The Indiana governor signed into law on Tuesday a bill which would adopt the SLIMPACT-lite tax sharing agreement.
Indiana is the 18th state to pass NonAdmitted and Reinsurance Reform Act (NRRA) implementation legislation during this session. In connection with the NRRA implementation efforts, NAPSLO provided draft legislation, and comments on the legislation and representatives of B&D Consulting testified at a committee hearing.
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.
Indiana's bill adopts SLIMPACT-lite, which provides for the creation of a Compact Commission that would adopt rules on tax allocation, reporting, collection and distribution, and may adopt uniform insurer eligibility requirements. Indiana's bill provides for exclusive home state regulation of surplus lines compliance, however does not incorporate the NRRA's exempt commercial purchaser (ECP) exemption from state diligent search requirements.
As amended, the bill provides that if SLIMPACT does not take effect or becomes ineffective, the Indiana Department of Insurance has the authority to enter into contracts to implement the requirements of the NRRA, subject to certain restrictions. The DOI may not enter into such a contract (compact or multistate agreement) "that is related to reporting, payment, collection, or allocation of fees or taxes on nonadmitted insurance, unless the Indiana department of insurance has done all of the following: (1) Completed a fiscal analysis of the impact of the contract. (2) Studied the expected effect of the contract on Indiana's gross receipt of premium tax. (3) Reviewed whether the contract will create undue administrative burdens on the state of Indiana or surplus lines licensees. (4) Concluded that entering into the contract: (A) is in Indiana's financial best interest; and (B) is consistent with the requirements of the NRRA."