Laws & Regulations - Prior Legislation

California Legislature

A.B. 1708 (Villines)

Would require the total capital and surplus requirement of eligible surplus line insurers to be at least $45 million beginning Dec. 31, 2012. This provision may be extended to Dec. 31, 2013. With respect to insurance exchanges, the bill would require each individual syndicate to maintain capital and surplus of not less than $45 million. This bill passed out of the assembly on April 14, 2010 and is pending consideration in the senate.

A.B. 1837 (Gaines)

Would explicitly authorize admitted affiliates of California domestic insurers to provide administrative services to non-admitted affiliates and is considering amendments to the bill. The bill was approved by the Assembly Insurance Committee on April 21, 2010 and is pending consideration on the Assembly floor.

A.B. 1258 (Kehoe)

Would implement the Governor's Emergency Response Initiative (ERI). The bill would require a special purpose surcharge of 4.8% on all commercial and residential fire and multi-peril insurance policies, including policies with combined property and liability coverage, issued or renewed on or after July 1, 2010. Funds collected would go to the California Emergency Management Agency, the Department of Forestry and Fire Protection, and the Military Department. Insurers collecting the surcharge would be required to make a specified disclosure on the policy declarations page, billing statement, or a separate document accompanying the declarations page or billing statement. The Governor's office estimates that such a surcharge would generate about $238 million in the budget year and about $480 million per year thereafter. The bill was passed by the Senate Governmental Organization Committee on April 15. The bill also heard in the Senate Banking, Finance & Insurance Committee on April 21. Because the surcharge has been declared a tax and the bill does not reflect the Proposition 98 (Education) obligation it would create, the bill has little chance of enactment this year.

United States Congress

The Wall Street Reform and Consumer Protection Act of 2009 (H.R. 4173)

Is a comprehensive bill to overhaul regulations in the financial sector. It would create a new Financial Protection Agency to regulate products like home mortgages, car loans and credit cards, give the Treasury Department new authority to place non-bank financial firms, like insurance companies into receivership and regulate the over-the-counter derivatives market. The bill creates the Federal Insurance Office that would monitor all aspects of the insurance industry with an emphasis on finding gaps in regulation. The bill also includes the full text of the Nonadmitted and Reinsurance Reform Act (H.R. 2571). The bill passed the House in 2009 and is currently pending in the floor of the U.S. Senate.

The Nonadmitted and Reinsurance Reform Act (NRRA) of 2009 (H.R. 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. H.R. 2571 passed the House in 2009 and is currently pending in the Senate on Banking, Housing and Urban Affairs. S 1363 is also pending in the Senate Banking Committee where no action has been taken.

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 II" 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. On March 3, 2010, this bill passed in the House of Representatives by voice vote.

The Insurance Information Act of 2009 (H.R. 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. This bill is stalled on the House floor.

The National Insurance Consumer Protection Act (H.R. 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 statebased 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. This bill stalled when it was referred to three House committees.

Restoring American Financial Stability Act (Discussion Draft)

Was released to the public by Senator Christopher Dodd (D-CT) on November 10, 2009. The Dodd Bill includes the language of the Nonadmitted and Reinsurance Reform Act (S 1363). The bill would regulate financial institutions, their products, and includes corporate governance and executive compensation provisions that would apply to public companies. The bill includes improvements over the Shareholder Bill of Rights Act proposed by Senator Charles Schumer (D-NY), but represents a federal regulation into areas that are currently attended by state regulation. The general governance and executive compensation provisions in the bill will be under scrutiny and revision, but there is extreme pressure in the Capitol to enact legislation to reform the financial system. The bill is pending on the Senate floor.