Reps. Dennis Moore (D-Kan.) and Scott Garrett (R-N.J.) recently announced their intention to reintroduce the Nonadmitted and Reinsurance Reform Act (the “NRRA”). As we previously reported here and here, the NRRA would establish national standards on how states may regulate and tax surplus lines insurers and also sets national standards concerning the regulation of reinsurance.
In particular, the NRRA would give regulators in an insured’s home state authority over most aspects of surplus lines insurance, including the right to collect and allocate premium tax with respect to policies with multi-state perils, and regulators in a reinsurer’s state of domicile would be given the sole responsibility for regulating the reinsurer's financial solvency. The NRRA would also prohibit a state from denying credit for reinsurance if the domiciliary state of the insurer purchasing reinsurance recognizes credit for reinsurance. Both reinsurance provisions require the domiciliary state to be NAIC-accredited or have financial solvency requirements substantially similar to NAIC accreditation requirements. The NRRA was passed by the House of Representatives in 2006 and 2007, but never reached the Senate floor for a vote.
The National Association of Professional Surplus Lines Offices (NAPSLO) lauded the announcement as it believes the NRRA will “make the surplus lines marketplace more efficient by facilitating the payment of surplus lines premium taxes and eliminating unnecessary duplicative compliance requirements on surplus lines multi-state risks,” as well as “provide needed uniformity and consistency in insurance regulation at the state level.”
We will update this post with a copy of the bill as soon as it is available, along with any other notable developments.