Posted on 22 May 2009
The National Association of Mutual Insurance Companies (NAMIC) today congratulated Reps. Dennis Moore (D-KS), and Scott Garrett (R-NJ), for introducing legislation to modernize the regulation of non-admitted insurance and reinsurance markets. The proposal enjoys bipartisan support, with more than 20 representatives, including House Financial Services Committee Chairman Barney Frank (D-MA), signing on as original co-sponsors of the legislation.
Non-admitted insurance, also called surplus lines, provides property/casualty insurance that covers unique, unusual, or non-standard risks that are not typically offered by insurers operating in the licensed marketplace. Included are business interruption, environmental impairment, special events, and coastal properties.
“Surplus lines play a crucial role in the insurance industry, covering hard to place risks that would otherwise not be protected. They represent more than 13 percent of the total amount of commercial insurance premiums,” said Marliss McManus, NAMIC’s senior federal affairs director.
“NAMIC believes that the reform of surplus lines regulation would significantly increase the efficiency of purchasing coverage for all those involved in the surplus lines transaction from insurance companies to consumers.”
The Nonadmitted and Reinsurance Reform Act of 2009 would establish national standards for state regulation of the surplus lines and reinsurance markets, including a uniform system of premium taxation, elimination of duplicative compliance requirements for multi-state transactions, and direct access to the surplus lines market for large commercial insurance buyers. It also grants regulatory authority over most aspects of surplus lines insurance to the state in which the carrier is domiciled. Similar legislation has been introduced and unanimously passed in the House twice before, but never reached the Senate floor for a vote.
“This approach would streamline the current regulatory system by establishing uniform and consistent standards, while leaving the day-to-day regulatory control at the state level,” McManus said. “Since surplus lines compliment the admitted market, reforming and standardizing regulation will ultimately provide more choices for insurance consumers. We are pleased to see Congress taking this appropriate step to bring uniformity to insurance regulation and encourage swift passage of this legislation.”