WASHINGTON—Supporters of a measure that would reform the regulation of surplus lines think they may have their best chance ever to see the bill become law.

That assessment came after the House of Representatives approved the Nonadmitted and Reinsurance Reform Act last week. The bill enjoys broad support among risk managers, insurers and producers. Among other things, the bill would make accessing the surplus lines market easier for risk managers and set a uniform system of surplus lines premium tax allocation and remittance. The measure provides a liberal definition of what criteria a risk manager must meet to be regarded as a “qualified risk manager” entitled to bypass the admitted market when seeking coverage. The bill also would ease regulatory burdens on reinsurers (see box, page 22).

The bill also would simplify reinsurance regulation by eliminating extraterritorial application of state reinsurance laws and make the domiciliary state the single regulator for financial solvency.

The House had previously approved two earlier versions, neither of which was taken up by the Senate. One of the bill's sponsors—Rep. Dennis Moore, D-Kan.—told his colleagues shortly before the vote that he believed “the third time will be the charm.”

Companion legislation has been introduced in the Senate but has yet to be the subject of a hearing or committee vote.

Advocates of the measure, however, say that changes in the political atmosphere may make enactment of the bill easier to achieve.

“We are very hopeful that we will see Senate action soon,” said Maria Berthoud, a partner at B&D Consulting in Washington, which represents the Kansas City, Mo.-based National Assn. of Professional Surplus Lines Offices.

She noted that the Senate measure is being co-sponsored by Sen. Evan Bayh, D-Ind., who sits on the Senate Banking, Housing and Urban Affairs Committee.

“This year, the leadership of Sen. Evan Bayh has given new momentum and more possibility to the NRRA becoming law,” she said.

Ben McKay, a senior vp in the Property Casualty Insurers Assn. of America's Washington office, noted that the measure has bipartisan support in the Banking Committee, with Sen. Mike Crapo, R-Idaho, serving as cosponsor with Sen. Bayh.

The chances of enactment are “better, because we have a bill introduced in the Senate, we have excellent cosponsors of that bill, both parties are represented and members of the most relevant committee are on the bill,” said Mr. McKay. “I think the chances are much better this year than before.”

Joel Wood, senior vp of the Council of Insurance Agents & Brokers in Washington, pointed out that the National Assn. of Insurance Commissioners had been involved in the legislative process this time around.

“The No. 1 factor is that the NAIC has been very constructively engaged in this process, and so I think there is a much stronger comfort zone between the industry and the regulators about the need for the NRRA as the impetus for the creation of an interstate compact to govern access to multistate surplus lines policies,” he said.

Mr. Wood added that last year, “just when we were getting the requisite oxygen within the Senate Banking Committee, the broader financial meltdown occurred. That was an understandable diversion.”

In terms of regulatory reform spurred by the financial crisis, Mr. Wood said that whether “very big or much more incremental, there will be regulatory reform that will be enacted in this session of Congress.” He said while he didn't know what the details would be, “I do know there is going to be regulatory reform, and shame on us if we can't make this a part of it.”

Enactment of a surplus lines reform law has long been a priority for the New York-based Risk & Insurance Management Society Inc., said Deborah Luthi, RIMS director-external affairs and director-enterprise risk management at Matheson Inc. in Sacramento.

“We're very pleased to see its passage in the House, but we view this as a critical juncture, so we urge Senate action and view the surplus lines industry as central to the nation's economic health,” she said. “We are very glad that it's going forward with the broader definition of qualified risk manager. We are optimistic that it can go through.”