Legislation designed to ease the regulatory burdens on surplus lines was approved by a House Financial Services subcommittee July 19.
The bill is likely to be taken up on the House floor in September, industry officials said.
Although the measure was approved by a voice vote with no opposition, some members argued that more work needs to be done on the bill to alleviate the concerns of the National Association of Insurance Commissioners, Kansas City, Mo., including others.
Rep. Richard Baker, R-La., the chairman of the subcommittee, said the bill “focuses on two specific sectors of the market that are, in my opinion, in need of reform.” Specifically, he said, the bill works to help streamline the surplus lines market and to protect reinsurance arbitration agreements from some state regulators, he said, adding some have been trying to apply their state’s laws extraterritorially.
Rep. Baker noted that many interested parties, including surplus lines insurers, buyers and brokers, had expressed their support for the bill and that the committee also has received input from the NAIC and “has now incorporated many of the recommendations into the bill.”
Rep. Paul Kanjorski, D-Pa., the ranking member of the subcommittee, said the bill has been put on a surprisingly fast track through the committee. “We have moved unusually fast,” to bring the bill, HR 5637, to a vote, he said.
Rep. Kanjorski thanked Rep. Baker for consulting with the NAIC, noting that committee staffers had done a great deal to incorporate their recommendations into the bill. He added, however, that more work would need to be done on the bill before it is voted on by the full committee, in such areas as due diligence and disclosure requirements and ensuring that state guaranty funds would not be weakened. “The professed intent of the bill is to streamline regulation, not deregulate surplus lines,” he said.