IIB 
111TH CONGRESS 
1ST SESSION H. R. 2571 
IN THE SENATE OF THE UNITED STATES 
SEPTEMBER 10, 2009 
Received; read twice and referred to the Committee on Banking, Housing, and 
Urban Affairs 
AN ACT 
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, 
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SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Nonadmitted and Reinsurance Reform Act of 2009’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
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. 
SEC. 2. EFFECTIVE DATE. 
Except as otherwise specifically provided in this Act, 
this Act shall take effect upon the expiration of the 12- 
month period beginning on the date of the enactment of 
this Act. 
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TITLE I—NONADMITTED 
INSURANCE 
SEC. 101. REPORTING, PAYMENT, AND ALLOCATION OF 
PREMIUM TAXES. 
(a) HOME STATE’S EXCLUSIVE AUTHORITY.—No 
State other than the home State of an insured may require 
any premium tax payment for nonadmitted insurance. 
(b) ALLOCATION
OF
NONADMITTED
PREMIUM 
TAXES.— 
(1) IN GENERAL.—The States may enter into a 
compact or otherwise establish procedures to allocate 
among the States the premium taxes paid to an in-
sured’s home State described in subsection (a). 
(2) EFFECTIVE
DATE.—Except as expressly 
otherwise provided in such compact or other proce-
dures, any such compact or other procedures— 
(A) if adopted on or before the expiration 
of the 330-day period that begins on the date 
of the enactment of this Act, shall apply to any 
premium taxes that, on or after such date of 
enactment, are required to be paid to any State 
that is subject to such compact or procedures; 
and 
(B) if adopted after the expiration of such 
330-day period, shall apply to any premium 
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taxes that, on or after January 1 of the first 
calendar year that begins after the expiration of 
such 330-day period, are required to be paid to 
any State that is subject to such compact or 
procedures. 
(3) REPORT.—Upon the expiration of the 330- 
day period referred to in paragraph (2), the NAIC 
may submit a report to the Committee on Financial 
Services and Committee on the Judiciary of the 
House of Representatives and the Committee on 
Banking, Housing, and Urban Affairs of the Senate 
identifying and describing any compact or other pro-
cedures for allocation among the States of premium 
taxes that have been adopted during such period by 
any States. 
(4) NATIONWIDE SYSTEM.—The Congress in-
tends that each State adopt nationwide uniform re-
quirements, forms, and procedures, such as an inter-
state compact, that provides for the reporting, pay-
ment, collection, and allocation of premium taxes for 
nonadmitted insurance consistent with this section. 
(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 
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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 section, the placement of nonadmitted in-
surance shall be subject to the statutory and regulatory 
requirements solely 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.—With respect to sec-
tion 101 and subsections (a) and (b) of this section, any 
law, regulation, provision, or action of any State that ap-
plies or purports to apply to nonadmitted insurance sold 
to, solicited by, or negotiated with an insured whose home 
State is another State shall be preempted with respect to 
such application. 
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(d) WORKERS’ COMPENSATION EXCEPTION.—This 
section may not be construed to preempt any State law, 
rule, or regulation that restricts the placement of workers’ 
compensation insurance or excess insurance for self-fund-
ed workers’ compensation plans with a nonadmitted in-
surer. 
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 a surplus lines broker in the State unless the 
State has in effect at such time laws or regulations that 
provide for participation by the State in the national in-
surance 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. 
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 such requirements and cri-
teria in sections 5A(2) and 5C(2)(a) of the Non-Ad-
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mitted Insurance Model Act, unless the State has 
adopted nationwide uniform requirements, forms, 
and procedures developed in accordance with section 
101(b) of this Act that include alternative nation-
wide uniform eligibility requirements; 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 Insurers Department 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-
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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. GAO STUDY OF NONADMITTED INSURANCE MAR-
KET. 
(a) IN GENERAL.—The Comptroller General of the 
United States shall conduct a study of the nonadmitted 
insurance market to determine the effect of the enactment 
of this title on the size and market share of the non-
admitted insurance market for providing coverage typi-
cally provided by the admitted insurance market. 
(b) CONTENTS.—The study shall determine and ana-
lyze— 
(1) the change in the size and market share of 
the nonadmitted insurance market and in the num-
ber of insurance companies and insurance holding 
companies providing such business in the 18-month 
period that begins upon the effective date of this 
Act; 
(2) the extent to which insurance coverage typi-
cally provided by the admitted insurance market has 
shifted to the nonadmitted insurance market; 
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(3) the consequences of any change in the size 
and market share of the nonadmitted insurance 
market, including differences in the price and avail-
ability of coverage available in both the admitted 
and nonadmitted insurance markets; 
(4) the extent to which insurance companies 
and insurance holding companies that provide both 
admitted and nonadmitted insurance have experi-
enced shifts in the volume of business between ad-
mitted and nonadmitted insurance; and 
(5) the extent to which there has been a change 
in the number of individuals who have nonadmitted 
insurance policies, the type of coverage provided 
under such policies, and whether such coverage is 
available in the admitted insurance market. 
(c) CONSULTATION WITH NAIC.—In conducting the 
study under this section, the Comptroller General shall 
consult with the NAIC. 
(d) REPORT.—The Comptroller General shall com-
plete the study under this section and submit a report to 
the Committee on Financial Services of the House of Rep-
resentatives and the Committee on Banking, Housing, and 
Urban Affairs of the Senate regarding the findings of the 
study not later than 30 months after the effective date 
of this Act. 
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SEC. 107. DEFINITIONS. 
For purposes of this title, the following definitions 
shall apply: 
(1) ADMITTED INSURER.—The term ‘‘admitted 
insurer’’ means, with respect to a State, an insurer 
licensed to engage in the business of insurance in 
such State. 
(2) AFFILIATE.—The term ‘‘affiliate’’ means, 
with respect to an insured, any entity that controls, 
is controlled by, or is under common control with the 
insured. 
(3) AFFILIATED GROUP.—The term ‘‘affiliated 
group’’ means any group of entities that are all af-
filiated. 
(4) CONTROL.—An entity has ‘‘control’’ over 
another entity if— 
(A) the entity directly or indirectly or act-
ing through one or more other persons owns, 
controls or has the power to vote 25 percent or 
more of any class of voting securities of the 
other entity; or 
(B) the entity controls in any manner the 
election of a majority of the directors or trust-
ees of the other entity. 
(5) EXEMPT
COMMERCIAL
PURCHASER.—The 
term ‘‘exempt commercial purchaser’’ means any 
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person purchasing commercial insurance that, at the 
time of placement, meets the following requirements: 
(A) The person employs or retains a quali-
fied risk manager to negotiate insurance cov-
erage. 
(B) The person has paid aggregate nation-
wide commercial property and casualty insur-
ance premiums in excess of $100,000 in the im-
mediately preceding 12 months. 
(C)(i) The person meets at least one of the 
following criteria: 
(I) The person possesses a net worth 
in excess of $20,000,000, as such amount 
is adjusted pursuant to clause (ii). 
(II) The person generates annual rev-
enues in excess of $50,000,000, as such 
amount is adjusted pursuant to clause (ii). 
(III) The person employs more than 
500 full time or full time equivalent em-
ployees per individual insured or is a mem-
ber of an affiliated group employing more 
than 1,000 employees in the aggregate. 
(IV) The person is a not-for-profit or-
ganization or public entity generating an-
nual budgeted expenditures of at least 
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$30,000,000, as such amount is adjusted 
pursuant to clause (ii). 
(V) The person is a municipality with 
a population in excess of 50,000 persons. 
(ii) Effective on the fifth January 1 occur-
ring after the date of the enactment of this Act 
and each fifth January 1 occurring thereafter, 
the amounts in subclauses (I), (II), and (IV) of 
clause (i) shall be adjusted to reflect the per-
centage change for such five-year period in the 
Consumer Price Index for All Urban Con-
sumers published by the Bureau of Labor Sta-
tistics of the Department of Labor. 
(6) HOME STATE.— 
(A) IN GENERAL.—Except as provided in 
subparagraph (B), the term ‘‘home State’’ 
means, with respect to an insured— 
(i) the State in which an insured 
maintains its principal place of business or, 
in the case of an individual, the individ-
ual’s principal residence; or 
(ii) if 100 percent of the insured risk 
is located out of the State referred to in 
subparagraph (A), the State to which the 
greatest percentage of the insured’s tax-
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able premium for that insurance contract 
is allocated. 
(B) AFFILIATED GROUPS.—If more than 
one insured from an affiliated group are named 
insureds on a single nonadmitted insurance con-
tract, the term ‘‘home State’’ means the home 
State, as determined pursuant to subparagraph 
(A), of the member of the affiliated group that 
has the largest percentage of premium attrib-
uted to it under such insurance contract. 
(7) INDEPENDENTLY PROCURED INSURANCE.— 
The term ‘‘independently procured insurance’’ 
means insurance procured directly by an insured 
from a nonadmitted insurer. 
(8) NAIC.—The term ‘‘NAIC’’ means the Na-
tional Association of Insurance Commissioners or 
any successor entity. 
(9) 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. 
(10) 
NON-ADMITTED
INSURANCE
MODEL 
ACT.—The term ‘‘Non-Admitted Insurance Model 
Act’’ means the provisions of the Non-Admitted In-
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surance Model Act, as adopted by the NAIC on Au-
gust 3, 1994, and amended on September 30, 1996, 
December 6, 1997, October 2, 1999, and June 8, 
2002. 
(11) 
NONADMITTED
INSURER.—The 
term 
‘‘nonadmitted insurer’’ means, with respect to a 
State, an insurer not licensed to engage in the busi-
ness of insurance in such State. 
(12) QUALIFIED
RISK
MANAGER.—The term 
‘‘qualified risk manager’’ means, with respect to a 
policyholder of commercial insurance, a person who 
meets all of the following requirements: 
(A) The person is an employee of, or third 
party consultant retained by, the commercial 
policyholder. 
(B) The person provides skilled services in 
loss prevention, loss reduction, or risk and in-
surance coverage analysis, and purchase of in-
surance. 
(C) The person— 
(i)(I) has a bachelor’s degree or high-
er from an accredited college or university 
in risk management, business administra-
tion, finance, economics, or any other field 
determined by a State insurance commis-
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sioner or other State regulatory official or 
entity to demonstrate minimum com-
petence in risk management; and 
(II)(aa) has three years of experience 
in risk financing, claims administration, 
loss prevention, risk and insurance anal-
ysis, or purchasing commercial lines of in-
surance; or 
(bb) has one of the following designa-
tions: 
(AA) a designation as a Char-
tered Property and Casualty Under-
writer (in this subparagraph referred 
to as ‘‘CPCU’’) issued by the Amer-
ican Institute for CPCU/Insurance In-
stitute of America; 
(BB) a designation as an Asso-
ciate in Risk Management (ARM) 
issued by the American Institute for 
CPCU/Insurance Institute of America; 
(CC) a designation as Certified 
Risk Manager (CRM) issued by the 
National Alliance for Insurance Edu-
cation & Research; 
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(DD) a designation as a RIMS 
Fellow (RF) issued by the Global Risk 
Management Institute; or 
(EE) any other designation, cer-
tification, or license determined by a 
State insurance commissioner or other 
State insurance regulatory official or 
entity to demonstrate minimum com-
petency in risk management; 
(ii)(I) has at least seven years of ex-
perience in risk financing, claims adminis-
tration, loss prevention, risk and insurance 
coverage analysis, or purchasing commer-
cial lines of insurance; and 
(II) has any one of the designations 
specified in subitems (AA) through (EE) 
of clause (i)(II)(bb); 
(iii) has at least 10 years of experi-
ence in risk financing, claims administra-
tion, loss prevention, risk and insurance 
coverage analysis, or purchasing commer-
cial lines of insurance; or 
(iv) has a graduate degree from an 
accredited college or university in risk 
management, business administration, fi-
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nance, economics, or any other field deter-
mined by a State insurance commissioner 
or other State regulatory official or entity 
to demonstrate minimum competence in 
risk management. 
(13) 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 government en-
tity directly or indirectly based on any payment 
made as consideration for an insurance contract for 
such insurance, including premium deposits, assess-
ments, registration fees, and any other compensation 
given in consideration for a contract of insurance. 
(14) SURPLUS LINES BROKER.—The term ‘‘sur-
plus lines broker’’ means an individual, firm, or cor-
poration which is licensed in a State to sell, solicit, 
or negotiate insurance on properties, risks, or expo-
sures located or to be performed in a State with 
nonadmitted insurers. 
(15) STATE.—The term ‘‘State’’ includes any 
State of the United States, the District of Columbia, 
the Commonwealth of Puerto Rico, Guam, the 
Northern Mariana Islands, the Virgin Islands, and 
American Samoa. 
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TITLE II—REINSURANCE 
SEC. 201. REGULATION OF CREDIT FOR REINSURANCE AND 
REINSURANCE AGREEMENTS. 
(a) CREDIT
FOR REINSURANCE.—If the State of 
domicile of a ceding insurer is an NAIC-accredited State, 
or has financial solvency requirements substantially simi-
lar to the requirements necessary for NAIC accreditation, 
and recognizes credit for reinsurance for the insurer’s 
ceded risk, then no other State may deny such credit for 
reinsurance. 
(b) 
ADDITIONAL
PREEMPTION
OF 
EXTRATERRITORIAL APPLICATION OF STATE LAW.—In 
addition to the application of subsection (a), all laws, regu-
lations, provisions, or other actions of a State that is not 
the domiciliary State of the ceding insurer, except those 
with respect to taxes and assessments on insurance com-
panies or insurance income, are preempted to the extent 
that they— 
(1) restrict or eliminate the rights of the ceding 
insurer or the assuming insurer to resolve disputes 
pursuant to contractual arbitration to the extent 
such contractual 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 
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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) otherwise apply the laws of the State to re-
insurance agreements of ceding insurers not domi-
ciled in that State. 
SEC. 202. REGULATION OF REINSURER SOLVENCY. 
(a) DOMICILIARY STATE REGULATION.—If the State 
of domicile of a reinsurer is an NAIC-accredited State or 
has financial solvency requirements substantially similar 
to the requirements necessary for NAIC accreditation, 
such State shall be solely responsible for regulating the 
financial solvency of the reinsurer. 
(b) NONDOMICILIARY STATES.— 
(1) LIMITATION ON FINANCIAL INFORMATION 
REQUIREMENTS.—If the State of domicile of a rein-
surer is an NAIC-accredited State or has financial 
solvency requirements substantially similar to the re-
quirements necessary for NAIC accreditation, no 
other State may require the reinsurer to provide any 
additional financial information other than the infor-
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mation the reinsurer is required to file with its 
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 filed with its domiciliary State. 
SEC. 203. DEFINITIONS. 
For purposes of this title, the following definitions 
shall apply: 
(1) CEDING INSURER.—The term ‘‘ceding in-
surer’’ means an insurer that purchases reinsurance. 
(2) 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. 
(3) REINSURANCE.—The term ‘‘reinsurance’’ 
means the assumption by an insurer of all or part 
of a risk undertaken originally by another insurer. 
(4) REINSURER.— 
(A) IN GENERAL.—The term ‘‘reinsurer’’ 
means an insurer to the extent that the in-
surer— 
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(i) is principally engaged in the busi-
ness of reinsurance; 
(ii) does not conduct significant 
amounts of direct insurance as a percent-
age of its net premiums; and 
(iii) is not engaged in an ongoing 
basis in the business of soliciting direct in-
surance. 
(B) DETERMINATION.—A determination of 
whether an insurer is a reinsurer shall be made 
under the laws of the State of domicile in ac-
cordance with this paragraph. 
(5) STATE.—The term ‘‘State’’ includes any 
State of the United States, the District of Columbia, 
the Commonwealth of Puerto Rico, Guam, the 
Northern Mariana Islands, the Virgin Islands, and 
American Samoa. 
TITLE III—RULE OF 
CONSTRUCTION 
SEC. 301. RULE OF CONSTRUCTION. 
Nothing in this Act or amendments to this Act shall 
be construed to modify, impair, or supersede the applica-
tion of the antitrust laws. Any implied or actual conflict 
between this Act and any amendments to this Act and 
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the antitrust laws shall be resolved in favor of the oper-
ation of the antitrust laws. 
SEC. 302. SEVERABILITY. 
If any section or subsection of this Act, or any appli-
cation of such provision to any person or circumstance, 
is held to be unconstitutional, the remainder of this Act, 
and the application of the provision to any other person 
or circumstance, shall not be affected. 
Passed the House of Representatives September 9, 
2009. 
Attest: 
LORRAINE C. MILLER, 
Clerk. 
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PO 00000
Frm 00022
Fmt 6652
Sfmt 6201
E:\BILLS\H2571.RFS
H2571
tjames on DSKG8SOYB1PROD with BILLS