111TH CONGRESS 

1ST SESSION H. R. 2571 

AN ACT 

To streamline the regulation of nonadmitted insurance and 

reinsurance, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 
2 

•HR 2571 EH

1 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 

2 (a) SHORT TITLE.—This Act may be cited as the 

3 ‘‘Nonadmitted and Reinsurance Reform Act of 2009’’. 

4 (b) TABLE OF CONTENTS.—The table of contents for 

5 this Act is as follows: 

Sec. 1. Short title and table of contents. 

Sec. 2. Effective date. 

TITLE I—NONADMITTED INSURANCE 

Sec. 101. Reporting, payment, and allocation of premium taxes. 

Sec. 102. Regulation of nonadmitted insurance by insured’s home State. 

Sec. 103. Participation in national producer database. 

Sec. 104. Uniform standards for surplus lines eligibility. 

Sec. 105. Streamlined application for commercial purchasers. 

Sec. 106. GAO study of nonadmitted insurance market. 

Sec. 107. Definitions. 

TITLE II—REINSURANCE 

Sec. 201. Regulation of credit for reinsurance and reinsurance agreements. 

Sec. 202. Regulation of reinsurer solvency. 

Sec. 203. Definitions. 

TITLE III—RULE OF CONSTRUCTION 

Sec. 301. Rule of construction. 

Sec. 302. Severability. 

6 SEC. 2. EFFECTIVE DATE. 

7 Except as otherwise specifically provided in this Act, 

8 this Act shall take effect upon the expiration of the 12- 

9 month period beginning on the date of the enactment of 

10 this Act. 
3 

•HR 2571 EH

1 TITLE I—NONADMITTED 

2 INSURANCE 

3 SEC. 101. REPORTING, PAYMENT, AND ALLOCATION OF 

4 PREMIUM TAXES. 

5 (a) HOME STATE’S EXCLUSIVE AUTHORITY.—No 

6 State other than the home State of an insured may require 

7 any premium tax payment for nonadmitted insurance. 

8 (b) ALLOCATION OF NONADMITTED PREMIUM

9 TAXES.— 

10 (1) IN GENERAL.—The States may enter into a 

11 compact or otherwise establish procedures to allocate 

12 among the States the premium taxes paid to an in13 sured’s home State described in subsection (a). 

14 (2) EFFECTIVE DATE.—Except as expressly 

15 otherwise provided in such compact or other proce16 dures, any such compact or other procedures— 

17 (A) if adopted on or before the expiration 

18 of the 330-day period that begins on the date 

19 of the enactment of this Act, shall apply to any 

20 premium taxes that, on or after such date of 

21 enactment, are required to be paid to any State 

22 that is subject to such compact or procedures; 

23 and 

24 (B) if adopted after the expiration of such 

25 330-day period, shall apply to any premium 
4 

•HR 2571 EH

1 taxes that, on or after January 1 of the first 

2 calendar year that begins after the expiration of 

3 such 330-day period, are required to be paid to 

4 any State that is subject to such compact or 

5 procedures. 

6 (3) REPORT.—Upon the expiration of the 330- 

7 day period referred to in paragraph (2), the NAIC 

8 may submit a report to the Committee on Financial 

9 Services and Committee on the Judiciary of the 

10 House of Representatives and the Committee on 

11 Banking, Housing, and Urban Affairs of the Senate 

12 identifying and describing any compact or other pro13 cedures for allocation among the States of premium 

14 taxes that have been adopted during such period by 

15 any States. 

16 (4) NATIONWIDE SYSTEM.—The Congress in17 tends that each State adopt nationwide uniform re18 quirements, forms, and procedures, such as an inter19 state compact, that provides for the reporting, pay20 ment, collection, and allocation of premium taxes for 

21 nonadmitted insurance consistent with this section. 

22 (c) ALLOCATION BASED ON TAX ALLOCATION RE23 PORT.—To facilitate the payment of premium taxes 

24 among the States, an insured’s home State may require 

25 surplus lines brokers and insureds who have independently 
5 

•HR 2571 EH

1 procured insurance to annually file tax allocation reports 

2 with the insured’s home State detailing the portion of the 

3 nonadmitted insurance policy premium or premiums at4 tributable to properties, risks or exposures located in each 

5 State. The filing of a nonadmitted insurance tax allocation 

6 report and the payment of tax may be made by a person 

7 authorized by the insured to act as its agent. 

8 SEC. 102. REGULATION OF NONADMITTED INSURANCE BY 

9 INSURED’S HOME STATE. 

10 (a) HOME STATE AUTHORITY.—Except as otherwise 

11 provided in this section, the placement of nonadmitted in12 surance shall be subject to the statutory and regulatory 

13 requirements solely of the insured’s home State. 

14 (b) BROKER LICENSING.—No State other than an in15 sured’s home State may require a surplus lines broker to 

16 be licensed in order to sell, solicit, or negotiate non17 admitted insurance with respect to such insured. 

18 (c) ENFORCEMENT PROVISION.—With respect to sec19 tion 101 and subsections (a) and (b) of this section, any 

20 law, regulation, provision, or action of any State that ap21 plies or purports to apply to nonadmitted insurance sold 

22 to, solicited by, or negotiated with an insured whose home 

23 State is another State shall be preempted with respect to 

24 such application. 
6 

•HR 2571 EH

1 (d) WORKERS’ COMPENSATION EXCEPTION.—This 

2 section may not be construed to preempt any State law, 

3 rule, or regulation that restricts the placement of workers’ 

4 compensation insurance or excess insurance for self-fund5 ed workers’ compensation plans with a nonadmitted in6 surer. 

7 SEC. 103. PARTICIPATION IN NATIONAL PRODUCER DATA8 BASE. 

9 After the expiration of the 2-year period beginning 

10 on the date of the enactment of this Act, a State may 

11 not collect any fees relating to licensing of an individual 

12 or entity as a surplus lines broker in the State unless the 

13 State has in effect at such time laws or regulations that 

14 provide for participation by the State in the national in15 surance producer database of the NAIC, or any other 

16 equivalent uniform national database, for the licensure of 

17 surplus lines brokers and the renewal of such licenses. 

18 SEC. 104. UNIFORM STANDARDS FOR SURPLUS LINES ELI19 GIBILITY. 

20 A State may not— 

21 (1) impose eligibility requirements on, or other22 wise establish eligibility criteria for, nonadmitted in23 surers domiciled in a United States jurisdiction, ex24 cept in conformance with such requirements and cri25 teria in sections 5A(2) and 5C(2)(a) of the Non-Ad-
7 

•HR 2571 EH

1 mitted Insurance Model Act, unless the State has 

2 adopted nationwide uniform requirements, forms, 

3 and procedures developed in accordance with section 

4 101(b) of this Act that include alternative nation5 wide uniform eligibility requirements; and 

6 (2) prohibit a surplus lines broker from placing 

7 nonadmitted insurance with, or procuring non8 admitted insurance from, a nonadmitted insurer 

9 domiciled outside the United States that is listed on 

10 the Quarterly Listing of Alien Insurers maintained 

11 by the International Insurers Department of the 

12 NAIC. 

13 SEC. 105. STREAMLINED APPLICATION FOR COMMERCIAL 

14 PURCHASERS. 

15 A surplus lines broker seeking to procure or place 

16 nonadmitted insurance in a State for an exempt commer17 cial purchaser shall not be required to satisfy any State 

18 requirement to make a due diligence search to determine 

19 whether the full amount or type of insurance sought by 

20 such exempt commercial purchaser can be obtained from 

21 admitted insurers if— 

22 (1) the broker procuring or placing the surplus 

23 lines insurance has disclosed to the exempt commer24 cial purchaser that such insurance may or may not 

25 be available from the admitted market that may pro-
8 

•HR 2571 EH

1 vide greater protection with more regulatory over2 sight; and 

3 (2) the exempt commercial purchaser has sub4 sequently requested in writing the broker to procure 

5 or place such insurance from a nonadmitted insurer. 

6 SEC. 106. GAO STUDY OF NONADMITTED INSURANCE MAR7 KET. 

8 (a) IN GENERAL.—The Comptroller General of the 

9 United States shall conduct a study of the nonadmitted 

10 insurance market to determine the effect of the enactment 

11 of this title on the size and market share of the non12 admitted insurance market for providing coverage typi13 cally provided by the admitted insurance market. 

14 (b) CONTENTS.—The study shall determine and ana15 lyze— 

16 (1) the change in the size and market share of 

17 the nonadmitted insurance market and in the num18 ber of insurance companies and insurance holding 

19 companies providing such business in the 18-month 

20 period that begins upon the effective date of this 

21 Act; 

22 (2) the extent to which insurance coverage typi23 cally provided by the admitted insurance market has 

24 shifted to the nonadmitted insurance market; 
9 

•HR 2571 EH

1 (3) the consequences of any change in the size 

2 and market share of the nonadmitted insurance 

3 market, including differences in the price and avail4 ability of coverage available in both the admitted 

5 and nonadmitted insurance markets; 

6 (4) the extent to which insurance companies 

7 and insurance holding companies that provide both 

8 admitted and nonadmitted insurance have experi9 enced shifts in the volume of business between ad10 mitted and nonadmitted insurance; and 

11 (5) the extent to which there has been a change 

12 in the number of individuals who have nonadmitted 

13 insurance policies, the type of coverage provided 

14 under such policies, and whether such coverage is 

15 available in the admitted insurance market. 

16 (c) CONSULTATION WITH NAIC.—In conducting the 

17 study under this section, the Comptroller General shall 

18 consult with the NAIC. 

19 (d) REPORT.—The Comptroller General shall com20 plete the study under this section and submit a report to 

21 the Committee on Financial Services of the House of Rep22 resentatives and the Committee on Banking, Housing, and 

23 Urban Affairs of the Senate regarding the findings of the 

24 study not later than 30 months after the effective date 

25 of this Act. 
10 

•HR 2571 EH

1 SEC. 107. DEFINITIONS. 

2 For purposes of this title, the following definitions 

3 shall apply: 

4 (1) ADMITTED INSURER.—The term ‘‘admitted 

5 insurer’’ means, with respect to a State, an insurer 

6 licensed to engage in the business of insurance in 

7 such State. 

8 (2) AFFILIATE.—The term ‘‘affiliate’’ means, 

9 with respect to an insured, any entity that controls, 

10 is controlled by, or is under common control with the 

11 insured. 

12 (3) AFFILIATED GROUP.—The term ‘‘affiliated 

13 group’’ means any group of entities that are all af14 filiated. 

15 (4) CONTROL.—An entity has ‘‘control’’ over 

16 another entity if— 

17 (A) the entity directly or indirectly or act18 ing through one or more other persons owns, 

19 controls or has the power to vote 25 percent or 

20 more of any class of voting securities of the 

21 other entity; or 

22 (B) the entity controls in any manner the 

23 election of a majority of the directors or trust24 ees of the other entity. 

25 (5) EXEMPT COMMERCIAL PURCHASER.—The 

26 term ‘‘exempt commercial purchaser’’ means any 
11 

•HR 2571 EH

1 person purchasing commercial insurance that, at the 

2 time of placement, meets the following requirements: 

3 (A) The person employs or retains a quali4 fied risk manager to negotiate insurance cov5 erage. 

6 (B) The person has paid aggregate nation7 wide commercial property and casualty insur8 ance premiums in excess of $100,000 in the im9 mediately preceding 12 months. 

10 (C)(i) The person meets at least one of the 

11 following criteria: 

12 (I) The person possesses a net worth 

13 in excess of $20,000,000, as such amount 

14 is adjusted pursuant to clause (ii). 

15 (II) The person generates annual rev16 enues in excess of $50,000,000, as such 

17 amount is adjusted pursuant to clause (ii). 

18 (III) The person employs more than 

19 500 full time or full time equivalent em20 ployees per individual insured or is a mem21 ber of an affiliated group employing more 

22 than 1,000 employees in the aggregate. 

23 (IV) The person is a not-for-profit or24 ganization or public entity generating an25 nual budgeted expenditures of at least 
12 

•HR 2571 EH

1 $30,000,000, as such amount is adjusted 

2 pursuant to clause (ii). 

3 (V) The person is a municipality with 

4 a population in excess of 50,000 persons. 

5 (ii) Effective on the fifth January 1 occur6 ring after the date of the enactment of this Act 

7 and each fifth January 1 occurring thereafter, 

8 the amounts in subclauses (I), (II), and (IV) of 

9 clause (i) shall be adjusted to reflect the per10 centage change for such five-year period in the 

11 Consumer Price Index for All Urban Con12 sumers published by the Bureau of Labor Sta13 tistics of the Department of Labor. 

14 (6) HOME STATE.— 

15 (A) IN GENERAL.—Except as provided in 

16 subparagraph (B), the term ‘‘home State’’ 

17 means, with respect to an insured— 

18 (i) the State in which an insured 

19 maintains its principal place of business or, 

20 in the case of an individual, the individ21 ual’s principal residence; or 

22 (ii) if 100 percent of the insured risk 

23 is located out of the State referred to in 

24 subparagraph (A), the State to which the 

25 greatest percentage of the insured’s tax-
13 

•HR 2571 EH

1 able premium for that insurance contract 

2 is allocated. 

3 (B) AFFILIATED GROUPS.—If more than 

4 one insured from an affiliated group are named 

5 insureds on a single nonadmitted insurance con6 tract, the term ‘‘home State’’ means the home 

7 State, as determined pursuant to subparagraph 

8 (A), of the member of the affiliated group that 

9 has the largest percentage of premium attrib10 uted to it under such insurance contract. 

11 (7) INDEPENDENTLY PROCURED INSURANCE.— 

12 The term ‘‘independently procured insurance’’ 

13 means insurance procured directly by an insured 

14 from a nonadmitted insurer. 

15 (8) NAIC.—The term ‘‘NAIC’’ means the Na16 tional Association of Insurance Commissioners or 

17 any successor entity. 

18 (9) NONADMITTED INSURANCE.—The term 

19 ‘‘nonadmitted insurance’’ means any property and 

20 casualty insurance permitted to be placed directly or 

21 through a surplus lines broker with a nonadmitted 

22 insurer eligible to accept such insurance. 

23 (10) NON-ADMITTED INSURANCE MODEL

24 ACT.—The term ‘‘Non-Admitted Insurance Model 

25 Act’’ means the provisions of the Non-Admitted In-
14 

•HR 2571 EH

1 surance Model Act, as adopted by the NAIC on Au2 gust 3, 1994, and amended on September 30, 1996, 

3 December 6, 1997, October 2, 1999, and June 8, 

4 2002. 

5 (11) NONADMITTED INSURER.—The term 

6 ‘‘nonadmitted insurer’’ means, with respect to a 

7 State, an insurer not licensed to engage in the busi8 ness of insurance in such State. 

9 (12) QUALIFIED RISK MANAGER.—The term 

10 ‘‘qualified risk manager’’ means, with respect to a 

11 policyholder of commercial insurance, a person who 

12 meets all of the following requirements: 

13 (A) The person is an employee of, or third 

14 party consultant retained by, the commercial 

15 policyholder. 

16 (B) The person provides skilled services in 

17 loss prevention, loss reduction, or risk and in18 surance coverage analysis, and purchase of in19 surance. 

20 (C) The person— 

21 (i)(I) has a bachelor’s degree or high22 er from an accredited college or university 

23 in risk management, business administra24 tion, finance, economics, or any other field 

25 determined by a State insurance commis-
15 

•HR 2571 EH

1 sioner or other State regulatory official or 

2 entity to demonstrate minimum com3 petence in risk management; and 

4 (II)(aa) has three years of experience 

5 in risk financing, claims administration, 

6 loss prevention, risk and insurance anal7 ysis, or purchasing commercial lines of in8 surance; or 

9 (bb) has one of the following designa10 tions: 

11 (AA) a designation as a Char12 tered Property and Casualty Under13 writer (in this subparagraph referred 

14 to as ‘‘CPCU’’) issued by the Amer15 ican Institute for CPCU/Insurance In16 stitute of America; 

17 (BB) a designation as an Asso18 ciate in Risk Management (ARM) 

19 issued by the American Institute for 

20 CPCU/Insurance Institute of America; 

21 (CC) a designation as Certified 

22 Risk Manager (CRM) issued by the 

23 National Alliance for Insurance Edu24 cation & Research; 
16 

•HR 2571 EH

1 (DD) a designation as a RIMS 

2 Fellow (RF) issued by the Global Risk 

3 Management Institute; or 

4 (EE) any other designation, cer5 tification, or license determined by a 

6 State insurance commissioner or other 

7 State insurance regulatory official or 

8 entity to demonstrate minimum com9 petency in risk management; 

10 (ii)(I) has at least seven years of ex11 perience in risk financing, claims adminis12 tration, loss prevention, risk and insurance 

13 coverage analysis, or purchasing commer14 cial lines of insurance; and 

15 (II) has any one of the designations 

16 specified in subitems (AA) through (EE) 

17 of clause (i)(II)(bb); 

18 (iii) has at least 10 years of experi19 ence in risk financing, claims administra20 tion, loss prevention, risk and insurance 

21 coverage analysis, or purchasing commer22 cial lines of insurance; or 

23 (iv) has a graduate degree from an 

24 accredited college or university in risk 

25 management, business administration, fi-
17 

•HR 2571 EH

1 nance, economics, or any other field deter2 mined by a State insurance commissioner 

3 or other State regulatory official or entity 

4 to demonstrate minimum competence in 

5 risk management. 

6 (13) PREMIUM TAX.—The term ‘‘premium tax’’ 

7 means, with respect to surplus lines or independently 

8 procured insurance coverage, any tax, fee, assess9 ment, or other charge imposed by a government en10 tity directly or indirectly based on any payment 

11 made as consideration for an insurance contract for 

12 such insurance, including premium deposits, assess13 ments, registration fees, and any other compensation 

14 given in consideration for a contract of insurance. 

15 (14) SURPLUS LINES BROKER.—The term ‘‘sur16 plus lines broker’’ means an individual, firm, or cor17 poration which is licensed in a State to sell, solicit, 

18 or negotiate insurance on properties, risks, or expo19 sures located or to be performed in a State with 

20 nonadmitted insurers. 

21 (15) STATE.—The term ‘‘State’’ includes any 

22 State of the United States, the District of Columbia, 

23 the Commonwealth of Puerto Rico, Guam, the 

24 Northern Mariana Islands, the Virgin Islands, and 

25 American Samoa. 
18 

•HR 2571 EH

1 TITLE II—REINSURANCE 

2 SEC. 201. REGULATION OF CREDIT FOR REINSURANCE AND 

3 REINSURANCE AGREEMENTS. 

4 (a) CREDIT FOR REINSURANCE.—If the State of 

5 domicile of a ceding insurer is an NAIC-accredited State, 

6 or has financial solvency requirements substantially simi7 lar to the requirements necessary for NAIC accreditation, 

8 and recognizes credit for reinsurance for the insurer’s 

9 ceded risk, then no other State may deny such credit for 

10 reinsurance. 

11 (b) ADDITIONAL PREEMPTION OF

12 EXTRATERRITORIAL APPLICATION OF STATE LAW.—In 

13 addition to the application of subsection (a), all laws, regu14 lations, provisions, or other actions of a State that is not 

15 the domiciliary State of the ceding insurer, except those 

16 with respect to taxes and assessments on insurance com17 panies or insurance income, are preempted to the extent 

18 that they— 

19 (1) restrict or eliminate the rights of the ceding 

20 insurer or the assuming insurer to resolve disputes 

21 pursuant to contractual arbitration to the extent 

22 such contractual provision is not inconsistent with 

23 the provisions of title 9, United States Code; 

24 (2) require that a certain State’s law shall gov25 ern the reinsurance contract, disputes arising from 
19 

•HR 2571 EH

1 the reinsurance contract, or requirements of the re2 insurance contract; 

3 (3) attempt to enforce a reinsurance contract 

4 on terms different than those set forth in the rein5 surance contract, to the extent that the terms are 

6 not inconsistent with this title; or 

7 (4) otherwise apply the laws of the State to re8 insurance agreements of ceding insurers not domi9 ciled in that State. 

10 SEC. 202. REGULATION OF REINSURER SOLVENCY. 

11 (a) DOMICILIARY STATE REGULATION.—If the State 

12 of domicile of a reinsurer is an NAIC-accredited State or 

13 has financial solvency requirements substantially similar 

14 to the requirements necessary for NAIC accreditation, 

15 such State shall be solely responsible for regulating the 

16 financial solvency of the reinsurer. 

17 (b) NONDOMICILIARY STATES.— 

18 (1) LIMITATION ON FINANCIAL INFORMATION

19 REQUIREMENTS.—If the State of domicile of a rein20 surer is an NAIC-accredited State or has financial 

21 solvency requirements substantially similar to the re22 quirements necessary for NAIC accreditation, no 

23 other State may require the reinsurer to provide any 

24 additional financial information other than the infor-
20 

•HR 2571 EH

1 mation the reinsurer is required to file with its 

2 domiciliary State. 

3 (2) RECEIPT OF INFORMATION.—No provision 

4 of this section shall be construed as preventing or 

5 prohibiting a State that is not the State of domicile 

6 of a reinsurer from receiving a copy of any financial 

7 statement filed with its domiciliary State. 

8 SEC. 203. DEFINITIONS. 

9 For purposes of this title, the following definitions 

10 shall apply: 

11 (1) CEDING INSURER.—The term ‘‘ceding in12 surer’’ means an insurer that purchases reinsurance. 

13 (2) DOMICILIARY STATE.—The terms ‘‘State of 

14 domicile’’ and ‘‘domiciliary State’’ means, with re15 spect to an insurer or reinsurer, the State in which 

16 the insurer or reinsurer is incorporated or entered 

17 through, and licensed. 

18 (3) REINSURANCE.—The term ‘‘reinsurance’’ 

19 means the assumption by an insurer of all or part 

20 of a risk undertaken originally by another insurer. 

21 (4) REINSURER.— 

22 (A) IN GENERAL.—The term ‘‘reinsurer’’ 

23 means an insurer to the extent that the in24 surer— 
21 

•HR 2571 EH

1 (i) is principally engaged in the busi2 ness of reinsurance; 

3 (ii) does not conduct significant 

4 amounts of direct insurance as a percent5 age of its net premiums; and 

6 (iii) is not engaged in an ongoing 

7 basis in the business of soliciting direct in8 surance. 

9 (B) DETERMINATION.—A determination of 

10 whether an insurer is a reinsurer shall be made 

11 under the laws of the State of domicile in ac12 cordance with this paragraph. 

13 (5) STATE.—The term ‘‘State’’ includes any 

14 State of the United States, the District of Columbia, 

15 the Commonwealth of Puerto Rico, Guam, the 

16 Northern Mariana Islands, the Virgin Islands, and 

17 American Samoa. 

18 TITLE III—RULE OF 

19 CONSTRUCTION 

20 SEC. 301. RULE OF CONSTRUCTION. 

21 Nothing in this Act or amendments to this Act shall 

22 be construed to modify, impair, or supersede the applica23 tion of the antitrust laws. Any implied or actual conflict 

24 between this Act and any amendments to this Act and 
22 

•HR 2571 EH

1 the antitrust laws shall be resolved in favor of the oper2 ation of the antitrust laws. 

3 SEC. 302. SEVERABILITY. 

4 If any section or subsection of this Act, or any appli5 cation of such provision to any person or circumstance, 

6 is held to be unconstitutional, the remainder of this Act, 

7 and the application of the provision to any other person 

8 or circumstance, shall not be affected. 

Passed the House of Representatives September 9, 

2009. 

Attest: 

Clerk. 

111TH CONGRESS 

1ST SESSION H. R. 2571 

AN ACT 

To streamline the regulation of nonadmitted 

insurance and reinsurance, and for other purposes.