Nonadmitted and Reinsurance Reform Act Passes House, Faces Senate Again

In what's become a familiar story, the Nonadmitted and Reinsurance Reform Act has now easily passed in the House of Representatives, but it awaits action in the Senate.

The bill -- designed to simplify conflicting state laws regarding placement, taxes and allocation of premium for multistate surplus lines risks -- has passed repeatedly in the House, both in 2006 and 2007, and has failed to find Senate approval.

Popular with the insurance industry, this 2009 passage was welcomed by such groups as the Property Casualty Insurers Association of America and National Association of Professional Surplus Lines Offices. PCI is asking the Senate to pass the bill quickly and without changes. David A. Sampson, PCI's president and chief executive officer, said in a statement, "This bill, if enacted, will create greater legal and regulatory certainty for surplus lines consumers, which will benefit insurers, businesses and the economy. It will also improve reinsurance regulation, which will ultimately benefit the entire marketplace."

"We are hoping the third time is the charm, and the bill will be signed into law," said Richard Bouhan, executive director of NAPSLO, in a statement. "These reforms and efficiencies are needed now."

Under the bill, home states would be tasked with regulation of surplus lines transactions. Brokers would pay taxes to the home state to be forwarded on to other affected states. The law also would dictate the solvency of reinsurers be left to the jurisdiction of the reinsurer's home state regulator, while home state regulators of the primary insurers would decide whether to grant a credit for reinsurance (BestWire, May 26, 2009).

The latest version of the legislation, H.R. 2751, was introduced by Reps. Dennis Moore, D-Kan., and Scott Garrett, R-N.J., and eventually made its way onto a list of noncontroversial bills scheduled for fast votes. The Senate version, S. 1363, was introduced in June by Sen. Mel Martinez, R-Fla., and is still under consideration by the Senate's Banking, Housing and Urban Affairs Committee.

Moore issued a statement after the unanimous vote: "?With such broad, bipartisan support, I?m confident that this long overdue legislation will bring efficiency and clarity to oversight of surplus lines and reinsurance. I hope the Senate will join us in quickly passing this legislation."