Insurance agents and brokers know that placing business in the surplus lines market is a difficult but necessary process. Federal legislation has recently been re-introduced in the house to address this problem (see here, here and here). Legislation overwhelmingly (417-0) passed in the House last year, but died in the Senate. NAPSLO strongly supports this bill, and has information available on its website (see here and here).
Why is this bill important to insurance agents and brokers? Surplus lines is not as easy as it should be. Insurance agents and brokers must obtain admitted market declinations, complete affidavits that insureds don’t understand, navigate inconsistent state requirements for the payment of taxes on multi-state risks, and address inconsistent licensing requirements. This new legislation attempts to balance the needs of consumer protection with the objectives of more a streamlined process and greater access to coverage. The bill would:
- Increase availability of property casualty insurance
- Simplify and streamline the regulation of the surplus lines business
- Create a uniform system of tax allocation among states
- Allow for single state compliance on multi-state surplus lines risks
- Provide direct access to the surplus lines market for sophisticated purchasers
HR 5637 passed in the House last year 417-0 (see here) and then died in the Senate. Hopefully HR 1065 will pass the Senate as well.