NAPSLO has expressed disappointment that the long awaited Optional Federal Chartering Proposal (OFC) which was recently introduced in the United States Senate, did not address the premium tax remittance and licensing concerns of the surplus lines industry.
The bill, The National Insurance Act (NIA), was introduced by Senators John Sununu (R-NH) and Tim Johnson (D-SD). The NIA provides for a parallel system of state and federal supervision of insurers and insurance producers. The proposed system of insurance regulation is modeled after the current dual system of state and federal banking regulation.
“Unfortunately, NAPSLO’s proposals to solve the current tax remittance and licensing problems of the industry were not included in the NIA legislation,” said NAPSLO Executive Director Richard Bouhan. “As a result, the NIA remains incomplete by not addressing the concerns of the $35 billion surplus lines industry. NAPSLO will continue to work with Senator Sununu and Johnson and their staffs to have the NAPSLO proposals included in any future versions of the bill.”
The NIA provides for two types of federal insurance company charters - one for national life companies and another for national property/casualty companies. Insurers can opt to be either federally or state chartered and can convert freely between federal and state charters.
NAPSLO had worked with the drafters of the NIA and offered ways in which the NIA could be improved by addressing surplus lines concerns on tax remittance and licensing issues.
Specifically, NAPSLO offered proposals that would create a national/federal surplus lines license that would allow the holder of the license to procure or place surplus lines insurance in any state consistent with state surplus lines laws.
Although the premium tax remittance, multi-state compliance and “level playing field” concerns are not included in the NIA, they are addressed, positively, in SMART Act which remains NAPSLO’s preferred approach in regard to federal insurance regulatory reform legislation. The House Financial Services Committee is currently considering the SMART Act.
More information on NAPSLO's views is availabe on the website.