On June 25 and for the second time in nine months, the House unanimously passed H.R. 1065, the Nonadmitted and Reinsurance Reform Act of 2007. The bill establishes national standards on how states may regulate and tax surplus lines insurers and also sets national standards concerning the regulation of reinsurance.
With respect to nonadmitted or surplus lines insurance, the bill prohibits any state other than the home state of an insured from requiring a premium tax payment for nonadmitted insurance, subjects nonadmitted insurance solely to the regulatory requirements of the insured’s home state, and declares that only an insured’s home state may require a surplus lines broker to be licensed to conduct nonadmitted insurance business with respect to such insured. The bill also includes mechanisms designed to create uniformity among state laws with respect to the allocation of premium tax, eligibility criteria and the collection of surplus lines broker fees.
With respect to reinsurance, the bill reserves to the reinsurer’s state of domicile the sole responsibility for regulating the reinsurer’s financial solvency; moreover, it prohibits a state from denying credit for reinsurance if the domiciliary state of the insurer purchasing reinsurance recognizes credit for reinsurance. In both instances, the domiciliary state must be NAIC-accredited or have financial solvency requirements substantially similar to NAIC accreditation requirements.
The bill awaits consideration in the Senate.
Click here to view the text of H.R. 1065.