National Association of Insurance Commissioners (NAIC) Surplus Lines Requirements Subgroup to Research Potential System for Brokers to Determine Insurer Eligiblity in Specific Jurisdictions

Mar 8, 2013


The Surplus Lines Requirements Subgroup (“Subgroup”) of the National Association of Insurance Commissioners (“NAIC”) Surplus Lines Task Force held a March 7, 2013 teleconference during which it was resolved that NAIC staff members would research the feasibility of creating a grid or other mechanism similar to the NAIC’s International Insurers Department (“IID”) listing that would allow brokers to query an insurer’s eligibility in specific jurisdictions.

The Subgroup was formed to develop recommendations for states regarding uniform nonadmitted insurer eligibility requirements.  The requirement for uniform standards is mandated by the Nonadmitted and Reinsurance Reform Act of 2010 (“NRRA”)

Opening the meeting, Subgroup Chair Cindy Donovan of Indiana indicated her desire to present recommendations to the Surplus Lines Task Force at the NAIC Spring Meeting scheduled for April 6 -9 in Houston, Texas.

Pamela Young, Associate General Counsel and Director Surplus/Specialty Lines & Producer Relations for the American Insurance Association (“AIA”), provided an overview of the joint comments of the AIA and Property Casualty Insurers Association of America (“PCIAA”) which include basic guidelines and a suggested process. 

The basic guidelines include:

  • A state’s authority to impose eligibility criteria exists when that state is the home state of the insured.
  • The criteria that may be required to determine the eligibility of a foreign surplus lines insurer are: (i) minimum capital and surplus and (ii) the authority of that nonadmitted insurer to write the business in its state of domicile.
  • Trust funds and/or other deposits cannot be required as a condition of eligibility.
  • Business Written Reports, Premium Tax Reports or similar requests for information by a state can no longer be required as part of the package that an insurer must file on an annual basis to retain its status as an eligible insurer.
  • Alternative listings requiring additional criteria, even voluntary submissions, should not co-exist with the eligibility mandates of Section 524 of the NRRA.
  • To ensure a comprehensive compliance with the NRRA, a state must make every effort to review its laws and regulations and make the necessary deletions and/or amendments to ensure complete compliance with Section 524 of the NRRA.

The recommended process suggested that states should use resources already in place to access information necessary to confirm that an insurer meets the requisite minimum and surplus and has the authority to write the target lines of business in its state of domicile.  This would include the use of the NAIC’s I-Site (Internet-State Interface Technology Enhancement), a tool available only to regulators containing substantial financial information about insurers.  Uniform implementation of the guidelines and process would allow states to confirm insurer eligibility and ensure compliance with state and federal law.

In response to Ms. Young’s remarks, a regulator from California on the call commented that California maintains a voluntary eligibility list of insurers that provide more information than is required by the NRRA.  He indicated that insurers not on the voluntary list could still write if they were in compliance, but the surplus lines broker must ensure that compliance. 

The California regulator also believed that the NRRA and the applicable provisions of the NAIC Non-Admitted Insurers Model Act authorize states to establish their own minimum and capital and surplus requirements for surplus lines insurers.  This was agreed to by a regulator on the call from New York.

There was further discussion regarding the use of I-Site by regulators in determining  insurer eligibility and it was pointed out that such a site would not be available to surplus lines brokers burdened with the obligation to ensure an insurer is eligible.

The Chair then asked NAIC staff to research the feasibility of creating a grid or similar mechanism; similar to the NAIC’s IID listing that would allow brokers to query an insurer’s eligibility in specific jurisdictions.

The next Subgroup conference call was scheduled for 2:00 p.m. ET, March 21, 2013, to continue the discussion.  The meeting was then adjourned.


Should you have any questions or comments, please contact Colodny Fass& Webb.



Click here to follow Colodny Fass& Webb on Twitter (@CFTLAWcom)



To unsubscribe from this newsletter, please send an email to Brooke Ellis at