Lawmakers have brought back a bill that could change states’ ability to weigh in on reinsurance arrangements.
The bill, H.R. 1065, would give a ceding insurer’s home state sole regulatory authority to determine whether a particular insurer qualified for credit for reinsurance.
The bill also would bar the extraterritorial application of state reinsurance laws and allow ceding insurers and reinsurers to resolve disputes using contractual arbitration clauses.
Other provisions would establish an insured’s home state as the primary regulator for multistate surplus lines risks and make it easier for sophisticated customers to do business with non-admitted carriers.
Reps. Dennis Moore, D-Kan., and Ginny Brown-Waite, R-Fla., are the primary sponsors of H.R. 1065.
The bill has 41 original co-sponsors including Rep. Paul Kanjorski, D-Pa., the chairman of a House Financial Services Committee subcommittee, and Rep. Spencer Bachus, R-Ala., the most senior Republican on the House Financial Services Committee.
Moore and Brown-Waite sponsored a similar bill in 2006.
The House passed the 2006 bill by a 417-0 vote, but the bill failed to surface in the Senate.
“Making the insurance market fairer and simpler benefits us all,” Moore says in a statement about H.R. 1065. “With such broad, bipartisan support in the past, I’m confident that this legislation, which is long overdue, will again receive very strong support in the House, and I hope that the Senate will join us in passing this legislation.”
At a recent event on Capitol Hill organized by the Council of Insurance Agents and Brokers, Washington, Senate Banking Committee Chairman Chris Dodd, D-Conn., said his committee would take a “good look” at H.R. 1065.
Some insurance industry groups are supporting H.R. 1065 and are supporting it as an alternative to “optional federal charter” proposals, or proposals to let companies choose between state and federal regulation.
“This consensus bill contrasts sharply with proposals such as the ‘optional’ federal charter, which is very controversial both within the industry and on Capitol Hill,” says Charles Symington, a senior vice president at the Independent Insurance Agents and Brokers of America, Alexandria, Va.
Support for the bill in the last Congress went beyond those seeking an alternative to OFC proposals, according to Joel Wood, a senior vice president at the CIAB.
“What was remarkable about this bill last year, and again this year, is that it comes as close as any meaningful legislation we’ve ever seen to attracting universal support among the stakeholders – policyholders, insurers, and, yes, even the state regulators, who have been extremely constructive in their commentary about the need for reform in this area,” Wood says.
The American Council of Life Insurers, Washington, says it sees H.R. 1065 as a complement to OFC legislation.
“H.R. 1065 would improve reinsurance regulation,” ACLI representative Jack Dolan says. “We’d like to see this bill as part of a comprehensive legislation to reform insurance regulation that would provide for an optional federal charter. But it is also important to note that while we support addressing the issues raised by the H.R. 1065 within the context of an OFC debate, the legislation would help those companies that would choose to remain state chartered under an OFC.”