NAMIC Applauds House Passage of Surplus Lines Bill

“We want to commend Reps. Moore and Garrett for their hard work on this issue and applaud the passage of H.R. 2571 by the House” said Marliss McManus, Senior Director of Federal Affairs for the National Association of Mutual Insurance companies (NAMIC). “This bill will help to streamline the surplus lines and reinsurance markets while respecting the regulatory authority of the domiciliary state. If enacted it would help provide much needed clarity for surplus lines insurers, their policyholders and the economy.”

The House approved the bill on a voice vote under the suspension calendar, which limits debate on a bill and is generally used for noncontroversial issues. Similar legislation was also approved by the House during the past two Congressional cycles. However, companion legislation in the Senate has been proposed for the first time by Sen. Evan Bayh, D-Ind.  “We look forward to working with Sen. Bayh and making the third time the charm for this important issue,” McManus said.

H.R. 2571 would establish the home state of an insured as the regulatory authority for a non-admitted multi-state risk and to collect premium taxes that would then be allocated under a system devised by the states.

Additionally, provisions in the bill would:

• Prohibit states from taxing and regulating certain insurance products issued by companies not based in the state;
• Prohibit states from collecting fees from certain brokers of insurance unless states participate in a database of national insurance producers for the licensing of surplus lines brokers and the renewal of those licenses;
• Preempt laws in at least 40 states regarding how insurance polices with multistate risks are taxed and how those taxes are distributed among states; and
• Preempt laws in at least 14 states regarding certain requirements for reinsurance.