“The Big “I” supports this legislation, which is an excellent example of pragmatic reform that utilizes targeted, federal tools to improve the state-based regulatory system,” says Charles E. Symington Jr., Big “I” senior vice president for government affairs and federal relations. “We support this type of approach to help bring needed reforms to the regulatory system.”
The legislation singles out two areas—surplus lines regulation and reinsurance supervision—where there is general consensus for reform. Independent insurance agents and brokers play a crucial role in surplus lines (or nonadmitted) insurance, which provides coverage for unique or hard-to-place property-casualty risks.
“The nonadmitted marketplace continues to function as a crucial ‘safety valve’ for the entire insurance market,” says Tom Koonce, Big “I” assistant vice president for federal government affairs. “The existing state-based regulatory system has some inefficiencies that disrupt the nonadmitted marketplace regarding the allocation and remittance of premium taxes, licensing of nonresident surplus lines brokers, and duplicative regulation of the nonadmitted market. This legislation will correct this.”
Additionally, the bill streamlines surplus lines regulation by making the insured’s home state the source of regulation for individual surplus lines transactions. The legislation’s second title would seek to reduce overlapping, multiple-state regulation of both reinsurer financial condition and credit-for-reinsurance on the balance sheets of ceding insurers. This is important to the Big “I” due to its reaffirmation of state regulatory system, which the Big “I” supports, with modifications such as those contained in this bill.
In the 109th Congress, similar legislation passed the House on a unanimous 417-0 vote, and the Big “I” is hopeful that this legislation will also receive such favorable consideration this session.
“We believe that the unanimous House vote of 417 to 0 to approve this legislation last year is testament to the support that can be generated for federal legislation reforming state insurance regulation. This consensus legislation contrasts sharply with proposals such as the ‘optional’ federal charter, which is very controversial both within the industry and on Capitol Hill,” Symington says. “Four hundred and seventeen House Members supported targeted reform last year, and we believe this action speaks volumes about the proper approach to reform the insurance market.” www.independentagent.com