The Oklahoma Governor has signed legislation on Thursday which authorizes the Commissioner to enter into the Nonadmitted Insurance Multistate Agreement (NIMA) or any other multistate agreement or compact.
Oklahoma is the 22nd state to pass NonAdmitted and Reinsurance Reform Act related implementation legislation and during the session. NAPSLO provided draft legislation and offered comments on legislation. However, there are several bills under consideration and any subsequent bill signed into law will take precedence over a previously signed bill.
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.
Oklahoma’s bill authorizes the Commissioner to enter into NIMA or "any other multistate agreement or compact with the same function and purpose." To participate in a NIMA-type agreement, the Commissioner is authorized to establish a uniform statewide rate of taxation (that encompasses all existing rates of taxation, fees and assessments imposed by Oklahoma), and the Commissioner is required to document how that rate is calculated.
The bill authorizes the Commissioner to adopt the multistate agreement's allocation schedule and requires surplus lines brokers to submit any required information to the clearinghouse established by the Commissioner through the multistate agreement, and to make quarterly premium tax payments to the clearinghouse.
The bill provides that the tax provisions shall apply equally to single state risks and multistate risks and requires brokers and insureds to apply the tax rates of each state where there are insured locations/exposures for a multistate risk even if a state is not sharing taxes with Oklahoma on a reciprocal basis. The bill also provides that Oklahoma will retain any premium tax allocated to a state that is not reciprocal with Oklahoma.
Oklahoma's bill would not change the state's annual reporting of surplus lines transactions by surplus lines brokers, which reports would need to show the information required to be submitted to the clearinghouse.
The bill defines "home state" per the NRRA, but does not incorporate the NRRA's mandate of exclusive home state regulation of nonadmitted insurance other than for premium tax. The bill does incorporates the NRRA's exempt commercial purchaser (ECP) exemption and generally adopts the NRRA's uniform eligibility requirements for insurers.