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HB 853 restores the industry's exemption from the regulation of surplus lines forms and policies and, outside of existing lawsuits, affirms the industry's regulatory exemption retroactively.
NAPSLO and the industry are pleased to see the bill signed into law. This was an important accomplishment for the industry and for the Working Group that had drafted and steered the legislation through the approval process.
The surplus lines industry also received good news in June with the announcement that the Treasury Department’s financial regulatory reform proposal envisions the continued use of state regulation of insurance and that the NonAdmitted and Reinsurance Reform Act has been introduced into the Senate.
In early June NAPSLO took part in a White House meeting with other industry representatives and was able to make a case for state regulation. NAPSLO also submitted information about our industry after the meeting, and our comments were fundamental in the Treasury Department’s final document.
This is an important time in the regulatory history of our industry. Our involvement at the federal level over the past few years has enabled us to take part in discussions with Congress and the White House on the future of our industry.
In speaking with Maria Berthoud, our Washington, D.C. representative, she noted that “if NAPSLO had decided to become involved in D.C. this year, or even last year, I am not sure we would have had the impact that a continued strong presence has had. In five years NAPSLO has become a voice that now needs to be heard, NAPSLO's opinions are sought after, and NAPSLO's leadership is now well known.”
Our members should be aware of our successful legislative efforts and know they can shape the future through their actions. Our success is due to the hard work by the NAPSLO staff, our representatives in Washington, the Legislative Committee, the NAPSLO Board of Directors, and our members, individually or through donations to the NAPSLO PAC. The next year will be very important in determining the type of regulation we face. It is essential for you to stay involved, or become involved.
The NAPSLO Annual Convention, October 7-10 in
While the convention is several months away, the Association is already working to prepare for 2010 and beyond. The Nominating Committee is currently taking nominations for members of the Board, and later this summer we will be asking for committee volunteers to assist with our efforts.
Future e-mails will provide more information on NAPSLO’s Advanced School, as registration will start later this summer. Recently we completed another successful E&S School with more than 80 people attending and this year's school already received very positive reviews.
Your participation in NAPSLO is key to our success. I urge you to be involved with the Association, whether it involves participating in our schools, attending our meetings, or assisting with our legislative efforts.
More Than 1,700 Register for Annual Convention
Online registration began June 15 and members can register at http://annual.napslo.org by clicking on the Register Online link. After registering, members can reserve a hotel room through the hotel reservation link. Attendees must be registered for the Convention to reserve a room, and NAPSLO reserves the right to cancel any rooms in the NAPSLO hotel room block reserved by non-registrants.
NAPSLO is offering reserved tables and this year is offering semi-private rooms near the Brokers’ Lounge areas for an additional fee.
The Opening Reception is scheduled for Wednesday evening, October 7, preceded by a "Happy Hour" in the Brokers’ Lounge from 4:00 p.m. – 5:00 p.m. Friday’s Derek Hughes/NAPSLO Educational Foundation Lecture will feature Dr. Robert Hartwig of the Insurance Information Institute. There will also be a panel discussion on Friday featuring company and broker representatives discussing the current state of the industry.
The Next Generation Rendezvous, 2nd Annual Cocktail Party will be held on Friday, October 9 and will feature a night time reception for networking among the Under 40 Next Generation group from 9:00 p.m. to Midnight. Please RSVP to ktaylor@usgins.com if you plan to attend and have not registered. Registered spouses or significant others can attend the Cocktail Party. A registration list is available to download from the Attendee List page of the convention website. A special discussion panel with the Next Generation of E&S vs. the Baby Boomers on current workplace issues will take place on Saturday morning from 9:00 a.m. - 10:30 a.m.
NAPSLO membership dues notices were mailed in late May and are due August 1. The annual fees remain the same as in 2008 and cover the period of August 1, 2009 to July 31, 2010.
NAPSLO accepts checks and credit cards for payment. If paying by credit card, please download the Credit Card form, complete it and return with invoice and branch office forms. Members wishing to add additional branch office locations can complete the Branch Office form and return with dues payment.
NAPSLO members must submit the candidate names for consideration as nominees no later than August 26, 2009, but members are encouraged to submit such names as soon as possible. Suggested candidate names may be submitted to the committee, in writing, by e-mail at nominations@napslo.org; by postal mail to the NAPSLO office; or directly to members of the Nominating Committee.
The Nominating Committee is chaired by former Past President Bill Newton of RPS Los Angeles (Lemac & Assoc.). Members of the committee are: Dave Leonard, RSUI Group; Hank Haldeman, The Sullivan Group; Tim Makowski, Specialty Lines Underwriters and Steve Vaccaro, MAX Specialty Insurance Co.
As required by the Association's Bylaws, the Nominating Committee will prepare slates of officer and director nominees and submit them to the NAPSLO membership at least 30 days prior to the Annual Business Meeting.
Members will vote at the Annual Business Meeting on the slate of five directors, who will serve three-year terms.
Characteristics the Nominating Committee considers in candidates include: integrity; personal character; willingness and ability to devote considerable time to the Association; ability to serve three to 10 years on the Board; a history of service to the industry, including NAPSLO committee work; involvement in state associations; active involvement in NAPSLO meetings or the NAPSLO schools; performing a leadership role in their own organization; and demonstrated leadership in the industry. Dale Pilkington Steps Down from NAPSLO Board
NAPSLO Survey Finds Specialty Lines Capacity Unchanged and Submissions Up in 2009
Despite an economic slowdown, the majority of wholesale brokers and E&S carriers are not seeing a decline in capacity or a tightening of terms in specialty lines, but are seeing an increase in submission activity, according to the results of a recent survey of NAPSLO members.
Webinar on E&S Market Available to View
A replay of the June 11 A.M. Best webinar organized by NAPSLO on the Pricing and Availability in the Excess & Surplus Lines Market is now available to view on the A.M. Best website. More than 1,000 people signed up to view the webcast live.
Paul Springman, President and COO, Markel Corp. Marla Donovan, Vice President, Burns & Wilcox Kevin Westrope, President and CEO, Westrope Richard Kerr, Chairman and CEO, MarketScout Corporation Duncan McColl and Lee McDonald, A.M. Best Company
The panel examined today's market, including pricing and availability, for specialty insurance, and changes in the financial strength of the specialty insurance sector of the property/casualty industry.
Federal Legislative Update By Richard Bouhan After months of waiting to see how the insurance industry would fit into financial services reform outlined by the Obama Administration, NAPSLO was encouraged by the fact that the recent Administration proposal appears to rely on the continued use of state regulation of the insurance industry. Only a scant three pages of the 88 page document was devoted to oversight of insurance.
With this limited focus on insurance, along with so much of the detail of the proposal lacking, there is no assurance that the insurance industry, much less the surplus lines / wholesale distribution system, will not be dramatically impacted by the proposal as it is implemented. However, the lack of specific attention to insurance does suggest that industry is not directly in the “reform” sights of the Administration’s guns.
NAPSLO strongly supports state regulation of insurance in that it offers consumers better protections and stronger regulation and is heartened that the Administration proposal embraces the continuation of state insurance regulation. NAPSLO also believes that using federal legislation to enhance the efficiency of state regulation is the best approach to reforming the regulatory system and is pleased that the Treasury took into consideration NAPSLO recent comments on the subject of insurance regulatory reform in writing its report.
In the Treasury Department’s report, entitled: Financial Regulatory Reform – A New Foundation, the Treasury outlined six principles for insurance regulation, including “Increased national uniformity through either a federal charter or effective action by the states.” In speaking about possible action by the states, the report stated that “increased consistency in the regulatory treatment of insurance – including strong capital standards and consumer protections – should enhance financial stability, increase economic efficiency and result in real improvements for consumers.”
The other insurance regulatory principles for insurance outlined in the report were: Effective systemic risk regulation with respect to insurance; Strong capital standards and an appropriate match between capital allocation and liabilities for all insurance companies; Meaningful and consistent consumer protection for insurance products and practices; Improve and broaden the regulation of insurance companies and affiliates on a consolidated basis, including those affiliates outside of the traditional insurance business; and International coordination.
The proposal also includes plans for the creation of several new financial services regulatory agencies, including the Financial Services Oversight Council, Consumer Financial Protection Agency, and National Bank Supervisor.
To promote national coordination in the insurance sector, the report proposed the creation of an Office of National Insurance (ONI) within Treasury, which would gather information, develop expertise, negotiate international agreements, and coordinate policy in the insurance sector.
The Treasury’s report said the ONI would be responsible for identifying the emergence of any problems or gaps in regulation that could contribute to a future crisis. The ONI would also recommend to the Federal Reserve any insurance companies that the Office believes should be supervised as Tier 1 Financial Holding Companies. The ONI would also carry out the government’s existing responsibilities under the Terrorism Risk Insurance Act.
NAPSLO believes the NRRA would help streamline the regulatory system and could work with the Treasury’s proposals ,and we look forward to working with the White House, the House and the Senate on this legislation.
NAPSLO Participates in White House Meeting Prior to the release of the report, in early June, Maria Berthoud, NAPSLO Washington Representative, with B&D Consulting, and other industry representatives met with Diana Farrell, Deputy Director of the National Economic Council and Deputy Assistant to the President, and Michael Barr, Assistant Secretary for Financial Institutions at the Department of Treasury to discuss financial services reform and the insurance industry. Other groups attending included the PCI, IIABA, AIA, ACLI, CIAB, NAMIC, NAIC, NAIFA and the Financial Roundtable.
This meeting entailed significant discussions on the future of financial services regulation. It was important for NAPSLO to be at this meeting in order to be able to explain the role of surplus lines insurance and the critical part it plays in the economy. Subsequent to the meeting, NAPSLO was asked by Administration officials for detailed positions on financial service and insurance regulation, as well as information on the surplus lines industry which was to be used in developing the Administration report on financial services regulatory reform. NAPSLO submitted a lengthy report which included its positions on insurance regulation and how the surplus lines and wholesale distribution system functioned on behalf of the insurance consumer.
During the White House discussions, there was spirited discussion regarding whether insurance should be regulated through a federal charter or if states should continue their supervisory role. NAPSLO urged that federal standards be examined as a viable approach to reforming insurance regulation, citing such legislation as the NonAdmitted Reinsurance Reform Act of 2009 (HR 2571), and NARAB (HR 2554), as examples of legislation aimed at overcoming the inefficiencies of state regulation without losing a high level of consumer protection.
NRRA Senators Evan Bayh (D-Ind.) and Mel Martinez (R-Fla.) introduced the Nonadmitted and Reinsurance Reform Act of 2009 in the Senate on June 25, along with co-sponsors Senators Bill Nelson (D-Fla.) and Mike Crapo (R-Id.) The bill was previously introduced in the House of Representatives in May. NAPSLO was instrumental in getting these two important members of the Senate Banking Committee to sponsor and introduce this legislation in the 111th Congress.
The NRRA (HR 2571 in the House and S 1063 in the Senate) is aimed at streamlining and reducing barriers in state regulation of surplus lines insurance and reinsurance. It would create a uniform regulatory system, while preserving the role of the state regulator. In addition to Senators Bayh and
This bill would simplify the tax remittance and compliance responsibilities surplus lines brokers must discharge, and bring efficiency and cost reduction to regulatory compliance in placements with multi-state exposures. Such reform would benefit not only the brokers and underwriters who provide surplus lines insurance but also consumers who ultimately pay the price for the inefficiencies.
In May, Rep. Dennis Moore (D-Kan.) and Rep. Scott Garrett (R-NJ), introduced H.R. 2571 in the House. The House passed similar versions of the NRRA in the last two sessions of Congress. The Senate took up a similar bill in 2007 but it took no action prior to the end of the 110th Congress, requiring that the bill be reintroduced in the 111th Congress.
We are hoping to see action take place soon on these surplus line reforms and believe there will be wide support for the legislation, noting that NAPSLO and other industry organizations have worked together in advocating enactment of this legislation.
Consumer Financial Protection Agency (CFPC) Act of 2009 NAPSLO's Washington D.C. representative has reviewed the proposed Consumer Financial Protection Agency (CFPC) Act of 2009 , and based on its analysis, if passed, would have the following impact on the insurance industry:
State Legislative Update By Steve Stephan, JD, CPCU, ASLI Director of Government Relations
Surplus Lines issues covered at recent NAIC meeting
Surplus lines licensing, an update on the Non-Admitted and Reinsurance Reform Act (NRRA), an update on the interstate compact proposal (SLIMPACT), and an update from the NAIC’s surplus lines Multi-state Tax Working Group were subjects of the NAIC Surplus Lines Task Force meeting on June 15 in Minneapolis during the NAIC’s summer meeting.
During the meeting, the subject of whether the commercial multi-state licensing exemption in the producer licensing model act (PLMA) applies to surplus lines brokers was raised by NAPSLO. Approximately half of the states do not believe that the commercial multi-state licensing exemption applies to surplus lines brokers. Instead, they believe that the surplus lines broker should be required to have a license from every state where any portion of the risk exposure resides.
The exemption in the PLMA provides that only one state license is required to place a risk with exposures in more than one state. In NAPSLO’s view, this was an issue discussed and decided when the PLMA was originally adopted. There was nothing in the PLMA language to indicate that the exemption was not applicable to surplus lines brokers. The NAIC decided to research the issue and NAPSLO will submit additional comments.
The NAIC Surplus Lines Task Force also decided to allow a survey of the task force members regarding their views on the surplus lines multi-state compliance compact (SLIMPACT) proposed by a group of interested parties. The SLIMPACT draft was completed several months ago and the drafting group is trying to determine if there are changes that would make it more palatable to the Task Force.
The Multi-State Tax Working Group (MSTWG) submitted a survey to state regulators to gather information to study the feasibility of a uniform surplus lines tax reporting form. At this point 31 states have responded and the MSTWG is following up with the states.
The NAIC NARAB Working Group also met on June 15 and issued a report that concludes, among other things, that a surplus lines wholesaler should not be required to obtain underlying P&C licenses from a state unless the wholesaler is involved with the diligent search of the admitted markets. This has been an issue raised by NAPSLO. The NARAB working group also issued a framework for implementation of the changes, including the surplus lines licenses. This should help streamline a process that has been very burdensome for surplus lines wholesale brokers.
The Reinsurance Task Force reports that the NAIC has retained a law firm to research a number of constitutional issues raised in connection with the NAIC's federal reinsurance proposal. The issues concern the NAIC's proposal to allow the NAIC authority under federal law when there is nobody within the NAIC that has been appointed by a federal authority. There as been speculation that the NAIC will seek to substitute their reinsurance proposal in place of the reinsurance section of the Nonadmitted and Reinsurance Reform Act.
Arkansas has passed legislation that would make it clear that surplus lines carriers are not required to file policy forms (23-79-109). It is one of the few states to do so since the surplus lines codes were originally intended to contain all the laws applicable to surplus lines insurance and the surplus lines codes do not require forms or rates to be filed.
California issued Bulletin 1181 on June 2 and the bulletin states that surplus lines business entities have until July 1, 2009 to provide two-hour training to employees.
California also has a proposal to add a surcharge on property insurance (including surplus lines) to fund a portion of firefighting expenses. At one point, it appeared likely to pass, but the prospects for passage are unclear today. The
The legislative fix for the
Effective July 1, 2009, the Montana Commissioner of Securities and Insurance announced it will review and process surplus lines insurance submissions, determine applicable stamping fees owed, and send surplus lines agents tax and fee statements. All of these functions were previously performed by the Montana Surplus Lines Agents Association (MSLAA).
New Jersey New Jersey has proposed increasing the surplus lines tax from 3% to 5%. The state is facing budget shortfalls and increasing the surplus lines tax was one of the many measures being proposed. NAPSLO objected to the tax increase on grounds that it was larger than the increase proposed for admitted business.
New York New York has proposed revisions to the excess lines placement governing standards, otherwise known as an “export list.” The additional coverages include some excess umbrella (over $10,000,000), commercial property (excess of $50,000,000), contract frustration, employed lawyers, and numerous lines impacting care providers. This expansion was the culmination of nearly two years of work by ELANY and other interested parties.
Rhode Island Rhode Island has been dealing with the question of whether the cancellation and non-renewal laws apply to a surplus lines company. At this point it appears industry and regulators alike may be interested in reinstating the exemption of surplus lines insurers from the cancellation and non-renewal provisions in the code.
On May 29, NAPSLO submitted a letter, in conjunction with the SILA surplus lines steering committee asking the Washington, D.C. Insurance Department to support legislation that would:
Federal Courts The U.S. Supreme Court has accepted a case that interprets the term “principal place of business.” (Hertz Corporation v. Friend) This is a term used in the Non-Admitted and Reinsurance Reform Act to define the home state of the insured. It would likely be rare for there to be more than one possible principal place of business of an insured and it would be even rarer for the matter to be in question following a review of the voluminous federal case law on the issue. Nevertheless, this case should further clarify the definition of “principal place of business.”
Steve Stephan Nominated to NCOIL's IEC Board
Technology Update A paper providing a roadmap to guide development of general agent websites; proof of concepts demonstrations showing that information can be transmitted electronically from a retail agent’s management system to a general agent’s using currently available software, and reviews of ACORD application forms for duplicate data are among the recent accomplishments by the Retail Agent/E&S Working Group.
The IIABA's Agents Council for Technology (ACT), AAMGA, and NAPSLO formed the Working Group to improve the efficiencies for Retail Agents interacting with Managing General Agents and wholesale brokers in the Excess &Surplus market and to promote the standardized electronic exchange of data between the partners. The group recently published a newsletter reviewing their activities and is available to download.
The website roadmap paper, put together by the Working Group’s General Agent subgroup, was recently released and is available to download. The paper is expected to help prepare general agents (GA) to be able to accept standardized interfaces from the retail agent (RA) systems, transfer the data into the backend GA systems (i.e. Agency Management System, Rater, or Carrier System), and return the results to the RA systems via download, completing the round trip, without the need to re-key.
The paper reviews components of the various generations of websites and what is needed to move to the next generation:
Building on these webinars, and discussions at the AAMGA Technology Conference, several vendors industry volunteered to develop working Proof of Concepts for the importing of data from RA systems into GA systems and these were unveiled at the Scottsdale Insurance Company’s technology conference in June 2009. Following that meeting, the Subgroup will hold Webinars to demonstrate the Proof of Concepts to interested parties. Additional details on the demonstration will be posted in the Technology section of the website.
The Retail Agent (RA) Interfaces subgroup has been working on the E&S Carrier supplemental applications to review non-standard data requirements and move the industry to utilize ACORD standards and applications as much as possible. A draft of a few E&S supplements were developed to validate that they could become ACORD supplements. ACORD is now seeking volunteers to participate on an Excess and Surplus Lines Working Group. If you are interested, please register for a User name and password on the www.acord.org site and send an
email to workinggroups@acord.org requesting that you be added to the E&S working group.
Portsoken House, 155 Minories (011-44207) 488-2211 (011-44207) 488-4436 Fax Neil Bagwell
Michael J. Curtin & Associates (Claims Adjuster) 6604 Parkside Drive Parkland, FL 33067 (954) 334-3300 (866) 906-6026 Fax Michael J. Curtin |
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