Rep. Dennis Moore, a main sponsor of the NonAdmitted Reinsurance and Reform Act, which was included in the financial services legislation recently signed into law, entered remarks into the Congressional Record on Thursday to clarify the provisions of the bill impacting surplus lines.
He noted that under the new bill surplus lines premium taxes are to be paid to the "Home State" (and to no other state); that the placement of all nonadmitted insurance, including surplus lines insurance, shall be subject solely to the statutory and regulatory requirements imposed directly by the insured’s ‘‘Home State;" and that States adopt uniform requirements and forms regarding payment and allocation of premium taxes.
The following is Rep. Moore's entry on Thursday in the Congressional Record.
"Madam Speaker, as a House conferee and the chief sponsor of H.R. 2571, the Nonadmitted and Reinsurance Reform Act, that was included in the conference report for H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act, I wanted to make one important clarification of intent on the final language. The President signed the Dodd-Frank Act into law yesterday.
Section 521(a) of the Dodd-Frank Act is intended to require the broker to pay or remit all tax in a surplus lines transaction to the ‘‘Home State’’ of the insured as defined in the Act and to no other state or political subdivision of any state. If other states are to receive a portion of the tax payment, the Act provides that the states may enter into a compact or otherwise establish procedures to allocate among the states the premium taxes paid to an insured’s‘ ‘Home State.’’
Further, it is the intention that as a result of this Act, each State adopt nationwide uniform requirements, forms, and procedures—such as an interstate compact—that provides for the reporting, payment, collection, and allocation of all premium taxes for surplus lines insurance as well as all nonadmitted insurance in the insured’s ‘‘home state’’. Uniformity in the taxation of surplus lines and nonadmitted insurance will be of great benefit to insurance consumers, brokers and the states.
In addition, under Section 522(a) of the Dodd-Frank Act, the placement of all nonadmitted insurance, including surplus lines insurance, shall be subject solely to the statutory and regulatory requirements imposed directly by the insured’s ‘‘Home State’’ and no other state. It is the intention that surplus lines and nonadmitted insurance transactions, particularly when the insurance covers risks in more than one state, be within the sole province of the insured’s ‘‘Home State.’’