Thursday, October 05, 2006

NAPSLO objects to Massachusetts Wind Storm Fund Bill including surplus lines carriers

NAPSLO has notified the Massachusetts Senate Committee on Ways and Means that it is objecting to the proposed Massachusetts Windstorm Catastrophe Fund legislation (SB2179) currently under review that would include surplus lines carriers in emergency assessments.

The act applies to policies issued by an "authorized insurer" and NAPSLO wrote the committee that since surplus lines company are not an "authorized insurer," a policy issued by a surplus lines insurer would not be protected by the reimbursement provisions of the act.

NAPSLO added that despite the fact that surplus lines insurers would receive no benefit from the act, the insurance commissioner could include surplus lines insurers in an emergency assessment on direct written premiums for all property and casualty lines of business.

NAPSLO also said that Surplus lines companies have been traditionally unregulated to fulfill their purpose as an insurance "safety valve" and to impose an assessment establishes a dangerous precedent. In addition, under the proposed act it is unclear who is subject to the assessment - the insured, the broker or the company. It is also unclear what happens if the assessment is not paid.

The bill has been referred to the Senate Committee on Ethics and Rules and NAPSLO is hopes to have a response to the objections.

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