BAKER SUBCOMMITTEE APPROVES BROWN-WAITE'S INSURANCE LEGISLATION
Washington, D.C.,
Jul 19 -
Today, during a mark up
session, 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.
Rep. Moore said, “I am
pleased that the committee is addressing the problem of conflicting and
inefficient state laws in the areas of non-admitted insurance and
reinsurance. I am proud to join my colleagues in supporting this
important legislation and appreciate the hard work of Congresswoman Brown-Waite
in helping to move this legislation forward with broad, bipartisan
support. This bill is an important first step in reforming the
system of insurance regulation in this country, and I look forward to its
passage on the House floor.”
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.