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WASHINGTONSupporters of a measure that would streamline surplus lines and reinsurance regulation are optimistic that the bill could receive approval sooner rather than later in the new Congress.
In part, that's because the measure, which was originally introduced in the House last summer, could be reintroduced in that chamber as early as this week.
The House passed the bill--the Nonadmitted and Reinsurance Reform Act--on a 417-0 vote last September, but it never was taken up by the Senate (BI, Oct. 2, 2006).
This year's bill is likely to track last year's quite closely, noted Richard Bouhan, executive director of the Kansas City, Mo.-based National Assn. of Professional Surplus Lines Offices Ltd., which supports the measure.
"We're hearing is that it will be dropped shortly," Mr. Bouhan said, adding that "sponsors may make some minor changes."
Issue to be resolved
At the heart of the measure is the creation of a uniform system for regulating and taxing the surplus lines industry by making nonadmitted insurance subject to regulation only in the policyholder's home state. A policyholder would have to employ a "qualified risk manager" to tap the market directly without first approaching the admitted market. In addition, the bill would streamline reinsurance solvency regulation.
The New York-based Risk & Insurance Management Society Inc., which supported the bill in its original form, withdrew its support after the measure was amended last year to change the definition of a "qualified risk manager" to one that few risk managers could meet, noted Terry Fleming, a member of the RIMS board and director-division of risk management for Montgomery County, Md., in Rockville. Last year's definition could "eliminate virtually all of our members," he said.
Among other things, last year's bill defined a qualified risk manager as one who met at least two of three criteria: holding an "advanced degree" in risk management from accredited college or university, having at least five years' experience in specific areas of insurance and holding at least one of a specified set of professional designations.
Sliding scale a possibility
The original definition was not so rigorous, noted Mr. Fleming. He said the measure placed no such requirements on underwriters, but "they're placing all these education requirements" on the risk manager. RIMS has "been lobbying on Capitol Hill. We asked (that) the bill remove the definition altogether." That does not appear likely, but there is some indication that "some sliding scale" in terms of education and qualifications may emerge, he said.
The bill's likely introduction by Reps. Dennis Moore, D-Kansas, and Virginia Brown-Waite, R-Fla. so early in the session is increasing the optimism of supporters that it will become law.
"We're hopeful that we can pick up where we left off last year, and we're especially pleased that Reps. Moore and Brown-Waite have been working hard to see to it that we can push this through the House again, leaving us much more time to get a Senate process completed," said Joel Wood, senior vp of the Council of Insurance Agents and Brokers in Washington.
Mr. Wood also praised the Kansas City, Mo.-based National Assn. of Insurance Commissioners for its "highly constructive" role in the process. "That is a critical element of building the kind of consensus that can get this bill to the president's desk," he said.
"We're optimistic that it will pass again in the House," said NAPSLO's Mr. Bouhan.
"The leadership apparently is willing to move this forward," he said. "It gets us to a point where we were back in September."
Moving the measure through the Senate could be more difficult, he said in noting that the Senate has not has been as involved in insurance regulatory reform as the House.
"We're encouraged by the interest in the House in regulatory reform for reinsurance," said Frank Nutter, president of the Washington-based Reinsurance Assn. of America. "Given the unanimous passage last year of the bill, you have to be encouraged by the prospects for passage of this bill or this bill being used as a basis for regulatory reform."