WASHINGTON--Lobbying for passage of federal legislation aimed at modernizing the regulation of the surplus lines market along with companion state compacts will be the major focus of excess and surplus lines associations in 2008, association executives said.
The major piece of federal legislation toward that goal, the Nonadmitted and Reinsurance Reform Act (H.R. 1065), was passed by the House of Representatives last June.
"With Congress having acted on the Terrorism Risk and Insurance Act Extension and the Federal Flood Insurance Program legislation, NAPSLO is optimistic that the Senate will turn its attention to the NRRA and pass it," said Mike Ardis, spokesman for National Association of Professional Surplus Lines Offices based in Kansas City, Mo. He added that this is the association's highest legislative priority in 2008.
The companion state legislation, designed to facilitate the payment, collection and distribution of multi-state surplus line insurance premium taxes, is the Surplus Lines Insurance Multi-State Compliance Compact (SLIMPACT).
The compact is essential to streamlining and improving the efficiency of the surplus lines market by eliminating duplicative and inconsistent tax and regulatory requirements between the states, according to officials of the King of Prussia, Pa.-based American Association of Managing General Agents. Passage of such legislation would allow surplus lines providers to better comply with such requirements.
"SLIMPACT and the NRRA are both attempting to correct the same regulatory problems caused by application of inconsistent state laws to a multi-state risk," according to an AAMGA official.
If the NRRA were adopted, it would preempt portions of SLIMPACT. However, passage of the NRRA would not eliminate the need for SLIMPACT, the official said.
The AAMGA said it is also working with its members and the London Market Brokers Committee (LMBC) regarding certain regulatory initiatives being pursued by the United Kingdom's Financial Services Authority (FSA), such as broker disclosure and other reforms. The concern is that it is not known what impact the FSA's proposed regulations would have on the ability of MGA's to offer the various services and products of the Lloyd's and London insurance market to their U.S. clients.
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