WASHINGTON (June 25, 2007) — The National Association of Mutual Insurance Companies (NAMIC) today applauded the House for passing legislation to reform the surplus lines and reinsurance market. H.R. 1065, the Nonadmitted and Reinsurance Reform Act of 2007, was approved in the chamber by unanimous consent.
“This bill will help policyholders that are vulnerable to natural catastrophes and terrorist attacks by eliminating unnecessary duplication of regulation,” said Justin Roth, NAMIC’s senior federal affairs director. “Many Florida homeowners, for example, have had to find wind coverage in the surplus lines marketplace due to recent hurricanes.”
The legislation would create a uniform system for taxing and regulating certain types of insurance products — known as surplus lines or nonadmitted insurance — by establishing national standards for how states may regulate, collect, and allocate taxes. The bill would also establish national standards for how states regulate reinsurance — often referred to as insurance for insurance companies.
“HR 1065 proves that Congress can play a meaningful role in modernizing the insurance regulatory system, while still leaving the day-to-day control at the state level,” Roth said. “NAMIC believes that the entire insurance industry will benefit from more streamlined nonadmitted insurance and reinsurance markets.”
The legislation gives the home state regulator of the insurer primary oversight of multistate surplus lines risk and responsibility for allocating any taxes collected on the coverage to the other involved states. It also makes it easier for sophisticated purchasers to access the surplus lines market.
The core reform put in place by the legislation would ensure that only one set of state regulatory rules apply to policies that insure exposures in multiple states — those of the policyholder's home state.
“With overwhelming support in the House and a united insurance industry backing this legislation, NAMIC is hopeful that the Senate considers this vital legislation, rather then focusing on legislation to create an optional federal charter, which has very little support among most property/casualty insurance companies and agents,” Roth said.
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