2009 Legislation

Last Update: July 2009

California Legislature

AB 196 (Committee on Budget)

This bill establishes a 4.8 percent surcharge on all new or renewed commercial and residential fire and multiperil property insurance policies issued or renewed on or after January 1, 2010. The surcharge revenue would be deposited into an Emergency Response Fund for use for emergency activities of the California Emergency Management Agency, the Department of Forestry and Fire Protection, and the Military Department. This bill also establishes the Local Government Mutual Aid Enhancement Program to provide local agencies additional funding to enhance or sustain fire and rescue disaster mutual aid capacity to combat the effects of emergencies and disasters. Local agencies would receive 31.3 percent of revenues deposited into the Emergency Response Fund beginning July 1, 2010. AB 196 passed the Senate on June 26th with a vote of 23-13; however, the urgency clause failed passage with a vote of 23-14. The bill was granted reconsideration and is currently on the Third Reading File of the Senate and can be taken up at any time. AB 39xxx (Evans) contains the same language as AB 196 relative to the fire surcharge. This measure passed the Assembly on June 28th with a vote of 44-31. It is currently in the Senate.

AB 784 (Gaines)

This bill would provide that a nonadmitted insurer that is affiliated with a California domestic insurer shall not be deemed to be transacting insurance in California as long as all California business written by the nonadmitted insurer is transacted by and through a surplus lines broker licensed in California. The bill would also authorize a nonadmitted insurer to receive administrative services rendered in California by its California domestic insurer affiliate or any other affiliate as long as the administrative services do not relate to the placement or transaction of any California risk or constitute management of the nonadmitted insurer. The bill would also permit a nonadmitted insurer and its California domestic affiliate to have common directors and officers as long as the nonadmitted insurer maintains a resident operating manager in its home state. AB 784 is a two year bill.

United States Congress

The Nonadmitted and Reinsurance Reform Act (NRRA) of 2009 (HR 2571 & S 1363)

The Nonadmitted and Reinsurance Reform Act (NRRA) of 2009 (HR 2571 & S 1363) was introduced by Rep. Dennis Moore (D-KS) in the House and Senators Evan Bayh (D-IN), Mel Martinez (R-FL), Bill Nelson (D-FL), and Mike Crapo (R-ID) in the Senate. The NRRA would limit the compliance requirements of surplus line brokers placing multi-state risks to the laws of the home state and adopt a uniform standard for multi-state premium tax allocation via an interstate compact. The bill would also create uniformity in state eligibility standards for nonadmitted insurers and create direct access to the surplus lines market for sophisticated commercial purchasers. The legislation's reinsurance provisions include (1) the ceding insurer's domiciled state to be the sole regulatory authority for determining credit for reinsurance for the insurer's ceded risk; (2) federal preemption of a state's ability to regulate on an extraterritorial basis in certain circumstances, and (3) the reinsurer's domiciliary state to be the sole regulator of that reinsurer's financial solvency. This bill attempts to create a uniform regulatory system while preserving the role of the state regulator.

The National Association of Registered Agents and Brokers Reform Act, H.R. 2554

The National Association of Registered Agents and Brokers Reform Act, H.R. 2554, was introduced by Representatives David Scott (D-GA) and Randy Neugebauer (R-TX), along with more than 30 House colleagues. The bill would streamline the multi-state licensing process for insurance producers. The National Association of Registered Agents and Brokers Reform Act - or "NARAB" as the bill is informally called - would create an organization whose specific jurisdiction would be the oversight of producer reciprocal licensing and continuing education standards on a national level.

The Insurance Information Act of 2009 (HR 2609)

The Insurance Information Act of 2009 (HR 2609), would establish within the Department of the Treasury the Office of Insurance Information. This new office would have the authority to monitor all aspects of the insurance industry, establish Federal policy on international insurance matters, serve as a liaison between the Federal government and the several States regarding insurance matters, and serve as an advisory to the Treasury regarding the export promotion of United States insurance products and services.

The National Insurance Consumer Protection Act (HR 1880)

The National Insurance Consumer Protection Act (HR 1880), would create an optional federal charter through an Office of National Insurance. A federal charter would create a framework for a national system of state-based regulation and create uniform standards in such areas as market conduct, licensing, the filing of new products and reinsurance. California Insurance Commissioner, Steve Poizner is opposed to the federal charter legislation.