Insurers and investors of all stripes are having their day in the sun this summer with action on major legislation, including the streamlining of specialty and reinsurance regulations.
The House Financial Services Committee approved a bill that would apply single-state regulation and uniform standards to surplus lines–specialized risks not normally covered by standard property/casualty insurance–and reinsurance lines. The legislation, H.R. 5637, would allow these insurers to avoid running through the multiple hoops of state laws to enter into contracts with their customers, usually large commercial entities.
For example, the bill would give the ceding reinsurer’s state the sole authority to govern reinsurance contracts and would also prohibit states from applying their laws in an extraterritorial manner. It would provide uniform regulation of reinsurer solvency based upon National Association of Insurance Commissioner (NAIC) accreditation standards.
The Senate has also toyed with insurance reform, but has taken less action. Its bill, S.2509, would create an optional federal charter for U.S. insurers and was introduced in the spring by Senators John E. Sununu (R-New Hampshire) and Tim Johnson (D-South Dakota), and was given a hearing in June. Independent insurance agents and various state organizations oppose the bill while larger multinational insurers and other interests frustrated by a hodgepodge of state laws governing licensing and insurance contracts embrace it.
In another insurance-related development, The Pension Protection Act makes permanent 2001′s Economic Growth and Tax Relief Reconciliation Act, makes annuities increasingly available through employer-sponsored plans, allows long-term care to be combined with annuities and permits employers to automatically enroll employees in company-sponsored plans to increase pension plan coverage, all a boon for the U.S. life insurance industry.–Elizabeth Festa