Insurance Journal reports that the House has passed a surplus lines reform bill:
The bill would establish national standards for how states regulate the surplus lines market and reinsurance and would create a uniform system of surplus lines premium tax allocation and remittance, one-state compliance on multi-state surplus lines risks, and direct access to the surplus lines market for sophisticated commercial purchasers.
Surplus lines policies tend to cover complex risks, or business of a nature that “traditional” writers operating on an admitted (generally regulated) basis are reluctant to touch.
Included in this category can be some complicated risks that may operate in multiple states, acquiring coverage through a broker that may exist in a different state, from a carrier that is domiciled in yet another state.
Given some of the vaugeness and confusion arising from conflicting provisions of surplus lines laws and licensing regulations in different states, there’s been the potential for a big mess when regulators review surplus lines writers, regulate brokers, etc.
Given the interstate nature of the mess, it’s certainly appropriate that Congress step in and attempt to clean up the mess.