United Front Leads to Nonadmitted & Reinsurance Reform Says Libby Baney

For nonadmitted insurers and reinsurers, legislative passages in the Dodd-Frank Act's insurance section have a truly massive effect, BestWire Services reported in its story, "Slow and Steady Won the Race for Surplus Lines Reform."

So, the story asked, how did the industry manage to quietly get the Nonadmitted and Reinsurance Reform Act inserted into the sweeping bill and see it almost unchanged through the divisive financial reform debate? The answer: With steady pressure and time, like most Washington success stories.

The process of reforming the market for the highly specialized insurers didn't begin in the early days of 2009, when federal lawmakers sought to repair the U.S. economy, BestWire Services reported. It really goes back a decade to the days of the Gramm-Leach-Bliley Act. The surplus lines reform idea was brought to congressional staffers by frustrated industry reps, concerned with contradictory and confusing state regulatory structures.

Regulators and the industry had concluded that a state-by-state solution wasn't going to work, said B&D Consulting's Libby Baney, who had co-chaired the Surplus Lines and Reinsurance Coalition as Washington counsel for the National Association of Professional Surplus Lines Offices.

Rep. Barney Frank, chairman of the Financial Services Committee, slipped the insurance provision into a gigantic financial reform bill, the BestWire Services story reported. It was, the thinking went, an easy, low-interest piece that wasn't going to draw fire from either side. And it was slightly positive in its Congressional Budget Office score, so it couldn't be criticized as a budget drag, according to the story.

Still, getting it that far "was really a testament to the united position of the industry on this," Baney said in the story. "It was a real united front."