In an effort to encourage the adoption of the Non-Admitted and Reinsurance Reform Act of 2007 (H.R. 1065) by the U.S. House of Representatives and a companion bill, S. 929, in the Senate, the National Association of Professional Surplus Lines Offices had published and distributed a paper, Why HR 1065, to members of the Association, public, and the press.
The paper, which is also available on NAPSLO’s web site at www.napslo.org/pdf/legreg/WhyHR1065.pdf, reviews how HR 1065 would simplify the payment of surplus lines premium taxes, establish one state compliance on multi-state risks, streamline access to the surplus lines market for large commercial purchasers; and create uniform surplus lines insurer eligibility standards.
“The one issue I am constantly asked about is how to resolve the tax and licensing issues regarding multi-state surplus lines risks,” said NAPSLO President Bill Newton. “We believe both brokers, and companies want this issue resolved. Brokers want to pay the surplus lines taxes to just one state. They want only one state to regulate the transaction and not have to complete duplicate, triplicate, 10, 20 or 40 affidavits and make an equal number of tax filings. Companies want to see one-state reporting as more and more insurance departments are asking carriers to reconcile their premiums with the brokers’ filings.”
Reps. Dennis Moore (D-Kan.) and Ginny Brown-Waite (R-Fla.) submitted H.R. 1065 earlier this year and it had several co-sponsors. Senators Mel Martinez (R-Fla.) and Bill Nelson (D-Fla.) introduced S. 929, a version of the Nonadmitted and Reinsurance Act of 2007 in the Senate in March.
H.R. 1065 will establish national standards for how states regulate the surplus lines market and reinsurance and would create a uniform system of surplus lines premium tax calculation and remittance, one-state compliance on multi-state surplus lines risks, and direct access to the surplus lines market for sophisticated commercial purchasers.
Highlights of Why HR 1065
NAPSLO’s paper, Why HR 1065, outlines the benefits of HR 1065 to the surplus lines industry and also consumers, including;
- HR 1065 would simplify the surplus lines broker’s payment of surplus lines premium taxes on multi-state risks by requiring that all premium tax due the states in a surplus lines transaction be paid to one state---the insured’s “home state.”
- HR 1065 would eliminate the current confusion over which state, or states, have jurisdiction to regulate a multi-state surplus lines transaction by establishing a one-state compliance obligation for the surplus lines broker involved in such multi-state transactions.
- HR 1065 allows the surplus lines broker to place insurance on behalf of large, sophisticated commercial purchasers, as defined in the act, without having to satisfy a diligent search requirement.
- HR 1065 creates national eligibility standards for surplus lines carriers by prohibiting states from imposing any eligibility requirements other than criteria established in the NAIC Nonadmitted Insurance Model Act.
“The concepts in HR 1065 are those that have been long endorsed by NAPSLO and promoted with members of Congress during meetings over the past two years,” said Mr. Newton. “This is important legislation and others in the industry share our views. Every major national producer organization in the country supports this bill and has it as either their top legislative priority or one of their top ones.”
In late April approximately 20 representatives of NAPSLO and B&D Consulting, NAPSLO's Washington lobbying firm, took part in NAPSLO's "Day on the Hill" in Washington, D.C. visiting members of Congress and their staff. The event was scheduled to help educate staff and legislators about NAPSLO's positions on current legislation before Congress.