I 
109TH CONGRESS 
2D SESSION 
H. R. 5637 
To streamline the regulation of nonadmitted insurance and reinsurance, and 
for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 19, 2006 
Ms. GINNY BROWN-WAITE of Florida (for herself, Mr. MOORE of Kansas, Mr. 
BAKER, Ms. HOOLEY, Mr. FEENEY, Ms. WASSERMAN SCHULTZ, Mr. 
SESSIONS, Mr. HOLDEN, Mr. FOSSELLA, Mr. SCOTT of Georgia, Mr. 
BACHUS, Ms. BEAN, Mr. RENZI, Mr. ISRAEL, Mr. FITZPATRICK of Penn-
sylvania, Mr. CROWLEY, and Mrs. BIGGERT) introduced the following bill; 
which was referred to the Committee on Financial Services, and in addi-
tion to the Committee on the Judiciary, for a period to be subsequently 
determined by the Speaker, in each case for consideration of such provi-
sions as fall within the jurisdiction of the committee concerned 
A BILL 
To streamline the regulation of nonadmitted insurance and 
reinsurance, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Nonadmitted and Reinsurance Reform Act of 2006’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows:
Sec. 1. Short title and table of contents. 
Sec. 2. Definitions. 
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. Definitions. 
TITLE II—CREDIT FOR REINSURANCE 
Sec. 201. Prohibiting extraterritorial application of State laws. 
Sec. 202. Solvency regulation. 
Sec. 203. Definitions. 
SEC. 2. DEFINITIONS. 
For purposes of this Act, the following definitions 
shall apply: 
(1) INSURER.—The term ‘‘insurer’’— 
(A) means an entity chartered and licensed 
as an insurance company and authorized to en-
gage in the business of insurance under the 
laws of at least 1 State; and 
(B) includes any entity that, under the 
laws of a State, is considered to be an insurer 
specifically for purposes of this title. 
(2) STATE.—The term ‘‘State’’ includes any 
State, the District of Columbia, the Commonwealth 
of Puerto Rico, Guam, the Northern Mariana Is-
lands, the Virgin Islands, and American Samoa.
TITLE I—NONADMITTED 
INSURANCE 
SEC. 101. REPORTING, PAYMENT, AND ALLOCATION OF 
PREMIUM TAXES. 
(a) HOME STATE’S EXCLUSIVE AUTHORITY.— 
(1) IN
GENERAL.—No State other than the 
home State of an insured may require any premium 
tax payment for nonadmitted insurance. 
(2) AMOUNT
OF
PAYMENT.—The amount of 
any premium tax payment for nonadmitted insur-
ance permitted under paragraph (1) shall be deter-
mined on the basis of any compact or procedures en-
tered into under subsection (b). 
(b) ALLOCATION
OF
NONADMITTED
PREMIUM 
TAXES.—The States may enter into a compact or other-
wise establish procedures to allocate among the States the 
premium taxes paid to an insured’s home State described 
in subsection (a). 
(c) ALLOCATION BASED ON TAX ALLOCATION RE-
PORT.—To facilitate the payment of premium taxes 
among the States, an insured’s home State may require 
surplus lines brokers and insureds who have independently 
procured insurance to annually file tax allocation reports 
with the insured’s home State detailing the portion of the 
nonadmitted insurance policy premium or premiums at-
tributable to properties, risks or exposures located in each 
State. The filing of a nonadmitted insurance tax allocation 
report and the payment of tax may be made by a person 
authorized by the insured to act as its agent. 
SEC. 102. REGULATION OF NONADMITTED INSURANCE BY 
INSURED’S HOME STATE. 
(a) HOME STATE AUTHORITY.—Except as otherwise 
provided in this title, nonadmitted insurance is subject to 
the applicable statutory and regulatory requirements sole-
ly of the insured’s home State. 
(b) BROKER LICENSING.—No State other than an in-
sured’s home State may require a surplus lines broker to 
be licensed in order to sell, solicit, or negotiate non-
admitted insurance with respect to such insured. 
(c) ENFORCEMENT PROVISION.—Any law, regula-
tion, provision, or action of any State that applies or pur-
ports to apply to nonadmitted insurance sold to, solicited 
by, or negotiated with an insured whose home State is an-
other State shall be preempted with respect to such appli-
cation. 
SEC. 103. PARTICIPATION IN NATIONAL PRODUCER DATA-
BASE. 
After the expiration of the 2-year period beginning 
on the date of the enactment of this Act, a State may 
not collect any fees relating to licensing of an individual
or entity as nonresident insurance broker in the State un-
less the State has in effect at such time laws or regulations 
that provide for participation by the State in the national 
insurance producer database of the NAIC, or any other 
equivalent uniform national database, for the licensure of 
surplus lines brokers and the renewal of such licenses. 
SEC. 104. UNIFORM STANDARDS FOR SURPLUS LINES ELI-
GIBILITY. 
After the expiration of the 2-year period beginning 
on the date of the enactment of this Act, a State may 
not— 
(1) impose eligibility requirements on, or other-
wise establish eligibility criteria for, nonadmitted in-
surers domiciled in a United States jurisdiction, ex-
cept in conformance with section 5C(2)(a) of the 
Non-Admitted Insurance Model Act; and 
(2) prohibit a surplus lines broker from placing 
nonadmitted insurance with, or procuring non-
admitted insurance from, a nonadmitted insurer 
domiciled outside the United States that is listed on 
the Quarterly Listing of Alien Insurers maintained 
by the International Insurance Division of the 
NAIC.
SEC. 105. STREAMLINED APPLICATION FOR COMMERCIAL 
PURCHASERS. 
A surplus lines broker seeking to procure or place 
nonadmitted insurance in a State for an exempt commer-
cial purchaser shall not be required to satisfy any State 
requirement to make a due diligence search to determine 
whether the full amount or type of insurance sought by 
such exempt commercial purchaser can be obtained from 
admitted insurers if— 
(1) the broker procuring or placing the surplus 
lines insurance has disclosed to the exempt commer-
cial purchaser that such insurance may or may not 
be available from the admitted market that may pro-
vide greater protection with more regulatory over-
sight; and 
(2) the exempt commercial purchaser has sub-
sequently requested in writing the broker to procure 
or place such insurance from a nonadmitted insurer. 
SEC. 106. DEFINITIONS. 
For purposes of this title, the following definitions 
shall apply: 
(1) EXEMPT
COMMERCIAL
PURCHASER.—The 
term ‘‘exempt commercial purchaser’’ means any 
person purchasing commercial insurance that meets 
the following requirements:
(A) The person employs or retains a quali-
fied risk manager to negotiate insurance cov-
erage. 
(B) The person meets at least 2 of the fol-
lowing criteria: 
(i) The person possesses a net worth 
in excess of $20,000,000. 
(ii) The person generates annual reve-
nues in excess of $50,000,000. 
(iii) The person employs more than 
500 full time or full time equivalent em-
ployees per individual insured or is a mem-
ber of affiliated group employing more 
than 1,000 employees in the aggregate. 
(iv) The person pays annual aggregate 
nationwide insurance premiums in excess 
of $100,000 for covered lines of insurance. 
(v) The person is a not-for-profit or-
ganization or public entity generating an-
nual budgeted expenditures of at least 
$30,000,000. 
(vi) The person is a municipality with 
a population in excess of 50,000 persons.
(2) HOME
STATE.—The term ‘‘home State’’ 
means the State in which an insured maintains its 
principal place of business or principal residence. 
(3) INDEPENDENTLY PROCURED INSURANCE.— 
The term ‘‘independently procured insurance’’ 
means— 
(A) insurance procured directly by an in-
sured from a nonadmitted insurer on prop-
erties, risks, or exposures located or to be per-
formed in whole or in part in the home State 
of the insured; or 
(B) a multi-State insurance policy with a 
nonadmitted insurer, that covers properties, 
risks, or exposures only partially located or to 
be performed in a State, placed by a surplus 
lines broker in another State. 
(4) NAIC.—The term ‘‘NAIC’’ means the Na-
tional Association of Insurance Commissioners or 
any other association that regularly establishes in-
surance model acts or insurance standards. 
(5) NONADMITTED
INSURANCE.—The term 
‘‘nonadmitted insurance’’ means any property and 
casualty insurance permitted to be placed directly or 
through a surplus lines broker with a nonadmitted 
insurer eligible to accept such insurance.
(6) NON-ADMITTED INSURANCE MODEL ACT.— 
The term ‘‘Non-Admitted Insurance Model Act’’ 
means the provisions of the Non-Admitted Insurance 
Model Act, as adopted by the NAIC on August 3, 
1994, and amended on September 30, 1996, Decem-
ber 6, 1997, October 2, 1999, and June 8, 2002, ex-
cept that such term shall not include any— 
(A) changes to the Non-Admitted Insur-
ance Model Act subsequent to the adoption of 
this Act; 
(B) State-specific deviations or alternative 
standards; or 
(C) best practices. 
(7) NONADMITTED INSURER.—The term ‘‘non-
admitted insurer’’ means, with respect to a State, an 
insurer not licensed to engage in the business of in-
surance in such State. 
(8) PREMIUM TAX.—The term ‘‘premium tax’’ 
means, with respect to surplus lines or independently 
procured insurance coverage, any tax, fee, assess-
ment, or other charge imposed by a State on an in-
sured based on any payment made as consideration 
for an insurance contract for such insurance, includ-
ing premium deposits, assessments, registration fees,
and any other compensation given in consideration 
for a contract of insurance. 
(9) SURPLUS LINES BROKER.—The term ‘‘sur-
plus lines broker’’ means an individual, firm, or cor-
poration which sells, solicits, or negotiates insurance 
on properties, risks, or exposures located or to be 
performed in a State with nonadmitted insurers. 
TITLE II—CREDIT FOR 
REINSURANCE 
SEC. 201. PROHIBITING EXTRATERRITORIAL APPLICATION 
OF STATE LAWS. 
(a) NO LIMIT
ON DOMICILIARY STATE REGULA-
TION.—This section may not be construed to limit the 
State of domicile of a ceding insurer from applying such 
State’s laws and regulation to the ceding insurer. 
(b) PREEMPTION OF STATE LAW.—Except as pro-
vided in subsection (a) with respect to the State of domi-
cile of a ceding insurer, all laws, regulations, provisions, 
or other actions of a State are preempted to the extent 
that they— 
(1) restrict or eliminate the rights of a ceding 
insurer or reinsurer to resolve disputes pursuant to 
contractual arbitration to the extent such contrac-
tual provision is not inconsistent with the provisions 
of title 9, United States Code;
(2) require that a certain State’s law shall gov-
ern the reinsurance contract, disputes arising from 
the reinsurance contract, or requirements of the re-
insurance contract; 
(3) attempt to enforce a reinsurance contract 
on terms different than those set forth in the rein-
surance contract, to the extent that the terms are 
not inconsistent with this title; or 
(4) apply the laws of the State to ceding insur-
ers not domiciled in that State. 
SEC. 202. SOLVENCY REGULATION. 
(a) DOMICILIARY STATE REGULATION.—The State 
of domicile of a reinsurer shall be solely responsible for 
regulating the financial solvency of the reinsurer if such 
State is an NAIC accredited State. 
(b) NONDOMICILIARY STATES.— 
(1) LIMITATION ON FINANCIAL INFORMATION 
REQUIREMENTS.—If the State of domicile of a rein-
surer is an NAIC accredited State, a State that is 
not the State of domicile of such reinsurer may not 
require the reinsurer to provide any additional finan-
cial information other than the information required 
to be filed with or by the domiciliary State. 
(2) RECEIPT OF INFORMATION.—No provision 
of this section shall be construed as preventing or
prohibiting a State that is not the State of domicile 
of a reinsurer from receiving a copy of any financial 
statement or information provided to the domiciliary 
State of the reinsurer. 
(3) CREDIT FOR REINSURANCE.—If a reinsurer 
qualifies for credit for reinsurance in the State of 
domicile of the reinsurer, each State other than the 
State of domicile shall accept such credit for reinsur-
ance. 
SEC. 203. DEFINITIONS. 
For purposes of this title, the following definitions 
shall apply: 
(1) DOMICILIARY STATE.—The terms ‘‘State of 
domicile’’ and ‘‘domiciliary State’’ means, with re-
spect to an insurer or reinsurer, the State in which 
the insurer or reinsurer is incorporated or entered 
through, and licensed. 
(2) REINSURANCE.—The term ‘‘reinsurance’’ 
means the sharing of underwriting risk by insurers 
and reinsurers, under which part of all of an insur-
er’s risk is assumed by the reinsurer in return for 
consideration.
(3) REINSURER.—The term ‘‘reinsurer’’ means 
an insurer engaged in the business of assuming in-
surers’ risk. 
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