Nebraska's Governor signed a bill on Tuesday which authorizes the Insurance Director to enter into the NIMA tax allocation compact to facilitate the collection, allocation and disbursement of premium taxes.
Nebraska is the 16th state to enact NonAdmitted and Reinsurance Reform Act (NRRA) implementation legislation. During the legislative session NAPSLO provided draft legislation and comments opposing the NIMA allocation approach, and Director of Government Relations Steve Stephan met with Insurance Department representatives.
The NRRA mandates that beginning July 21 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance.
The bill would authorize the Director to enter into NIMA, participate in the clearinghouse, and adopt the allocation schedule established through NIMA. Nebraska law already provides for premium tax to be imposed on the total gross amount of surplus lines premiums.
The bill also provides for exclusive home state regulation of surplus lines placements and replaces the current definition of an industrial insured with the more narrow definition of an exempt commercial purchaser (ECP) from the NRRA.
The bill incorporates the NRRA eligibility requirements for U.S. domestic insurers, prohibits a surplus lines licensee from placing insurance with non-U.S. insurers unless the insurer is International Insurers Department (IID) listed, and removes the existing eligibility criteria for non-U.S. insurers so that there is no alternative to IID listing to become eligible.