Friday, April 15, 2011

Washington Approves NRRA Legislation; Premium Taxes Not Shared

Washington's Governor signed NRRA implementation legislation this week which does not include sharing premium taxes on multi-state risks.

During the session NAPSLO provided draft legislation, supplied comments on early drafts of  legislation that included tax allocation provisions and Director of Government Relations Steve Stephan met with Insurance Department representatives twice on the legislation.  NAPSLO applauded the decision to study the allocation issue further to determine if any allocation system will benefit the state.

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.

Washington's bill does not provides for sharing premium taxes on multi-state risks. For property and casualty insurance if Washington is the insured's Home State, the surplus lines tax would be imposed on 100% of the premium even if the policy covers multi-state risks. Other lines of insurance would be taxed only on the portion of the premium allocated to Washington risks.

The bill incorporates the NRRA's Home State definition, plus a definition of "principal place of business." It provides for exclusive Home State regulation of surplus lines placements of property and casualty insurance. Incorporates the ECP exemption from the NRRA. Generally incorporates the NRRA uniform standards for insurer eligibility, and limits placement with non-U.S. insurers to insurers on the IID list.

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