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What's Going On: Can states and feds agree on E&S regulatory reform?

IN AN ARTICLE in this month's issue, agents and brokers discuss how they interact with the E&S marketplace. One of those agents, John Tallarida, senior vice president of the Heffernan Group in Palo Alto, Calif., cited one problem retailers can

By Harmony Nicole Fortenberry | Updated on July 31, 2006

IN AN ARTICLE in this month’s issue, agents and brokers discuss how they interact with the E&S marketplace. One of those agents, John Tallarida, senior vice president of the Heffernan Group in Palo Alto, Calif., cited one problem retailers can face. He explained that after investing a lot of time working with a surplus-lines broker on a large account, a retailer may discover that the client has exposures in a state in which the surplus-lines broker is not licensed. At that point, Tallarida says, the retailer might have to bring in another surplus-lines broker–just to remit the required premium tax in that jurisdiction.

This is the sort of headache that a new bill before Congress, the Nonadmitted and Reinsurance Reform Act (H.R. 5637), is intended to relieve. The bill was introduced in June by Rep. Ginny Brown-Waite (R-Fla.) and Rep. Dennis Moore (D-Kan.). Late last month, it was approved by the House Financial Services Committee’s Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises. A few days later, it got the OK from the committee itself. Let’s ignore the bill’s relatively short reinsurance section and consider how it might affect the E&S industry.

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