The bill will streamline a critical component of the surplus lines insurance market, particularly in regard to conflicting state laws governing the placement, tax payment and allocation of premium for multistate surplus lines risks. It will assign responsibility for the regulation of a surplus lines transaction to the consumer’s home state, with tax payment by the broker to that state to be forwarded to any other states for multistate risks. Regarding reinsurance, the legislation will prohibit extraterritorial application of state laws to certain reinsurance transactions, similarly assigning primary responsibility for the reinsurance transaction to the insured’s home state.
Surplus lines reinsurance legislation has passed the House unanimously in each of the last two Congresses but was not introduced in the Senate. PCI encourages both the Senate and the House to pass the bill and President Obama to sign it into law.
"This legislation is a vital step toward reforming and streamlining our current insurance regulatory system. If enacted, it will create greater legal and regulatory certainty for surplus lines consumers, which will benefit insurers, businesses and the economy,” said David A. Sampson, PCI’s president and CEO. “It has passed the House overwhelmingly in each of the last two Congresses, and we are pleased that it has now been introduced in the Senate as well. We commend Senators Martinez, Bayh, Crapo and Nelson for their bipartisan work on this bill and look forward to working with them on this legislation."