AAMGA Reports on NAIC Fall 2009 Surplus Lines Task Force Meeting

The National Association of Insurance Commissioners’ (“NAIC”) Surplus Lines Task Force met on Wednesday, September 23, during the NAIC Fall 2009 National Meeting. 

The meeting summary reprinted below has been provided through the courtesy of Bernd G. Heinze, Esq., Executive Director of the American Association of Managing General Agents (“AAMGA”).

Meeting materials include:

• Agenda
  
• Multi-State Surplus Lines Premium Tax Working Group Conference Calls Summary
  
• 2010 Proposed Charges

 

Should you have any questions or comments, please contact Colodny Fass.

 

NAIC Surplus Lines Task Force September 23 Meeting Summary

The following is a summary of the matters discussed and actions taken during the NAIC’s Surplus Lines (C) Task Force meeting held on Wednesday, September 23, 2009.

 

NRRA

Task Force Chair, Commissioner James Donelan of Louisiana, called on NAIC staff to provide an update on the Non-Admitted & Reinsurance Reform Act of 2009 (NRRA) and its passage in the US House of Representatives. While in favor of the Senate’s passage of the surplus lines provisions of the legislation, the NAIC remains opposed to the reinsurance provisions. While not specific on the current objections, it was noted that staff are working with the NAIC’s Reinsurance Task Force to draft language that will be offered as amendments to the wording. None of those efforts will impact the surplus lines wording. In speaking with our colleagues from the CIAB, Big I, RIMS, PIA and the surplus lines/stamping offices at the meeting, all remain fully in support of the Bill. We are coordinating activities to lobby the Bill in the Senate. I have arranged a meeting with Senator Dodd’s senior staffer on the Senate Banking, Housing and Urban Affairs Committee for another push in November. In the event the reinsurance amendments become a stumbling block, I will recommend we advocate a segregation of the Bill in the Senate to include passage of the surplus lines provisions either independently or in conjunction with Senator Dodd’s desire for an omnibus Bill, and allow the reinsurance provisions to be dealt with separately at a later time.

 

Nonresident Producer Licensing

An update was provided on the status of survey responses received to date on the Task Force inquiries on producer licensing of nonresident surplus lines writers. The effort is being led by Cindy Donovan of the Indiana DOI. Jim Roe and I have been in contact with her and, while she was unable to attend this meeting due to state imposed budget constraints on travel, she did provide a written summary of the initiative. The survey is separated into two questions, one for regulators (#1) and the other (#2) for both regulators and the industry.

The question addressed to us is to “describe any alternative methods for states to identify and collect premium taxes for multi-state exposures that would not require nonresident producer licensing.”

We will put this on the agenda for the October Conference Call of the Governmental Affairs Committee to discuss further. In the meantime, kindly give this inquiry your attention and let’s start circulating some ideas on the best response to provide on behalf of the AAMGA members. You’ll see on the attachment the responses provided by several states, NAPSLO, ELANY, SLOT, PIA and others. SLIMPACT has been offered as an alternative, as have proposals from the NARAB II Working Group, whose meeting I also attended. Commissioner Donelan implored all state regulators to submit a reply. AAMGA will do so as well.

Toward the end of the meeting, Commissioner Donelan noted that the legislation, in its present form, does not provide guidance into how Congress believes the provisions should be implemented or the goals achieved. From the onset of our being involved in the drafting of this legislation, there was never a legislative intent to provide the states with that type of information.

Representative Richard Baker, who was the original sponsor of the Bill and who has now retired from Congress, had always expected the states would enact enabling legislation. The effort by Congress was merely to remove the extra-territorial provisions and provide for the states to give reciprocity in recognizing one another’s provisions toward creating a more uniform system with less forms, fees and compliance costs.

 

Surplus Lines Premium Tax Working Group

The Working Group has held 2 conference calls since the June NAIC meeting. This effort is also being led by Ms. Donovan.

A separate survey is being conducted on the topic in an effort to develop a universal form for filing that automatically pre-fills state tax percentages on the Excel Spreadsheet under development. Another conference call will be held in 2 weeks. If the new spreadsheet is adopted, it may lead to changes in Stamping Office procedures. This issue “will be a top priority for this Task Force in 2010,” as noted by Commissioner Donelan. We will be able to ask him more about this at the Fall Meeting (which, by the way, I trust you have all well considered attending. There is still time to register. The dates are November 12-14, 2009 at the Marco Island Marriott. Click here for the brochure:  http://www.aamga.org/files/fallmtg/fallmtg09/AAMGA_2009FallMeetingBrochure.pdf; here for the registration form: http://www.aamga.org/files/fallmtg/fallmtg09/AAMGA2009FallMeeting_RegForm.pdf; and here for the on-line registration: http://events.aamga.org/core/events/events.aspx. More information about the Hotel can be found here: http://www.marcoislandmarriott.com/).

 

Task Force Charges for 2010

The Task Force adopted the following charges for the coming year:

1. Maintain the IID Plan of Operation and its requirements relating to standards for inclusion on the NAIC’s Quarterly Listing of Alien Insurers
2. Provide NAIC/IID financial staff guidance and expertise relative to regulatory policy and practices
3. Perform financial analysis of the surplus lines market utilizing the NAIC Financial Data Repository and other sources in order to prepare a regulator report
4. Consider a uniform method of allocating and/or reporting surplus lines and independently procures insurance premium tax on multi-state risks and other surplus lines issues.

 

SLIMPACT

Commissioner Donelan asked all regulators to respond with comments to the current version of the compact. Recommendations will also be made by industry to the Task Force on whether SLIMPACT can provide the implementing back-office for the NRRA once it has been passed. I expect more will be discussed at the December NAIC meeting.

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