Risk managers see jobs ease

Risk managers’ may see their jobs ease up if a bill meant to ease regulatory burden that is placed on surplus lines insurers is passed according to a recent congressional panel discussion.
Risk & Insurance Management Society Inc. vice president Janice Ochenkowski told the House Financial Services’ Committee’s Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises that the bipartisan non-admitted and Reinsurance Reform Act of 2006 would help to rectify problems that commercial insurance buyers are “experiencing in obtaining surplus lines insurance by placing authority in the home state of the insured.”
Under the bill Bill H.R. 5637 a uniform system for regulating and taxing the surplus lines industry will be initiated by making non-admitted insurance only subject to regulation in the policyholder’s home state. This guideline is meant to eradicate the oversight that surplus lines brokers and insurers have to deal with when providing coverage across multiple jurisdictions. Ultimately, the new bill will lead to the policyholder’s home state collecting surplus lines premium taxes, while each state would decide how to allocate the tax internally.
The bill will also give “sophisticated” commercial policyholders with unique or large risks that require surplus lines coverage to bypass its, according to RIMS, prepared testimony “regulatory hurdles currently imposed by the states which add no meaningful value to the process.”
RIMS says risk managers must prove insurers have declined them on multiple occasions before the nonadmitted market is available to them.
Ochenkowski, senior vp and director of global risk management for Jones Lang LaSalle Inc., says agents and brokers are uncertain when placing surplus lines business as a result of variations between individual states in relation to premium tax allocation and remittance schedules.
Under the bill, a reinsurer’s state of domicile is the sole regulator of that reinsurance company’s solvency, but only if the state is accredited by the National Assn. of Insurance Commissioners.