Industry Issues | Surplus Lines Reform

NAIC Surplus Lines Task Force and Working Group Meetings, Teleconference – Report

NAIC Surplus Lines (C) Task Force & Surplus Lines (C) Working Group

The NAIC Surplus Lines Task Force did not meet during the recent fall 2017 NAIC National Meeting in Honolulu. The Task Force did meet on November 28, 2017, via teleconference.

During November 28, meeting, the Task Force adopted the minutes from its meeting on August 6, as part of the summer 2017 NAIC national meeting. The members additionally received and adopted a report from its Surplus Lines Working Group. 

The Working Group reported that on November 14, a draft rewrite of the IID Plan of Operation (Plan) was exposed, and other background materials were made available, including a copy of the February 2012 Plan and a revision-marked up copy of the draft rewrite of the Plan. NAIC staff provided a summary of the key changes made within the draft rewrite. Among those highlighted: 1) a new background and introduction section; 2) a timeline for application submissions; 3) the removal of a limitation for surplus lines trust account required minimum amounts; 4) new processes for appealing decisions related to trust fund amounts and reconsiderations of rejection and de-listing decisions; 5) a section regarding efforts to hold information as confidential; and 6) a new section describing a process for amending the Plan.

Lloyds of America, PCI and other interested parties raise some question related to the relationship between the International Insurers Department (IID) and the Working Group. NAIC staff reaffirmed that the Working Group remains ultimately responsible for all decisions affecting the listing of companies and the IID's operations, and any objection or de-listing recommendation by IID staff must garner the final approval of the regulators of the Working Group.

The Plan draft rewrite is currently exposed for comment during a 45-day period ending December 29, 2017. The draft Plan is available under the Exposure Draft tab on the Surplus Lines (C) Working Group webpage:  http://www.naic.org/cmte_c_surplus_lines_wg.htm

Also during the November 28, Task Force call, the members received an update from the Nonadmitted A&H/Disability Drafting Group that has compiled a summary of State responses to an Accident and Health survey -  A&H Survey Summary. Lastly, the Task Force heard an update on the Flood Insurance Market Parity and Modernization Act (H.R. 1422/S. 563), and a discussion on the future collection processes of U.S. exposure related to the federal Terrorism Risk Insurance Act (TRIA). On Nov. 14, the House passed H.R. 2874, a National Flood Insurance Program (NFIP) reform and reauthorization bill by a vote of 237-189. A NFIP short-term extension is set to expire December 8. The Senate timeline for flood action remains unclear.