Surplus lines reform bill offers more flexibility

A FAST START can be key in getting legislation enacted. That's why we have nothing but praise for the House backers of more efficient insurance regulation who wasted no time in introducing a new--and we believe improved--version of the Nonadmitted and Reinsurance Reform Act.

We say improved because, as we report on page 1, the new bill contains a much more reasonable definition of a "qualified risk manager" than the measure passed by the House last September. The previous bill defined a qualified risk manager as someone who possessed at least two of three credentials: an undefined "advanced degree" in risk management, five years' experience or at least one of several specific professional designations.

A commercial policyholder would have to employ a qualified risk manager before the policyholder could have its broker go directly to the nonadmitted market without approaching the admitted market. Such a restrictive definition would have defeated one of the bill's key purposes--to ease access to the nonadmitted market.

Fortunately, the new bill allows risk managers much more flexibility in meeting the definition. Rather than a one-size-fits-all approach, the bill provides five ways for risk managers to be considered "qualified." That flexibility led the Risk & Insurance Management Society Inc. to drop its opposition to the measure.

Given the previous bill's overwhelming support in the House, we see no reason why the new measure shouldn't have equally easy sailing. And given that this time there's interest in the Senate as well, we hope this will culminate in swift enactment of the measure into law. This year's bill is off to a good start, and merits an even better finish.