Federal Laws


The Non-admitted and Reinsurance Reform Act (NRRA) went into effect in July 2011. The legislation established a single-state compliance requirement where brokers are only required to comply with the regulations of the insured’s home state. The “home state of the insured” is defined as the following:

The state in which an insured maintains its principal place of business or, in the case of an individual, the individual’s principal residence; or if 100% of the premium of the insured risk is located out of the previously mentioned state, the state to which the greatest percentage of the insured’s taxable premium for that insurance contract is located.

Under the NRRA, the home state of the insured assumes sole authority for the regulation of surplus lines transactions. Any other state attempting to apply its own laws and regulations is specifically preempted.

Only the home state of the insured may require a surplus lines broker to be licensed before selling, soliciting, or negotiating surplus lines coverage. In addition, only the home state can require a premium tax payment.

In accordance with the legislation, the following provisions also apply:

  • States may form compacts where taxes paid to the home state would be allocated among the participating states
  • A state may not collect fees relating to the licensure of surplus lines brokers unless the state has regulations providing for participation in the NAIC national insurance producer database, or an equivalent database
  • A state may not establish eligibility criteria for non-admitted insurers domiciled in the U.S., except in conformance with the requirements of the NAIC Non-Admitted Insurance Model Act, unless the state has adopted nationwide uniform requirements that include alternative nationwide uniform eligibility requirements
  • A state may not prohibit a surplus lines broker from procuring non-admitted insurance from an insurer based outside the U.S. that is listed on the NAIC Quarterly Listing of Alien Insurers
  • A surplus lines broker procuring non-admitted insurance for an exempt commercial purchaser is not required to satisfy diligent effort requirements if the following requirements are met:
    • The broker has disclosed that coverage may be available in the admitted market
    • The purchaser requests in writing the broker place the insurance with a non-admitted insurer

The Federal Insurance Office (FIO) was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The FIO is part of the U.S. Department of the Treasury, wherein the director of the office is appointed by the Secretary of the Treasury.

The FIO serves as an adviser on domestic and international insurance policy for the Secretary of the Treasury, and can represent the U.S. in international insurance affairs.

It was created in response to gaps in insurance regulation, but has no authority to regulate insurance in the states. Instead, it monitors the insurance industry as a whole and seeks to gain knowledge on issues and challenges that state regulators face.

The authorities of the office, defined in Title V of the Dodd-Frank Act, include the following:

  • Monitor all aspects of the insurance industry, including identifying issues or gaps in the regulation of insurers that could contribute to a systemic crisis in the insurance industry or the United States financial system
  • Monitor the extent to which traditionally underserved communities and consumers, minorities, and low- and moderate-income persons have access to affordable insurance products regarding all lines of insurance, except health insurance
  • Recommend to the Financial Stability Oversight Council that it designate an insurer, including the affiliates of such insurer, as an entity subject to regulation as a nonbank financial company supervised by the Board of Governors
  • Assist the Secretary in administering the Terrorism Insurance Program established in the Department of the Treasury under the Terrorism Risk Insurance Act of 2002
  • Coordinate Federal efforts and develop Federal policy on prudential aspects of international insurance matters, including representing the United States, as appropriate, in the International Association of Insurance Supervisors (or a successor entity) and assisting the Secretary in negotiating covered agreements
  • Determine whether state insurance measures are preempted by covered agreements
  • Consult with the states (including state insurance regulators) regarding insurance matters of national importance and prudential insurance matters of international importance

The National Association of Insurance Commissioners (NAIC) is a regulatory support organization that consists of the chief insurance regulators in all 50 states, the District of Columbia, and five U.S. territories.

Although the organization presents solutions to insurance regulatory matters that are often widely accepted by the states, but the NAIC itself is not a regulatory agency. Instead, the members of the NAIC convene three times per year to develop insurance policies on a national collaborative scale, when appropriate. These policies are then submitted to state legislatures, where the policy may be made law. Each state addresses the proposed law individually, and may amend the law during the legislative process, but the laws are generally accepted by the states.

In addition to creating policy, the NAIC is responsible for developing statutory accounting principles (SAP), which are accounting standards for insurance companies. These principles are in place to assist state insurance departments regulate insurer solvency.

Additionally, the NAIC continues to thrive and provides a forum for elected or appointed state insurance officials to meet and discuss new concepts in the industry.


The National Flood Insurance Program (NFIP) allows property owners and renters in certain areas to purchase federally backed flood insurance. In order to qualify for the program, participating communities must take measures to guard against future flood damage.

The NFIP is managed by the Federal Emergency Management Agency (FEMA), and was established as a result of the National Flood Insurance Act of 1968. At the time, it was difficult to obtain private flood insurance, and the federal government had to provide increasing federal disaster relief to victims of flood.

Now, more than 20,600 communities in the United States participate in the program, and the majority of properties covered are in Florida or Texas.

For those property owners in high-risk and moderate-to-low risk flood areas, federal flood insurance is available through the NFIP, but not mandatory. However, it is required for buildings in high-risk areas that have loans backed by federally regulated or insured lenders. Those in communities that participate in the NFIP may also purchase additional flood insurance, but they must obtain NFIP insurance first.

In 2012, the Biggert-Waters Flood Insurance Reform Act was signed into law, which addressed the cumulative debt of the program and aimed to make it more financially stable. As a result of the legislation, flood insurance rates were adjusted to reflect the actual flood risk. As premiums began to rise, the Homeowner Flood Insurance Affordability Act of 2014 was introduced. The law modified certain portions of the Biggert-Waters Act by repealing some rate increases, preventing future increases, and adding a surcharge to every policy.