these efforts is reflective of the significant amount of time the industry put forward in working with legislators and regulators on this issue. In July 2008 NAPSLO began meeting with the Florida Surplus Lines Association and the Florida Surplus Lines Service Office to explore the various options to resolve the issues around the Zota decision.
In October 2008, NAPSLO, the FSLA, Florida Insurance Council, PCIAA, AIA, Lloyd's, and the FSLO established a working group to develop a legislative solution. NAPSLO Director of Government Relations Steve Stephan participated in numerous conference calls on the issue and made five trips to Florida on legislative hearings, meetings with the Florida Insurance Department, and working group meetings.
Together, all of the group's efforts were successful in educating legislators about our industry and securing approval of a bill that will provide a retroactive solution (except for cases filed) and affirms our traditional freedom from form regulation.
Educating legislators at the state and federal levels about our industry is an important endeavor for NAPSLO. One of the functions of the NAPSLO PAC is to assist with our educational efforts at the federal level and, thanks to the NAPSLO PAC, we have made great progress in telling our story.
The NAPSLO PAC recently added the option to contribute online. NAPSLO members desiring additional information on their eligibility to contribute, or about the activities of the NAPSLO PAC, may contact Kevin Westrope, Chairman of the NAPSLO PAC, at kwestrope@westrope.com, or visit the "Legislation/Regulation" section of the NAPSLO website.
Because of federal law, NAPSLO PAC contributions are screened, and contributions from persons who are not solicitable must be returned.
While a solution to the Zota case has been found, Florida will continue to be on our minds this year as the 2009 NAPSLO Annual Convention is set for Oct. 7-10 in Orlando. Online registration will start in mid-June and the Convention Committee is working on finalizing details of another excellent meeting that will be interesting, informative, and beneficial. Please watch for the email at the end of the month with registration information, and be sure to review the convention materials and
register early for the meeting.
NAPSLO programs and meetings are consistently well attended. The NAPSLO Annual Convention has always been the most important meeting for the surplus lines industry and this year's meeting will be an outstanding event. Be sure and make plans early so you can be among the attendees in Orlando. I look forward to seeing you there.
Annual Convention Registration
Registration will begin in a few weeks for the 2009 NAPSLO Annual Convention, set for October 7-10 at Marriott’s Orlando World Center.
Because of current economic conditions, the NAPSLO Convention Committee and Board of Directors have been working on offering options to help make the convention more beneficial, economical, and efficient. Among the items members should note when making their convention plans are:
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NAPSLO will keep the delegate registration fee at $795 again this year.
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Member firms registering more than 10 delegates will receive a rebate following the convention of $795 for each 10 paid delegates.
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NAPSLO will offer accommodations at the Caribe Royale Orlando All-Suites Hotel at $169 per night, compared to $219 at the Orlando World Center.
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NAPSLO will also offer continuous transportation between the Caribe and the Marriott during convention hours.
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In addition to the Broker’s Club Tables, NAPSLO will offer meeting room space in the ballroom area for purchase.
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Several programs on the economic and general landscape of the industry will be offered
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Dr. Robert P. Hartwig, CPCU, president of the Insurance Information Institute, will present the Derek Hughes/NAPSLO Educational Foundation Lecture Series.
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A panel of company and broker members will review the current landscape in our industry.
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A panel representing Generation X will review industry expectations and attitudes during a program on Saturday.
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NAPSLO will offer a special Friday night activity for members under 40.
Additional information regarding the convention will be sent to members in early June, and online registration will start on June 15. Paper registration forms will also be available to download on June 15.
NAPSLO E&S School – All Spaces Filled
All spots have been filled for the NAPSLO E&S School, scheduled for June 23-26 at the Eric P. Newman Education Center in St. Louis.
The school’s curriculum focuses on five segments: Risk Takers - and various markets; Distribution System - purpose & variations; MGAs and Brokers - managing the business; Market Dynamics - changing environments; and Cops - regulatory agencies.
In addition, Steven DeCarlo of AmWins will present Perspectives From the Top, and there will an Executive Panel featuring:
- Ron Helveston - CRC Alabama
- Letha E. Heaton - Markel
- Tim Makowski - Specialty Lines Underwriters
- Robert Lala - Liberty International Underwriters
The NAPSLO E&S School is designed for insurance professionals with less than five years experience in the surplus lines industry. Persons with more than five years surplus lines experience are encouraged to attend the NAPSLO Advanced School, offered each Fall.
NAPSLO Next Generation
The Career Awareness Committee has been working to actively increase its role in developing and promoting career opportunities aimed at the younger generation. The committee is: working with NAPSLO to create an updated and modern separate career website; organizing the NAPSLO Next Generation group to help develop future industry leaders; and creating a social networking group on Facebook. The committee is also promoting the job portal, where employers can post job openings and potential employees can find and apply to jobs online at jobs.napslo.org.
NAPSLO encourages employers to post open positions in their firms. Potential employees can review jobs posted by NAPSLO member firms, post their resumes; and apply for jobs online. There is no charge for jobseekers to use the system, however, users must register to apply for jobs, or to have their resumes made available to employers. Employers must be members of NAPSLO to post jobs.
The NAPSLO Next Generation group is focused on attracting, retaining and developing young talent to the insurance and surplus lines community. The group will provide leadership, industry training, social networking, and other skills necessary for the development and success of young insurance professionals. The group will also provide members a voice within the Association on industry matters.
To help promote the group there will be a cocktail reception during the 2009 Annual Convention on Friday, October 9, for networking with the under 40 Next Generation Group. There will also be a program on Saturday, Oct. 10, featuring a panel with the Next Generation of E&S leaders vs. the current generation of leaders.
Along with educational conferences and seminars, participants in the Next Generation group will learn new ideas opportunities. Discover what new, young leaders are doing to stand out. For further information about how to join, e-mail Kristen Taylor at ktaylor@usgins.com. The Next Generation offers young insurance professionals a chance to jump start their careers by creating a base of industry contacts, developing important professional skills, and keeping up to date with the latest insurance trends.
Technology Report – E&S/Agent Workgroup Making Progress on Data Transmission
Progress on finding ways to improve the ability of firms to transmit data electronically between retailers and MGA/wholesalers is being achieved by a technology working group, and NAPSLO and its members are playing an important role.
The Retail Agent E&S Workgroup will meet at the upcoming ACORD-LOMA Annual Convention in Orlando. Data transmission was also the subject of the NAPSLO keynote address at the AAMGA Automation Conference in March.
Since the workgroup was formed approximately a year ago, the group has met several times, three subgroups were organized, and more than 100 people representing MGA/wholesalers, carriers, retail agents and vendors have volunteered to assist in the efforts. Additional volunteers are still being sought, with emphasis on carrier involvement. To participate, people should contact Mike Ardis at NAPSLO at mike@napslo.org.
The three subgroups were formed to examine different areas of the insurance transaction, and they have had several face-to-face meetings and nearly 30 conference. The subgroups are: Retail Agent Interface, General Agent Interface, and General Agent Website.
The Retail Agent Interface Subgroup is reviewing E&S company applications and supplemental forms to determine which data requirements are already included in current ACORD standards and forms and don't need to repeated in the supplemental applications. To date the group has identified several top programs and is reviewing those applications.
The General Agent Interface subgroup is concentrating on data transmission streams from retail agents to general agents, as well as within general agents, in order to automate the flow of this data as much as possible. The subgroup has worked with a number of vendors regarding current options. Several vendors described their future plans during a Vendor Panel at the recent Automation Conference.
The General Agent Website subgroup’s goal is to develop a roadmap of recommendations for MGA website capabilities. Among the recommendations are to develop “third generation” websites which would provide capability for bindable quotes, online underwriting and referrals, quote proposals, subjectivity management, bind, bill and policy issuance/endorse/renew capabilities. This would lead to fourth generation sites, which would provide Real-Time, Straight-Through-Processing from the retail agency management systems.
Legislative Report - In the States
By Steve Stephan, JD, CPCU, ASLI
Director of Government Relations
A number of bills regarding surplus lines were reviewed by the state legislatures during the past month.
Alabama
SB 558 would allow a surplus lines insurer to become approved without completing the 5-year seasoning requirement for insurers making a special deposit with the state.
California
AB 784 would have addressed the issue of what duties can be performed by a California domestic company in California on behalf of an affiliated surplus lines insurer. California presently prohibits a surplus lines insurer from operating within its borders. The bill will apparently not advance in this session as the interested parties are seeking a solution outside of the legislative process.
Florida
The Florida legislature has passed HB 853/SB 1894 to rectify the holding in Essex v. Zota. The working group fought off a number of amendments offered by the trial bar and ultimately got the bill passed. The trial bar did succeed in getting some of their amendments attached, but it could have been much worse without the tireless efforts of the working group. The bill provides that Chapter 627
of the Florida insurance code does not apply to surplus lines insurance, except for those provisions that specifically reference surplus lines insurance. The bill must still be signed by the Governor to become law, but the working group is optimistic this should occur shortly.
Louisiana
HB 333 would allow only one deductible per calendar year for named windstorms, as well as windstorm and hail. It was to apply to homeowners insurance. The language of the bill did not specifically state that it applied to surplus lines insurance or exempted surplus lines insurance. NAPSLO submitted a joint letter with the AAMGA and the Louisiana Surplus Lines Association asking that surplus lines insurers be exempted from the scope of the bill in order to retain the
traditional freedom from form regulation. The letter argued that the bill would actually make insurance less available for the most distressed homeowners and force more business into the state-run facility. Through the efforts of the LSLA and others, the bill has now exempted surplus lines insurance from the one deductible rule.
Louisiana Regulation 93 has become final. The regulation requires insurers who wish to deviate from rules regarding canceling or changing policy terms for homeowner's policies that have been in force for more than three years to file a business plan with the Department outlining how they plan on writing additional policies in the state. The regulation states that it applies to surplus lines insurers.
Other bills being considered by Louisiana include: SB 40 which would repeal the surplus lines tax; SB 290 which would exempt surplus lines insurance from statutory provisions regarding co-insurance clauses; and HB 293 which would allow state agencies to purchase excess insurance exempt from the surplus lines tax.
New York
Resident surplus lines brokers in Missouri, Montana and Florida applying for an excess line broker license in New York will not receive full license authority to write business in New York state because those states do not issue an unlimited license for New York resident licenses, according to a recent bulletin from ELANY.
Under Bulletin 2009-10 released on May 11, ELANY reviewed the state’s position regarding reciprocity and the issuance of “full” or “limited” non-resident excess/surplus lines broker licenses. The bulletin said that brokers from Florida and Montana will receive a limited license, which permits them only to write purchasing group business
in New York.
New York will issue an unlimited license for Missouri licenses for individuals, however corporate entities will receive the limited license. In addition, while not limiting what they can write, the state will require a bond for California and Washington resident brokers because those states require a bond for New York resident brokers.
NAIC
On March 27, NAPSLO submitted written comments to the NAIC NARAB working group concerning the requirement that surplus lines brokers obtain a P&C agent license as a prerequisite for a surplus lines broker’s license. Graham Leach Bliley required the states to enact reciprocal licensing requirements. If the states failed to do so, the National Association of Registered Agents and Brokers would come into existence. The underlying licenses would appear to contravene the reciprocity requirements outlined in GLBA.
Rhode Island
Bulletin 2008-8 provided that surplus line affidavits are no longer required to be filed with the state insurance department. The broker maintains the original in his or her office. The state is still being asked by brokers to confirm no filing is required. In addition, the notary signature is no longer required. The state has asked NAPSLO to help publicize these procedures.
Insurance Bulletin 2009 – 4 establishes an emergency adjuster access and coordination plan to be implemented when a catastrophe is declared. The bulletin requires insurance companies, including surplus lines companies, to provide the department with emergency contact information
Texas
SB 2136 is a bill to create a surplus lines export list. It took an unusual turn when the background material described the bill as allowing agents to access either the admitted or non-admitted markets. NAPSLO has written a letter explaining how the surplus lines broker’s license is necessary to access the surplus lines markets in other states. We do not believe the background material intended to allow broader access to surplus lines insurers, but was more likely a poor
choice of words.
Industry Legislative Meetings
On April 15 I attended a meeting in Washington D.C. with the NAIC, other trade associations, NAPSLO lobbyist Libby Baney of B&D Consulting, and staffers from the offices of numerous congressional representatives regarding the introduction of the Non-Admitted and Reinsurance Reform Act in the U.S. House of Representatives in 2009.
The discussion generally involved the question of whether the surplus lines portion of the bill would be introduced exactly as it appeared last year, or whether some technical language changes would be made. The NAIC had been pushing for some minor changes. The staffers seemed interested in determining whether there were language changes with which all parties could agree.
The staffers in the offices of Rep. Dennis Moore (D-KS) and Rep. Scott Garrett (R-NJ), worked with leadership and staff on the House Financial Services Committee to arrange the impressive meeting of major NRRA stakeholders. We are hopeful the bill will be introduced in the near future with minor language changes. The reinsurance section of the NRRA was not on the agenda and was beyond the scope of the meeting.
On April 16 and 17 I attended the annual meeting of the Louisiana Surplus Lines Association in Marksville, Louisiana, where new officers were installed. Also discussed during the meeting was the Essex v. Zota problem in Florida.
On April 29 I gave a presentation at the NAIC’s E-Reg conference in Kansas City on the problems with the multi-state taxation of surplus lines insurance.
On April 30 I attended the IIABA Legislative conference. While there, along with the IIABA representatives, I visited the office of numerous congressional representatives to discuss, among other things, the NRRA.
New Members
WHOLESALE BROKERS
Brooks Insurance Group
70 Bridge Plaza Drive
Manalapan, NJ 07726
(732) 786-5165 (732) 591-8785 Fax
Ralph April, CPCU
ralph@brooks-ins.com
Camford National Insurance Brokers LLC
413 King George Road, #202
Basking Ridge, NJ 07920
(908) 647-4900 (908) 647-2100 Fax
David T. O’Keeffe
d.okeeffe@camfordnational.com
GCube Insurance Services, Inc.
3101 W. Coast Highway, #100
Newport Beach, CA 92663
(949) 515-9981 (949) 515-9984 Fax
John O’Dea
jodea@worldlink.com
Insurance Marketing Corporation of Oregon
18765 SW Boones Ferry Road, #100
Tualatin, OR 97062
(503) 783-2650 (503) 783-2686 Fax
Trevor Miller
tmiller@imcoinsurance.com
Standard Lines Brokerage dba SLB Insurance Group
5900 Hiatus Road
Fort Lauderdale, FL 33321
(954) 724-7014 (954) 724-9864 Fax
Darren Marsh
dmarsh@slbinsurancegroup.com
COMPANIES
Aegis Security Insurance Company
2407 Park Drive
Harrisburg, PA 17110
(717) 657-9671 (717) 657-0340 Fax
William Lane
wlane@aegisfirst.com
Valiant Insurance Company
100 William Street, 30th Floor
New York, NY 10038
(212) 444-4017 (212) 444-3968 Fax
Scott Bayer
scott.bayer@valiantinsurance.com
ASSOCIATES
Jubilee Managing Agency
(Lloyd’s Syndicate)
50 Fenchurch Street, 4th Floor
London, England EC3M 3J4
(011-44207) 220-8700 (011-44207) 220-8701 Fax
Martin Pope
martin.pope@jubilee-insurance.com
Surplus Lines Association of Minnesota
(Surplus Lines Association)
600 Clark Street
Mora, MN 55051
(320) 679-4244 (320) 679-8230 Fax
Nicholas Schroeder
nschroeder@mnsla.com
Terrace Software, Inc.
(Software Vendor)
150 Spear Street, #1775
San Francisco, CA 94105
(415) 848-7302 (415) 848-7301 Fax
Todd Ziesing
toddz@terrace.com
