DATE:MAY 21, 2009

TO:NCOIL LEGISLATORS

FROM:SUSAN NOLAN

NCOIL EXECUTIVE DIRECTOR

RE:HILL UPDATE: THREE INSURANCE BILLS EXPECTED IN U.S. HOUSE

OFC PROPOSAL GAINS A SPONSOR

The following information is provided for your review:

2009 NARAB Bill Draft

Legislative Alert—NARAB Legislation, H.R. 5611, Passes House(9/18/08 NCOIL)

2009 Fixed-Indexed Annuity Bill Draft

Legislative Alert—SEC Approves Controversial Indexed Annuity Rule Despite State and Federal Official Protests(12/17/08 NCOIL)

Non-admitted and Reinsurance Bill “Dear Colleague” letter (5/19)

Three new House bills are expected to be introduced soon—perhaps as early as today—that would

set up a nonprofit NARAB for producer licensing

repeal SEC Rule 151A regarding federal regulation of fixed-indexed annuities

require home state regulation for surplus lines transactions and reinsurance

We have also learned that freshman Congressman Jim Himes (D-CT) today plans to sign on to already introduced OFC legislation as a cosponsor.

NARAB

Congressman David Scott (D-GA) will reintroduce the bipartisan National Association of Registered Agents and Brokers Reform Act, which would, among other things:

create the nonprofit NARAB as an optional national producer licensing clearinghouse.

be governed by a board consisting of six insurance regulators and five insurance industry representatives.

allow a member to operate in any state as the equivalent of a nonresident producer.

A similar NARAB bill—cosponsored by more than 50 Members of Congress—was approved late last year on the House suspension calendar. After the House approved the bill, the U.S. Department of Justice (DOJ) sent a letter outlining certain constitutional concerns to Congress.

The new NARAB bill is nearly identical to the 2008 version. However, Congressman Scott has made certain changes—particularly to the governing board appointment process—to answer the DOJ concerns. Instead of granting the NAIC and the insurance industry authority to appoint members to the board (2008 bill), the new draft calls for the President to make the appointments and authorizes him/her to seek recommended candidates from the NAIC and the industry.

NCOIL POSITION

NCOIL did not take a position on the 2008 bill. At our 2008 Spring Meeting, NCOIL adopted a resolution supporting state enactment of features available through a National Insurance Producer Registry (NIPR)—a state-based, electronic one-stop facility for producer licensing.

FIXED-INDEXED ANNUITIES

Congressman Gregory Meeks (D-NY) and more than 20 cosponsors will introduce the bipartisan Indexed Annuities and Insurance Products Classification Act, which would:

repeal SEC Rule 151A regarding federal regulation of fixed-indexed annuities.

amend the Securities Act of 1933 to exempt fixed-indexed annuity products from federal securities regulation.

NCOIL POSITION

NCOIL strongly opposed—in multiple letters to the SEC and in press releases—SEC Rule 151A in 2008 and adopted a Resolution in Support of State Insurance Commissioner Authority Over Fixed Indexed Annuity Products.

SURPLUS LINES AND REINSURANCE

Congressmen Dennis Moore (D-KS) and Scott Garrett (R-NJ) will reintroduce the bipartisan Nonadmitted and Reinsurance Reform Act, which would, among other things:

require home state regulation for nonadmitted insurance and surplus lines brokers.

prohibit a state from denying credit for reinsurance if the state of domicile of a ceding insurer recognizes credit for ceded risk.

require reinsurer financial solvency regulation by the state of domicile only.

Previous versions of the legislation were approved in the 109th and 110th Congress’ by a voice vote and in a 417-0 vote, respectively.

NCOIL POSITION

NCOIL does not have a position on the legislation. NCOIL adopted a Resolution in Support of Surplus Lines Insurance Multi-State Compliance Compact (SLIMPACT) in 2007 to address surplus lines insurance issues. The federal legislation would express the intent of Congress that states enter into a compact to allocate surplus lines premium taxes, although we understand that SLIMPACT, as proposed, would need to be revised if the legislation is approved.

Please contact Susan Nolan at 518-6878-0178 or at or Mike Humphreys at 202-220-3014 or should you have any questions.