SLA Fighting to Ensure Quality Legislation
As of the last newsletter there were five bills which directly affected the surplus line market. In the span of time since the last newsletter was issued, two of those bills (SB 958--requiring submission of automotive policies to CAARP prior to going to the non-admitted market; and SB 75 1--which proposed to make significant changes to broker liability) have been put on a two year track (i.e. they have been suspended and will be reviewed in 1994). Therefore these bills will have no impact this year.
Because of the, deliberations related to the California Budget and the debates about workers compensation, little attention has been devoted by California legislators on other matters and that includes the remaining three surplus line bills (SB 959--White List, SB 625-Direct Placement Tax, and AB 865--Codification of Surplus Line Advisory Organization). There have been no real substantive changes to any of these bills. Each bill has passed out if its house of origin.
However, with the passing of the state budget a few weeks ago, serious discussions have begun once more in relation to SB 959. The SLA is continuing to push for the addition of an industrial insured exemption to this bill. The purpose of the exemption would be to exclude large sophisticated buyers of insurance from certain surplus line requirements in the code.
With regard to AB 865, the Surplus Line Coalition is continuing their negotiations with senior members of the DOI and interested legislators. The next hurdle for this bill is the Senate Insurance Committee. This bill authorizes the establishment of a "surplus line advisory organization" to assist the Insurance Commissioner With certain aspects of the regulation of surplus line insurance.
The Franchise Tax Board is currently reviewing the technical requirements of SB 625, the tax on direct placements. It is anticipated that they will have formulated their recommendations in regard to this bill by the time this newsletter is sent. I will update you in the next issue.
The SLA is actively working with all responsible parties in Sacramento to ensure that the legislation being considered takes into account the realities of the surplus line market. While this process is time consuming and, at times, difficult, it is necessary if the integrity and stability of the surplus line market is to be maintained for California's insurance consumers and the providers of surplus line insurance.