The Florida Governor signed legislation late last week authorizing the Department of Financial Services and the Office of Insurance Regulation to enter into an agreement with other states to share taxes. The legislation also requires that taxes be calculated on a gross premium basis but at the individual states’ tax rates for which each portion of the risk is located.
Florida is the 23rd state to pass NonAdmitted and Reinsurance Reform Act related implementation legislation. During the session NAPSLO provided draft legislation, offered comments on legislation and testified during a hearing.
The NRRA mandates that beginning July 21, 2011 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.
Florida’s bill generally authorize the DFS and the OIR to enter into an agreement with other states to share taxes. The bill outlines the terms of such agreement and requires the Florida Surplus Lines Service Office to implement the agreement. The bill does not expressly limit the tax sharing agreement the DFS/OIR may enter into.
The bill requires that for multi-state policies filed in Florida effective July 21, 2011, taxes will now be calculated on a gross premium basis but at the individual states’ tax rates for which each portion of the risk is located. The service fee and assessments will be calculated on a gross premium basis as well, but at Florida’s current rate schedule.
The bill does not incorporate the NRRA's mandates for exclusive home state regulation, an exempt commercial purchaser (ECP) exemption or nationwide uniform insurer eligibility standards, although these are standard NRRA provisions. A Broker Protocol with additional information is available on the NAPSLO website.
The Florida Surplus Lines Service Office website provides additional information regarding the state's action on the NRRA, including links to a recent webinar and Frequently Asked Questions.