Baker Subcommittee Approves Brown-Waite’s Insurance Legislation
July 21, 2006
During a mark up session this week, the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, chaired by Rep. Richard H. Baker (LA), approved H.R. 5637 by voice vote. The Nonadmitted and Reinsurance Reform Act of 2006, introduced by Reps. Ginny Brown-Waite (FL) and Dennis Moore (KS) on June 19, would improve and streamline the regulation of non-admitted insurance and reinsurance.
Rep. Brown-Waite said, “As I noted in today’s bipartisan markup, non-admitted insurance reform is a pro-consumer piece of legislation. H.R. 5637 makes it clear that the state where the policyholder resides should be the entity that is in charge of regulation. Simplifying and streamlining the insurance market will bring savings to consumers and companies doing business across state lines. I thank Chairman Baker and Chairman Oxley for marking up my legislation and look forward to seeing it on the House floor in the near future.”
H.R. 5637 would apply single-state regulation and uniform standards to the non-admitted insurance and reinsurance marketplace. The legislation would:
- give sole regulatory and enforcement authority to the insured’s home state for
the placement of non-admitted insurance and create a uniform system for the collection
and allocation of premium tax obligations related to non-admitted insurance;
- streamline eligibility requirements for non-admitted insurers and allow sophisticated
commercial purchasers to directly access the surplus lines market;
- for reinsurance, give the ceding insurer’s state of domicile sole regulatory authority
for determining whether or not a particular insurer qualifies for credit for reinsurance;
- prohibit states from applying their laws in an extra-territorial manner; and
- provide uniform regulation of reinsurer solvency based upon NAIC accreditation standards.
Non-admitted insurance and reinsurance providers encounter several regulation problems, including: extra-territorial application of state law, different licensing requirements that discriminate against non-resident brokers, and archaic state declination rules that are denying sophisticated entities direct access to the surplus lines markets.
Capital Markets Subcommittee Chairman Baker said, “I want to congratulate Congresswoman Ginny Brown-Waite for her leadership on this issue. While we work to forge a consensus on comprehensive regulatory reform, we must also try to move forward on those areas of incremental reform, like surplus lines, where we have general agreement. This modest but important improvement will remove unnecessary burdens in the marketplace and move us toward greater efficiency that benefits both providers and consumers.”
Financial Services Committee Chairman Michael G. Oxley (OH) said, “This targeted legislation reforms and revises insurance regulations that are inhibiting growth and limiting consumer access to the surplus lines markets. It also provides for greater regulatory certainty for reinsurance contracts and eliminates extraterritorial application of state law. These targeted reforms will make the nation’s insurance markets more efficient and effective, which in turn will provide more choices for consumers.”
A manager’s amendment offered by Subcommittee Chairman Baker and approved by voice vote would make technical changes.