Legislative Committee Report

Legislative Committee Report: June, 30 2021

Table of Contents

State Issues

  • Cliston Brown secured a crucial amendment to Assembly Bill 371 to ensure that surplus line brokers will be able to place commercial general liability policies to operators of shared mobility services (such as motorized scooters). Upon learning that the original version of the bill would have limited coverage to “insurers doing business in California,” which generally has been taken to mean admitted insurers, Cliston set up a meeting with the bill author’s staff and explained why it was important not to exclude surplus lines. Staffers for the author, Reginald Jones-Sawyer (D-Los Angeles), expressed gratitude for Cliston educating them on the role and reach of surplus lines market, and they saw to it that the bill was amended on the Assembly floor to ensure surplus lines brokers could place this business. The SLA, at staff’s request, submitted a letter of support for the bill as amended, and it is now in the State Senate.
  • In other important news at the state level, Insurance Commissioner Ricardo Lara announced in May that he will seek a second term in 2022. Lara, a former state senator, has long been rumored to be very interested in running for Congress, but no districts in his area appear to be opening up in time for the 2022 elections. The fact that California, for the first time in its history, will lose a U.S. House seat also complicates matters for anyone who would like to seek a seat in Congress at this time. Between the loss of a seat and the decennial redistricting, at least one Congressional race is likely to have two incumbent members of Congress running against each other, barring any retirements.
  • Assembly Bill 1393, sponsored by WSIA, would resolve a conflict in state law that simultaneously requires workers compensation coverage in homeowners policies for domestic employees but blocks surplus lines insurers from issuing workers compensation coverage. Assembly Insurance Committee staff attempted to solve this issue in 2020 but withdrew the language after the California Department of Insurance (CDI) strongly objected. In cooperation with CIWA, WSIA has sought input from the SLA and has been trying to convince the CDI not to oppose the bill, which will not move forward unless the CDI consents.
  • Assembly Bill 743, which would do an end run around contractual language excluding business interruption coverage for viruses or pandemics, appears to be going nowhere. The author, Assembly Member James Ramos (D-Highland), introduced a similar bill in 2020 but withdrew it before it could be heard by the Senate Insurance Committee. Because it is an emergency bill, which requires a 2/3 majority in the legislature, it is unlikely to pass. Similar bills have been introduced in numerous states since the onset of the pandemic, and none have passed thus far.

Federal Issues

  • WSIA and allies are working to find members for the National Association of Registered Agents and Brokers (NARAB) board, whose 13 seats have gone unfilled since NARAB was created in 2015.
    • This association would allow brokers to obtain state-level licenses through a single federal agency, but it cannot begin operations until at least a majority of the seats on the board are filled.
    • President Obama nominated a slate of appointees, but none were approved by the Senate before his term expired, and President Trump did not make any nominations to the board.
    • The board is to include eight insurance commissioners and five industry representatives, three of whom are to come from the property/casualty side, and two from the life/health side. While all Obama nominees reportedly are willing to be considered again, many of the commissioners who were nominated six or seven years ago are no longer in office. The NAIC has taken the lead in lining up commissioners, but there is some concern among the associations that it is not moving very expeditiously.
    • Cliston Brown has been in contact with both WSIA and the Council of Insurance Agents and Brokers (CIAB), and has been invited by Joel Wood of CIAB to participate in the process.
    • As part of the SLA-sponsored Assembly Bill 1641, which was enacted by the California legislature and signed into law Governor Jerry Brown in 2017, brokers who obtain California surplus lines licenses through NARAB will be deemed to be SLA members, the same as licensees who obtain those licenses via the traditional, state-level process.
  • H.R. 1996, the Secure and Fair Enforcement (SAFE) Banking Act, passed the House on April 19, and the legislation is under consideration by the Senate Banking Committee. The bill would provide a safe harbor for financial services companies providing services to cannabis operations in states where they are legal.
  • Attempts to move legislation known as the Pandemic Risk Insurance Act hit a speed bump when the legislation’s leading supporter, Congressman Steve Stivers (R-Ohio) announced he would resign from Congress to become head of the Ohio Chamber of Commerce. WSIA is trying to find another lead sponsor.
  • The SLA has learned that Chairwoman Maxine Waters of the House Financial Services Committee has circulated a discussion draft of a bill that would reauthorize the National Flood Insurance Program. The SLA is collaborating with WSIA on communicating with her and her staff, in hopes of ensuring that federal flood reform will include a provision specifically allowing surplus line carriers to issue private flood policies.

Legislative Committee Roster

Mr. Hank Haldeman – Legislative Chair
Worldwide Programs

Mr. John Baran
Worldwide Facilities, LLC

Mr. Tim Burnett
Burns & Wilcox Insurance Services, Inc.

Mr. Tim Conlon
Industria Risk & Insurance Services

Mr. Rupert Hall
M.J. Hall and Company, Inc.

Mr. Paul Laufer
Gorst & Compass Insurance

Mr. Tony Manzitto
Guy Carpenter

Mr. John Mundelius
Union General Insurance Services

Mr. Peter Scott
CRC Insurance Services, Inc.

Mr. Gerald Sullivan
G.J. Sullivan, Co., Reinsurance

Mr. Benjamin McKay, JD, MPA – Staff Liaison
The Surplus Line Association of California

Mr. Cliston Brown – Staff Liaison
The Surplus Line Association of California