Speaking to power: The impact of WSIA’s legislative efforts

Work continues on several fronts for the benefit of the Surplus Lines industry.

One of WSIA’s top continued initiatives is its work on the legislative front. Throughout the year, E&S leaders work tirelessly to help lawmakers gain a better understanding of the needs of the Surplus Lines industry and seek to further legislation favorable to the work of WSIA members. In the year to come, the organization will continue to focus on several key topics highly relevant to the E&S business.

NRRA implementation

The Nonadmitted and Reinsurance Reform Act (NRRA) is the most important legislative change to impact the surplus lines industry in decades, and WSIA will continue to work with states to fully implement the intent of the law. Not all states are calculating surplus lines premium taxes based solely on the NRRA’s home state authority: Although the NRRA is a simple law, it was not implemented in a fully uniform manner – and WSIA’s priority is to protect the NRRA and support uniform implementation.

“WSIA and the Council of Insurance Agents & Brokers (CIAB) have worked in coalition over the last few years to seek NRRA reform in this area, and since we began we have eliminated this practice not only for most of the NIMA states, specifically Louisiana, Puerto Rico, South Dakota, Utah and Wyoming, but also for states that included this requirement in anticipation of tax sharing, including Kansas, Nebraska, and North Dakota,” said Keri Kish, WSIA’s Director of Government Relations.

“We are very pleased to report that on July 31, we added Massachusetts to this list and the State will calculate surplus lines policies based entirely on their tax rate and rules,” Kish added. “There are only four remaining states that are outliers: Florida, Hawaii, New Hampshire and Vermont, which we will continue to focus on.”

During the past legislative session in the Sunshine State, HB 465  and SB 784 were introduced to eliminate the statutory requirement to tax multistate risks at other states’ rates. Although the bill gained understanding and support from members in both the House and Senate throughout the legislative session, it failed to be passed. WSIA will continue to work toward implementation in Florida.

Meanwhile, WSIA and CIAB members continue to meet with the Commissioners and staff from Hawaii, New Hampshire and Vermont to eliminate this taxing structure. “We have laid some good ground work in these states and anticipate legislation, to be introduced during the upcoming legislative sessions,” said Tim Chaix, WSIA Legislative Co-Chair and and CEO, R.E. Chaix & Associates Insurance Brokers Inc. in Irvine, Calif.

Related: E&S premiums are going up (again!)

Federal Legislative/Regulatory Activity

WSIA continues to strongly support and advocate for the passage of the Flood Insurance Market Parity and Modernization Act (H.R. 1422/S. 563). Congress has yet to come to mutually agreeable terms to reform the National Flood Insurance Program (NFIP), and this legislation remains a key part of that debate. As the NFIP headed towards the expiration of its sixth extension on July 31, both the House and Senate passed a seventh extension of the NFIP, getting the program through to Nov. 30.

“We continued to regularly meet with Hill staff to keep the legislation as a priority with the offices, and to  ensure that as the voice of our industry that we address surplus lines issues on behalf of the membership,” said Lana Parks, Legislative Committee Co-Chair and President of The Parks Group Inc. in Arlington, Texas. “Work to pass a long-term extension, with major reforms – including the Flood Insurance Market Parity and Modernization Act – this month is one of the top issues in both chambers.”

WSIA also continues to seek relief for members from Foreign Account Tax Compliance Act (FATCA) reporting, based on the fact that its application to the Surplus Lines market is unnecessary and burdensome. “Ultimately, FATCA is directed at foreign financial institutions and financial intermediaries with the intent to prevent tax evasion by U.S. citizens, U.S. residents and corporations using offshore accounts, but the original application of the law cast a wide net, including our members’ market which is not in a position to commit the type of tax evasion the law intended to curtail,” said Chaix. WSIA has asked for both legislative and regulatory relief for this unnecessary and costly burden.

Kish noted there are members of Congress who understand and support WSIA’s request to eliminate FATCA’s application to our industry. “Sen. Tim Scott (R-SC) is a former retail agent and has been vocal on the need for relief for the industry,” she said. “He continues to discuss this issue with the Treasury Department and encourage quick action by the Secretary to implement regulatory changes consistent with our request. We appreciate the senator’s support and we will continue to work with and support The Council of Insurance Agents & Brokers as they lead our coalition of interested industry members in working towards the regulatory relief.”

Unfortunately, the National Association of Registered Agents and Brokers (NARAB) has yet to become operational because a Board of Directors has still not yet been implemented. “We are pleased to hear that the Federal Insurance Office and the White House have begun efforts to review and nominate candidates for the inaugural Board,” said Kish. “We believe it is important to have representation on the Board for the surplus lines licensee, and are hopeful that the White House will soon send its nominees for the Board to the Senate Banking Committee for approval.”

Surplus Lines Compliance Guidance

Additionally, WSIA makes compliance guidance materials (50 state comparison charts) available for surplus-lines-specific topics. Currently, the following charts are on WSIA.org for members to access and download:

WSIA also sends legislative, regulatory and compliance updates regularly to members. Visit the Legislative Advocacy page of the WSIA website to signup if you don’t already receive them.

Related: E&S lines in 2018: Catching up with WSIA’s Brady Kelley

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