Federal Issues

NAPSLO closely monitors the work of federal legislators and regulators for issues that impact the surplus lines insurance industry. NAPSLO provides comments on legislation or regulations when appropriate and in the best interest of the NAPSLO membership.

Federal Definition of Private Flood Insurance

NAPSLO strongly supports revisions to the federal definition of private flood insurance and believes it is necessary to amend the current definition to ensure surplus lines insurers are eligible to offer private market solutions and alternatives to consumers in need of unique and complex flood risks.

In 2014, NAPSLO supported the Flood Insurance Modernization and Market Parity Act which was introduced by Congressmen Dennis Ross (R-FL) and Patrick Murphy (D-FL) and Senators Dean Heller (R-NV) and Jon Tester (D-MT). We are very pleased that these same members of Congress filed similar legislation in the summer of 2015 to revise the federal definition of private flood insurance. The Flood Insurance Market Parity and Modernization Act (H.R. 2901S. 1679) will provide clarity to lenders that they may accept private flood insurance solutions from the surplus lines market, just as they had prior to the Biggert-Waters Act of 2012 (BW12). Surplus lines has traditionally served as a supplemental market to the NFIP and standard market. After the passage of BW12, confusion arose in the lending industry regarding accepting private flood insurance, including surplus lines policies. 

NAPSLO has worked to relieve some of that confusion by offering NRRA-compliant language as part of the proposed revised definition. This legislation has strong support from both the insurance and banking industry and we hope it will lead to passage in Congress. In January 2016, NAPSLO testified on H.R. 2901 before the House Financial Services Subcommittee on Housing and Insurance. NAPSLO's testimony was in support of the legislation as an issue of critical importance to the Association and its members. 

On April 28, 2016 the U.S. House of Representatives passed H.R. 2901 on a 419-0 vote. The original version of the legislation was slightly amended by the House Financial Services Committee before passing 53-0 and being sent to the House for a full vote.  The revisions include retaining the disclosure requirements within current law, which apply to lenders, and improving the Government Servicing Entity (GSE) language in current law to assure no federal preemption of the state regulatory system. NAPSLO continues to strongly support this legislation because these revisions do not impact the definition of private flood insurance and specifically do not harm the surplus lines industry. The bill will now be sent to the Senate for consideration. NAPSLO remains hopeful that the legislation will be passed before the end of 2016. 

April 26, 2016  - NAPSLO letter to NAIC Property & Casualty (C) Committee regarding private flood insurance and the surplus lines market
February 26, 2016 - NAPSLO Letter of Support to House Financial Services Committee regarding H.R. 2901
February 22, 2016 - Common Misconceptions of the Surplus Lines Industry in the Debate of H.R. 2901 and S. 1679
February 22, 2016 - Surplus Lines Market Data and Statistics
January 2016 - NAPSLO Testimony before House Financial Services Subcommittee on Housing and Insurance Supporting H.R. 2901
June 2015 - NAPSLO Letter of Support to Representatives Dennis Ross and Patrick Murphy
November 19, 2014 - NAPSLO Testimony before House Financial Services Subcommittee on Insurance Supporting H.R. 4558
May 20, 2014 - NAPSLO Letter of Support to Representative Dennis Ross
December 2013 - NAPSLO Comments to Federal Regulators on Proposed Revisions to Federal Flood Insurance Regulations

Foreign Account Tax Compliance Act (FATCA)

Surplus lines brokers and insurers’ compliance obligations related to the Foreign Account Tax Compliance Act (FATCA) took effect on July 1, 2014.  NAPSLO has compiled a number of helpful resources and updates related to FATCA reporting requirements. This page provides links and information that will help you as you develop your own compliance program. To learn more about FATCA we recommend starting with our Executive Summary and Legal Memorandum linked below.

NAPSLO Issued Resources

Helpful Resources

NAPSLO closely monitors developments related to FATCA. We encourage you to reach out to us with questions or concerns that we may be able to help you with or direct you to proper resources.

NAPSLO FATCA contact: Keri Kish, Director of Government Relations, at keri@napslo.org.

Terrorism Risk Insurance Program Reauthorization Act of 2015

On January 12, 2015 the Terrorism Risk Insurance Program Reauthorization Act of 2015 was enacted, reauthorizing the program for an additional six years (12/31/2020). Although the program expired on December 31, 2014 due to lack of action by Congress, the January reauthorization allows for no gap in program coverage. Key changes to the TRIA program are that beginning January 1, 2016: 

• Federal share reduces from current 85% to 80% (by 1% per year)
• Program trigger increases from current $100M to $200M (by $20M per year) 
• Industry’s aggregate retention increases from current $27.5B to $37.5B (by $2B per year),and Treasury’s recoupment rate increases from 133% to 140% 
View a side-by-side comparison of expired TRIA program and the new Terrorism Risk Insurance Program Reauthorization Act of 2015.  

State Insurance Departments have begun issuing guidance concerning the reauthorization of TRIA. In general, the focus of the guidance regards policy filings but there may be information of interest to the surplus lines market. NAPSLO is aware that the below agencies have issued guidance:

NAIC Model Bulletin on Filing Procedures for Compliance with TRIA Program Reauthorization Act U.S. Department of Treasury issued interim guidance concerning the TRIA Program Reauthorization Act. Several states issued specific guidance as well, including:

AlabamaArizonaArkansasCaliforniaConnecticutDistrict of ColumbiaIdahoIllinoisKentuckyLouisianaMaineMassachusettsMinnesotaNew MexicoNew YorkNorth CarolinaOhioOregonRhode IslandTexasUtahVermontVirginia, and Wyoming.

One June 30, 2016 the Federal Insurance Office (FIO) released a report required by the 2015 reauthorization of the program. The report indicates that it had limited data available to review based on a voluntary data call of insurers, but nonetheless FIO found the program continues to ensure availability and affordability for terrorism coverage in the United States. Future data calls for the required annual report will be mandatory for all insurers providing coverage. Download the report here. 

National Association of Registered Agents and Brokers (NARAB II)

The National Association of Registered Agents and Brokers (NARAB II) was enacted as part of the Terrorism Risk Insurance Program Reauthorization Act of 2015. NAPSLO strongly supported the creation of NARAB II and advocated for its passage with Congress.

NARAB will streamline agent and broker licensing for those operating on a multi-state basis. It creates a nonprofit board governed by a panel of state insurance regulators and industry representatives to create rigorous standards and ethical requirements with a goal of applying licensing, continuing education and nonresident insurance producer standards on a multi-state basis. With a focus on nonresident licensing, agents or brokers applying for a national license through NARAB will first be required to hold a current license in their home state, pass a national criminal background check and meet the criteria established by the Board, which shall include standards for personal qualifications, educational training and professional experience. 

The President, with the advice and consent of the U.S. Senate, was directed to appoint the 13 Board members (8 regulators and 5 industry members) 90 days from January 12, 2015. While 10 nominations have now been put forth by the President, the nominees have not yet been confirmed by the Senate. Additional appointments are expected in the near term.  

The board must first establish the rules, requirements and procedures, as well as a national licensing clearinghouse. NARAB is not expected to become operational for a while, with most observers believing it will most likely happen in about two years. Information and resources for NARAB implementation will be posted as it develops. For additional updates about NARAB, visit NAPSLO's NARAB implementation resource

Additional Comment Letters

December 10, 2014 - Trade Association TRIA Support Letter
May 15, 2014 – NAPSLO Letter of Support for Insurance Data Protection Act
February 25, 2014 - NAPSLO Testimony before Senate Banking Committee on TRIA
June 10, 2013 – NAPSLO Comments to FIO on Natural Catastrophes and Insurance
May 17 and February 27, 2013 – NAPSLO Letters to FHFA regarding Lender Placed Insurance
September 16, 2013 – NAPSLO Comments to FIO on TRIA
March 19, 2013 – NAPSLO Testimony to Senate Banking Committee on NARAB