Members of a U.S. House Financial Services Committee subcommittee today approved a measure that could make regulation of the reinsurance market and the property-casualty surplus lines market more uniform.
The committee’s Capital Markets, Insurance and Government Sponsored Enterprises Subcommittee passed H.R. 5637, The Nonadmitted and Reinsurance Reform Act of 2006, by a voice vote.
One provision of the bill relating to reinsurance would give the ceding insurer’s state of domicile sole regulatory authority for determining whether or not a particular insurer qualifies for credit for reinsurance, according to a summary prepared by the subcommittee staff.
Another provision would establish uniform regulation of reinsurer solvency based on accreditation standards established by the National Association of Insurance Commissioners, Kansas City, Mo.
A third provision would prevent states from applying their standards for reinsurance dispute arbitration to a ceding insurer with a domicile in another state or from requiring that a certain state’s law will govern reinsurance contract disputes.
Other provisions of H.R. 5637 would apply the laws of the insured’s home state to nonadmitted property-casualty insurance and encourage states to join compacts that would allocate the premium taxes paid in connection with surplus lines coverage.
Getting H.R. 5637 through the capital markets subcommittee is the “first significant step in our longer journey towards uniform insurance regulation,” says Rep. Richard Baker, R-La., the subcommittee chairman.
Rep. Paul Kanjorski, D-Pa., the most senior Democrat on the subcommittee, voted for the bill. He says he will not “let the perfect become the enemy of the good.”
But Kanjorski warns in a statement that “piecemeal reforms” of insurance regulation could interfere with the passage of more comprehensive legislation, and he says he would like to strengthen bill disclosure requirements and protections for state guaranty funds before the full Financial Services Committee votes on the bill.
“The professed intent of the bill is to streamline regulation, not deregulate surplus lines,” Kanjorski says.