NAPSLO has added to its website a state-by-state review of legislation passed at the state level during the past few months to bring states into compliance with the Nonadmitted and Reinsurance Reform Act (NRRA).
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. Also, many states have passed laws based on NRRA with differing requirements and effective dates.
Earlier this year NAPSLO put together a new section of the website - New Surplus Lines Law - which included a section reviewing legislation under consideration at the state level. With more than 30 states passing legislation NAPSLO has now added a section reviewing the laws enacted by each state.
In the State Update Review section there is a table listing all of the states and links to reviews to most of the legislation completed. Additional states are being added as the review process of the legislation is completed.
The pages include information on state bulletins/regulations/rules; the status of joining compacts or other tax sharing agreements; the new laws definition of "home state"; exempt commercial purchaser (ECP) status; eligibility information; tax reporting status; tax processing fee information; and contact information for the state insurance department or stamping office.
Wednesday, June 29, 2011
Sunday, June 26, 2011
Alaska Approves Legislation to Enter NIMA-type Agreement to Share Premium Taxes
Alaska has enacted legislation which provides authority for the Director to enter into a NIMA-type agreement with other states to share premium taxes.
Alaska is among the latest of states to pass NonAdmitted and Reinsurance Reform Act (NRRA) related implementation legislation. During the session NAPSLO provided draft legislation, supplied comments on legislation and Director of Government Relations Steve Stephan and Executive Director Richard Bouhan testified during hearings.
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
Alaska's bill provides authority for the Director to enter into a NIMA-type agreement with other states to share premium taxes. Allocation would be done according to a schedule set forth by regulation, and the tax rates of each state would apply to multistate exposures. There are also requirements for allocating premium when a policy covers more than one classification. Brokers would be required to file quarterly allocation reports, even though the NRRA only permits annual reports. Alaska would retain any premium tax not allocated and paid to another state when Alaska is the home state.
The bill incorporates the exempt commercial purchaser (ECP) exemption from the NRRA and adopts the NRRA's uniform eligibility requirements for U.S. domestic and non-U.S. insurers (retaining alternative criteria for non-U.S. insurers besides International Insurers Department listing), but the Director would retain existing statutory authority to declare an insurer ineligible based on any number of factors including quality of management, financial condition, capital and surplus of a parent company, underwriting profit, investment income trends, trade and claims practices, reserving practices, company record and reputation within the industry, all of which eligibility requirements are preempted by the NRRA. The Director would be authorized to participate in an interstate agreement to develop alternative nationwide uniform eligibility requirements for U.S. domestic insurers.
Alaska is among the latest of states to pass NonAdmitted and Reinsurance Reform Act (NRRA) related implementation legislation. During the session NAPSLO provided draft legislation, supplied comments on legislation and Director of Government Relations Steve Stephan and Executive Director Richard Bouhan testified during hearings.
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
Alaska's bill provides authority for the Director to enter into a NIMA-type agreement with other states to share premium taxes. Allocation would be done according to a schedule set forth by regulation, and the tax rates of each state would apply to multistate exposures. There are also requirements for allocating premium when a policy covers more than one classification. Brokers would be required to file quarterly allocation reports, even though the NRRA only permits annual reports. Alaska would retain any premium tax not allocated and paid to another state when Alaska is the home state.
The bill incorporates the exempt commercial purchaser (ECP) exemption from the NRRA and adopts the NRRA's uniform eligibility requirements for U.S. domestic and non-U.S. insurers (retaining alternative criteria for non-U.S. insurers besides International Insurers Department listing), but the Director would retain existing statutory authority to declare an insurer ineligible based on any number of factors including quality of management, financial condition, capital and surplus of a parent company, underwriting profit, investment income trends, trade and claims practices, reserving practices, company record and reputation within the industry, all of which eligibility requirements are preempted by the NRRA. The Director would be authorized to participate in an interstate agreement to develop alternative nationwide uniform eligibility requirements for U.S. domestic insurers.
Wednesday, June 22, 2011
Oregon Legislative Counsel Questions Delegation of Authority in Compact Bill
Legislation delegating legislative authority to insurance departments as part of laws allowing states to enter into unspecified tax sharing agreements or interstate compacts is unconstitutional, according to an opinion issued by the Oregon Legislative Counsel Committee.
In a written response to a state senator regarding a bill under consideration by the Oregon Legislature, the Legislative Counsel Committee stated that under Oregon’s constitution, the authorization in HB 2679 to allow the Director of the Department of Consumer and Business Services “to enter into a compact, or other tax sharing arrangement, constitutes an “unconstitutional delegation of authority.”
Oregon, along with other states, are considering, or have considered, legislation to enter into a compact or establish agreements with other states to allocate premium taxes paid to an insured’s home state.
some States have considered such legislation in connection with other legislation updating state laws to bring them into compliance with the Nonadmitted and Reinsurance Reform Act, which goes into effect on July 21.
The Oregon counsel’s office said that the “Legislative Assembly may delegate some portion of its authority to state agencies, as it deems appropriate”, however the authority to enter into an interstate compact has not been delegated by the Legislative Assembly in the past (with one exception), and the bill “does not contain sufficient standards and safeguards regarding the delegation of legislative authority and because the subject of the delegation, the power to tax, is a core legislative function.”
In a written response to a state senator regarding a bill under consideration by the Oregon Legislature, the Legislative Counsel Committee stated that under Oregon’s constitution, the authorization in HB 2679 to allow the Director of the Department of Consumer and Business Services “to enter into a compact, or other tax sharing arrangement, constitutes an “unconstitutional delegation of authority.”
Oregon, along with other states, are considering, or have considered, legislation to enter into a compact or establish agreements with other states to allocate premium taxes paid to an insured’s home state.
some States have considered such legislation in connection with other legislation updating state laws to bring them into compliance with the Nonadmitted and Reinsurance Reform Act, which goes into effect on July 21.
The Oregon counsel’s office said that the “Legislative Assembly may delegate some portion of its authority to state agencies, as it deems appropriate”, however the authority to enter into an interstate compact has not been delegated by the Legislative Assembly in the past (with one exception), and the bill “does not contain sufficient standards and safeguards regarding the delegation of legislative authority and because the subject of the delegation, the power to tax, is a core legislative function.”
Citizens and Catastrophe Fund Assessment Base Under Review by Florida Insurance Officials
Principals with the Office of Insurance Regulation, Citizens Property Insurance Corporation and the Florida Hurricane Catastrophe Fund are reviewing the premium assessment base for Florida policyholders relating to multi-state risks when Florida is the home state, according to the Florida Surplus Line Service Office.
The FSLSO noted that after reviewing the language of the federal NRRA and provisions of SB 1816, it appears that the assessments levied against Florida policyholders will be limited to the portion of premium covering only the exposures in Florida and not the entire gross premium of the policy.
The FSLSO also noted Surplus lines agents and Independently Procured Coverage filers will be required to submit the gross policy premium allocated by state for multi-state new business and renewal policies, and any subsequent endorsements to those policies, effective on or after July 1, 2011. As provided, SB 1816 dictates that multi-state exposures filed with Florida will be taxed on the gross premium using the tax rates of the states applicable to the premium allocated for each state where the risk is located. Service fees will be calculated at Florida's fee on 100% of the gross premium of the policy.
The FSLSO noted that after reviewing the language of the federal NRRA and provisions of SB 1816, it appears that the assessments levied against Florida policyholders will be limited to the portion of premium covering only the exposures in Florida and not the entire gross premium of the policy.
The FSLSO also noted Surplus lines agents and Independently Procured Coverage filers will be required to submit the gross policy premium allocated by state for multi-state new business and renewal policies, and any subsequent endorsements to those policies, effective on or after July 1, 2011. As provided, SB 1816 dictates that multi-state exposures filed with Florida will be taxed on the gross premium using the tax rates of the states applicable to the premium allocated for each state where the risk is located. Service fees will be calculated at Florida's fee on 100% of the gross premium of the policy.
Tuesday, June 21, 2011
Connecticut Enacts NRRA Bill Authorizing Revenue/Insurance Commissioner to Enter Tax Sharing Agreement
The Connecticut Governor signed into law a bill on Tuesday that authorizes the Commissioner of Revenue Services and/or the Insurance Commissioner to enter into a tax sharing agreement or compact.
Connecticut is the 34th state to enact Nonadmitted and Reinsurance Reform Act (NRRA) related implementation legislation. During the session NAPSLO provided draft legislation, offered comments on legislation, and spoke with insurance department officials.
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.
Connecticut's bill (HB6652) as amended, authorizes the Commissioner of Revenue Services and/or the Insurance Commissioner to enter into a tax sharing agreement or compact including, but not limited to, NIMA.
The agreement/compact may provide for the application of the premium tax rate(s) for surplus lines and independently procured insurance of each state where there are insured risks, a standardized allocation formula and for taxes to be allocated to Connecticut when it is the home state and the other state where insured risks are located has not entered into the agreement/compact.
The agreement/compact may also provide for certain enumerated requirements and procedures that appear to be based on NIMA. The agreement/compact would control over any conflicting statutory provisions. The bill would require premium tax payments to Connecticut when it is the home state to be based on 100% of the entire premium basis and applying Connecticut's 4% tax rate, though as noted this requirement would not apply if there is a conflicting tax agreement/compact provision. Premium tax payments would need to be made quarterly (again subject to any agreement/compact).
The changes to the premium tax provisions would apply to insurance "that is procured, continued or renewed on or after July 1, 2011." This bill also incorporates the NRRA's exempt commercial purchaser (ECP) exemption.
Connecticut is the 34th state to enact Nonadmitted and Reinsurance Reform Act (NRRA) related implementation legislation. During the session NAPSLO provided draft legislation, offered comments on legislation, and spoke with insurance department officials.
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.
Connecticut's bill (HB6652) as amended, authorizes the Commissioner of Revenue Services and/or the Insurance Commissioner to enter into a tax sharing agreement or compact including, but not limited to, NIMA.
The agreement/compact may provide for the application of the premium tax rate(s) for surplus lines and independently procured insurance of each state where there are insured risks, a standardized allocation formula and for taxes to be allocated to Connecticut when it is the home state and the other state where insured risks are located has not entered into the agreement/compact.
The agreement/compact may also provide for certain enumerated requirements and procedures that appear to be based on NIMA. The agreement/compact would control over any conflicting statutory provisions. The bill would require premium tax payments to Connecticut when it is the home state to be based on 100% of the entire premium basis and applying Connecticut's 4% tax rate, though as noted this requirement would not apply if there is a conflicting tax agreement/compact provision. Premium tax payments would need to be made quarterly (again subject to any agreement/compact).
The changes to the premium tax provisions would apply to insurance "that is procured, continued or renewed on or after July 1, 2011." This bill also incorporates the NRRA's exempt commercial purchaser (ECP) exemption.
Friday, June 17, 2011
NAPSLO Questions Long-Term Viability of NAIC's NIMA Multistate Tax Compact
Representatives of NAPSLO questioned the long-term viability of the Nonadmitted Insurance Multistate Agreement (NIMA) to collect and distribute surplus lines premium taxes in light of the announcement by the Florida Office of Insurance Regulation (Office) that Florida has entered into an agreement with Mississippi and Hawaii to start NIMA.
"Signing the contract doesn't mean that the NIMA clearinghouse will become operational or that states will ultimately share revenue," said Richard Bouhan, Executive Director of NAPSLO. "It is not clear why any state, much less a large state, would stay in the NIMA system if it would cause a loss of revenue to the state. If the NIMA clearinghouse becomes operational, some states will lose tax revenue and some states will gain revenue. NIMA failed to create a revenue-neutral allocation system so its long-term viability is in question."
Under the Nonadmitted and Reinsurance Reform Act passed last year 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 have been working to bring their laws into compliance.
Under the Nonadmitted and Reinsurance Reform Act passed last year 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 have been working to bring their laws into compliance.
"Many issues need to be resolved before states could begin sharing revenue. For example, the creation of a clearinghouse for the states to share tax revenue will require compliance with state procurement laws," said Mr. Bouhan. "This could prevent some states from joining NIMA or force some to withdraw before the clearinghouse becomes operational. NIMA only requires 60 days notice to withdraw."
In addition to concerns about the viability of NIMA, NAPSLO officials questioned how NIMA would operate and whether it would be a burden on surplus lines brokers.
"NAPSLO is concerned that NIMA imposes a burdensome data reporting system on policyholders and brokers, since much of the required data would have to be created outside of the normal course of business. NIMA reinstates the type of tax system that the Dodd-Frank bill tried to eliminate. Instead of relying upon the home-state tax rate, NIMA attempts to impose the taxes, fees and assessments of multiple states on a single policy based upon dozens of different allocation formulas such as sales, receipts, employees etc. NIMA is basically the same system that Congress was seeking to reform."
As of June 16, 33 states have enacted NRRA related compliance laws and legislation is under review by Governors in Alaska, Connecticut and Missouri. Nine other states have bills under consideration by their legislatures; two states and the District of Columbia are not currently considering legislation, and three state legislatures adjourned without taking action. Of the 36 state legislatures taking action, 18 have passed laws allowing the state to join a multistate tax sharing agreement, nine passed bills allowing the state to specifically join SLIMPACT, eight states passed compliance legislation without addressing a tax sharing agreement and one state (Nebraska) passed legislation allowing the state to only join the NAIC’s NIMA tax compact.
Many of the largest states have elected not to join NIMA at this time. New York, California, Illinois, Ohio, Maryland, Missouri, Virginia, Washington, and others have declined to authorize the state to enter into the NIMA system. Pennsylvania has a bill pending to conform the state code to the NRRA, but it fails to authorize the state to join NIMA. Nine other states authorized their state to enter into SLIMPACT an alternative compact model. The state where the principal place of business resides is the only state that may tax a nonadmitted policy under the NRRA. It is possible that NIMA is failing to attract the states with the most corporate headquarters because those states may lose revenue if they join. Some of the states that are not joining NIMA appear to be states that have a concentration of corporate headquarters.
"Another potential obstacle to the long term viability of the NIMA clearinghouse is that some states will avoid the NIMA system if their policyholders experience a tax increase after they join NIMA," said NAPSLO Director of Government Relations Steve Stephan. "For example, joining the NIMA tax compact could represent a tax increase for some Hawaiian policyholders because they would face paying the higher assessments charged by Florida and Mississippi. Many states are simply unwilling to impose a tax increase of any size."
Thursday, June 16, 2011
Maine Enacts NRRA Legislation Allowing State to Enter Tax Sharing Agreement
The Maine Governor has signed into law a bill that authorizes the Maine Tax Assessor, after consulting with the Department of Professional and Financial Regulation, Bureau of Insurance, to enter into a tax sharing agreement.
Maine is the 33rd state to enact Nonadmitted and Reinsurance Reform Act (NRRA) related implementation legislation. During the session NAPSLO provided draft legislation, offered comments on legislation, and participated in working group meetings to discuss improvements to the legislation.
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.
Maine's bill generally authorizes the Maine Tax Assessor, after consulting with the Department of Professional and Financial Regulation, Bureau of Insurance, to enter into a tax sharing agreement. The Assessor may not enter into a tax sharing agreement unless he or she completes a fiscal analysis of the impact of the agreement on the state's receipt of premium tax. The Assessor must also conclude, after consultation with certain industry representatives, that entering into the agreement is in the state's financial best interest, does not significantly increase administrative burden and cost to the state, surplus lines insurers and insureds, and is consistent with the NRRA requirements.
Maine's bill provides that all gross direct insurance premiums paid to nonadmitted insurers are subject to taxation under the Maine nonadmitted insurance laws if Maine is the insured's home state. The bill further provides that "for any nonadmitted insurance premiums that are subject to taxation by this State and interstate allocation of taxes…, the rate of taxation on each participating state's share of the premium must be that state's applicable nonadmitted insurance premium tax rate." The bill clarifies that all nonadmitted insurance premium tax other than for surplus lines insurance must be paid by the insured. These provisions apply to taxes on all premiums received on or after July 1, 2011.
This new legislation provides that Maine nonadmitted insurance laws apply "exclusively to transactions when [Maine] is the home state of the applicant or insured. It also adopts the NRRA definition of "home state" and clarifies the exempt commercial purchaser (ECP) exemption by adopting the explicit language from the NRRA.
Finally, the bill incorporates the NRRA insurer eligibility requirements, but retains the superintendent's authority to place on a white list those insurers that appear to be sound financially and have satisfactory claims practices. Maine continues to require producers to place business with only those insurers appearing on the list (if any such list has been published).
Maine is the 33rd state to enact Nonadmitted and Reinsurance Reform Act (NRRA) related implementation legislation. During the session NAPSLO provided draft legislation, offered comments on legislation, and participated in working group meetings to discuss improvements to the legislation.
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.
Maine's bill generally authorizes the Maine Tax Assessor, after consulting with the Department of Professional and Financial Regulation, Bureau of Insurance, to enter into a tax sharing agreement. The Assessor may not enter into a tax sharing agreement unless he or she completes a fiscal analysis of the impact of the agreement on the state's receipt of premium tax. The Assessor must also conclude, after consultation with certain industry representatives, that entering into the agreement is in the state's financial best interest, does not significantly increase administrative burden and cost to the state, surplus lines insurers and insureds, and is consistent with the NRRA requirements.
Maine's bill provides that all gross direct insurance premiums paid to nonadmitted insurers are subject to taxation under the Maine nonadmitted insurance laws if Maine is the insured's home state. The bill further provides that "for any nonadmitted insurance premiums that are subject to taxation by this State and interstate allocation of taxes…, the rate of taxation on each participating state's share of the premium must be that state's applicable nonadmitted insurance premium tax rate." The bill clarifies that all nonadmitted insurance premium tax other than for surplus lines insurance must be paid by the insured. These provisions apply to taxes on all premiums received on or after July 1, 2011.
This new legislation provides that Maine nonadmitted insurance laws apply "exclusively to transactions when [Maine] is the home state of the applicant or insured. It also adopts the NRRA definition of "home state" and clarifies the exempt commercial purchaser (ECP) exemption by adopting the explicit language from the NRRA.
Finally, the bill incorporates the NRRA insurer eligibility requirements, but retains the superintendent's authority to place on a white list those insurers that appear to be sound financially and have satisfactory claims practices. Maine continues to require producers to place business with only those insurers appearing on the list (if any such list has been published).
New Hampshire Approves NRRA Bill Allowing Commissioner to Join Tax Sharing System
The New Hampshire Governor has signed Nonadmitted and Reinsurance Reform Act (NRRA) compliance legislation that would give discretion for the Commissioner to participate in a tax sharing system for premium taxes on multistate risks.
New Hampshire is the 32nd state to enact NRRA related implementation legislation and during the session NAPSLO provided draft legislation, offered comments, and talked with representatives of the Department of Insurance.
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.
New Hampshire bill is mainly a premium tax bill and it provides broad discretion for the Commissioner to participate in a tax sharing system for premium taxes on multi-state risks. There is authorization for the Commissioner to use the allocation schedule included in such a system, which suggests the Commissioner could use a different allocation schedule than other participating states.
On placements involving multistate risks, the bill requires surplus lines brokers and insureds to apply the tax rates of each state where there are risks outside of New Hampshire and authorizes New Hampshire to retain all taxes not paid to other states. Brokers and insureds apparently would be required to allocate and calculate tax for each state applying each state's own tax rate, even if the state does not participate in the new tax sharing system.
The bill contains the NRRA's definition of "Home State" (minus the definitions related to affiliated groups) but does not otherwise use the term in the operative statutory text and the bill would adopt the NRRA's uniform insurer eligibility standards (the bill presumes any alternative nationwide uniform eligibility requirements would be part of the tax sharing agreement). The bill also would allow a New Hampshire domestic insurer to be designated as a surplus lines insurer.
New Hampshire is the 32nd state to enact NRRA related implementation legislation and during the session NAPSLO provided draft legislation, offered comments, and talked with representatives of the Department of Insurance.
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.
New Hampshire bill is mainly a premium tax bill and it provides broad discretion for the Commissioner to participate in a tax sharing system for premium taxes on multi-state risks. There is authorization for the Commissioner to use the allocation schedule included in such a system, which suggests the Commissioner could use a different allocation schedule than other participating states.
On placements involving multistate risks, the bill requires surplus lines brokers and insureds to apply the tax rates of each state where there are risks outside of New Hampshire and authorizes New Hampshire to retain all taxes not paid to other states. Brokers and insureds apparently would be required to allocate and calculate tax for each state applying each state's own tax rate, even if the state does not participate in the new tax sharing system.
The bill contains the NRRA's definition of "Home State" (minus the definitions related to affiliated groups) but does not otherwise use the term in the operative statutory text and the bill would adopt the NRRA's uniform insurer eligibility standards (the bill presumes any alternative nationwide uniform eligibility requirements would be part of the tax sharing agreement). The bill also would allow a New Hampshire domestic insurer to be designated as a surplus lines insurer.
Wednesday, June 15, 2011
Nevada Approves NRRA Legislation Allowing Commissioner to Enter Into Compact With Approval by State Board of Examiners
The Nevada Governor has signed into law Nonadmitted and Reinsurance Reform Act (NRRA) compliance legislation which authorizes the Commissioner, with the approval of the State Board of Examiners, to enter into a tax sharing agreement.
Nevada is among the latest of states to pass NRRA related implementation legislation. During the session NAPSLO provided draft legislation and offered comments on legislation.
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.
Nevada’s bill authorizes the Commissioner, with the approval of the State Board of Examiners, to enter into a tax sharing agreement. The bill was amended to remove a specific authorization to join NIMA, in favor of a more generic authorization to join a nonspecified compact. The bill provides that if the Commissioner conducts a hearing regarding participation in a tax agreement, within 18 months after the Commissioner enters into the agreement, the Commissioner must submit the findings to the State Board of Examiners as well as to the Legislative Counsel Bureau. The State Board of Examiners has the authority to approve the Commissioner's continued participation in the tax agreement if it is found to be in the best interest of the state (or to approve withdrawal if it is found not to be in the state's best interest).
The bill also allows the Commissioner may adopt regulations as necessary "to ensure compliance with federal law relating to nonadmitted insurance." If the Commissioner has entered into a tax sharing agreement, the tax rate of each participating state where risks are located would apply to premium allocated to that state; Nevada's tax rate would apply to the portion allocated to those states that have not entered into the agreement and Nevada would retain those taxes.
If the Commissioner has not entered into a tax sharing agreement, Nevada will collect and retain nonadmitted insurance premium tax based on 100% of the premium when the insured's home state is Nevada. The bill requires quarterly multistate allocation reports. It also incorporates the NRRA's definition of "home state", but also adds the NIMA definitions of "principal place of business" and "group policyholder" which if enacted could effectively preclude Nevada consumers from participating in surplus lines group insurance programs.
The bill incorporates the NRRA's exempt commercial purchaser (ECP) exemption (with a more liberal standard for a city or county), and provides for the exclusive home state regulation of surplus lines transactions and taxation, including surplus lines broker licensing. The bill also incorporates the NRRA/NAIC insurer eligibility requirements.
Nevada is among the latest of states to pass NRRA related implementation legislation. During the session NAPSLO provided draft legislation and offered comments on legislation.
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.
Nevada’s bill authorizes the Commissioner, with the approval of the State Board of Examiners, to enter into a tax sharing agreement. The bill was amended to remove a specific authorization to join NIMA, in favor of a more generic authorization to join a nonspecified compact. The bill provides that if the Commissioner conducts a hearing regarding participation in a tax agreement, within 18 months after the Commissioner enters into the agreement, the Commissioner must submit the findings to the State Board of Examiners as well as to the Legislative Counsel Bureau. The State Board of Examiners has the authority to approve the Commissioner's continued participation in the tax agreement if it is found to be in the best interest of the state (or to approve withdrawal if it is found not to be in the state's best interest).
The bill also allows the Commissioner may adopt regulations as necessary "to ensure compliance with federal law relating to nonadmitted insurance." If the Commissioner has entered into a tax sharing agreement, the tax rate of each participating state where risks are located would apply to premium allocated to that state; Nevada's tax rate would apply to the portion allocated to those states that have not entered into the agreement and Nevada would retain those taxes.
If the Commissioner has not entered into a tax sharing agreement, Nevada will collect and retain nonadmitted insurance premium tax based on 100% of the premium when the insured's home state is Nevada. The bill requires quarterly multistate allocation reports. It also incorporates the NRRA's definition of "home state", but also adds the NIMA definitions of "principal place of business" and "group policyholder" which if enacted could effectively preclude Nevada consumers from participating in surplus lines group insurance programs.
The bill incorporates the NRRA's exempt commercial purchaser (ECP) exemption (with a more liberal standard for a city or county), and provides for the exclusive home state regulation of surplus lines transactions and taxation, including surplus lines broker licensing. The bill also incorporates the NRRA/NAIC insurer eligibility requirements.
Tuesday, June 14, 2011
FSLSO to Offer Two NRRA webinars in June
The Florida Surplus Lines Service Office has two webinars scheduled this month regarding understanding the Nonadmitted and Reinsurance Reform Act (NRRA).
The first webinar, Understanding More About the NRRA: Commonly Asked Questions and Possible Scenarios is scheduled for Friday, June 24 from 3:00 p.m. - 4:00 p.m. Eastern and is targeted towards agents.
This webinar is a follow-up to FSLSO's original webinar and will take a more in-depth look at how Florida's surplus lines agents' filing procedures will change as a result of the passage of SB 1816 and the implications of the NRRA. Additionally, this presentation will go over some of the more frequently-asked-questions being sent to FSLSO by the agent community, including common placement scenarios and filing questions.
The second webinar, Understanding the NRRA: What Insurers Should Know and How to Be Prepared, is set for Wednesday, June 29 from 2:30 p.m. - 3:30 p.m. Eastern and is targeted towards insurers.
The webinar will provide an overview of the NRRA, the NAIC's response through the Nonadmitted Insurance Multi-state Agreement (NIMA), and Florida's legislative initiatives outlined in SB 1816.
Additionally, this webinar will discuss the provisions of the NRRA that will affect Florida's surplus lines insurer force including changes to insurer filing procedures, insurer management systems, and additional staff training.
Links to registration to both webinars are available on the FSLSO website at http://www.fslso.com/statutes/leg/2010/fed/index.aspx.
The first webinar, Understanding More About the NRRA: Commonly Asked Questions and Possible Scenarios is scheduled for Friday, June 24 from 3:00 p.m. - 4:00 p.m. Eastern and is targeted towards agents.
This webinar is a follow-up to FSLSO's original webinar and will take a more in-depth look at how Florida's surplus lines agents' filing procedures will change as a result of the passage of SB 1816 and the implications of the NRRA. Additionally, this presentation will go over some of the more frequently-asked-questions being sent to FSLSO by the agent community, including common placement scenarios and filing questions.
The second webinar, Understanding the NRRA: What Insurers Should Know and How to Be Prepared, is set for Wednesday, June 29 from 2:30 p.m. - 3:30 p.m. Eastern and is targeted towards insurers.
The webinar will provide an overview of the NRRA, the NAIC's response through the Nonadmitted Insurance Multi-state Agreement (NIMA), and Florida's legislative initiatives outlined in SB 1816.
Additionally, this webinar will discuss the provisions of the NRRA that will affect Florida's surplus lines insurer force including changes to insurer filing procedures, insurer management systems, and additional staff training.
Links to registration to both webinars are available on the FSLSO website at http://www.fslso.com/statutes/leg/2010/fed/index.aspx.
North Carolina Passes NRRA Compliance Law; Study to Determine if State to Join a Compact
The North Carolina Governor has signed into law Nonadmitted and Reinsurance Reform Act compliance legislation which authorizes a study to determine whether the state will join a tax sharing agreement or compact.
North Carolina is among the latest of states to pass Nonadmitted and Reinsurance Reform Act related implementation legislation. During the session NAPSLO provided draft legislation, offered comments on legislation and met with the Department of Insurance.
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.
North Carolina’s legislation does not authorize the Commissioner to enter into a tax sharing compact or agreement. Rather, it requires a study committee, in cooperation with the Commissioner, to examine the impact of the state’s entry into a tax compact or agreement, then report its findings and any proposed legislation to the 2012 Regular Session of the 2011 General Assembly.
The legislation also would add a provision to the surplus lines tax section stating that if other states have failed to enter into a tax sharing compact or procedures with North Carolina, the tax collected (at North Carolina's 5% rate) shall be retained by North Carolina. This legislation also expressly provides for exclusive home state taxation and regulation, and incorporates the exempt commercial purchaser exemption.
North Carolina is among the latest of states to pass Nonadmitted and Reinsurance Reform Act related implementation legislation. During the session NAPSLO provided draft legislation, offered comments on legislation and met with the Department of Insurance.
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.
North Carolina’s legislation does not authorize the Commissioner to enter into a tax sharing compact or agreement. Rather, it requires a study committee, in cooperation with the Commissioner, to examine the impact of the state’s entry into a tax compact or agreement, then report its findings and any proposed legislation to the 2012 Regular Session of the 2011 General Assembly.
The legislation also would add a provision to the surplus lines tax section stating that if other states have failed to enter into a tax sharing compact or procedures with North Carolina, the tax collected (at North Carolina's 5% rate) shall be retained by North Carolina. This legislation also expressly provides for exclusive home state taxation and regulation, and incorporates the exempt commercial purchaser exemption.
Tennessee Approves SLIMPACT-Lite but State Could Join Other Tax Sharing Agreement
The Tennessee Governor has signed into law a bill that would adopt SLIMPACT-Lite, however if the compact is not effective by early next year the bill allows the state to enter into another tax sharing agreement.
Tennessee is among the latest of states to pass Nonadmitted and Reinsurance Reform Act related implementation legislation. During the session NAPSLO provided draft legislation and offered comments on legislation.
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.
Tennessee's bill would adopt SLIMPACT-lite, however, if SLIMPACT does not become effective by February 28, 2012, Tennessee would be authorized to enter into a cooperative agreement, compact or reciprocal agreement with another state(s) for the purpose of the collection of insurance premium taxes.
Under the bill surplus lines brokers would be required to file annual reports of surplus lines transactions. The bill would require a tax on the total gross premiums charged at a rate of 5%, which would be an increase from the current tax rate (from 3.25% on fire insurance, 4.0% on workers' comp and 2.5% for other lines) when Tennessee is the home state of the insured.
Tennessee would retain any premium tax allocated to a state that has failed to enter SLIMPACT with Tennessee. The bill provides that Tennessee's surplus lines law would apply only to surplus lines transactions where Tennessee is the insured's home state.
The bill would incorporate the exempt commercial purchaser (ECP) exemption and the bill repeals existing insurer eligibility provisions and incorporates the NRRA mandates regarding nationwide uniform insurer eligibility standards. However, the law as amended apparently would purport to continue to allow the Commissioner to make an insurer ineligible based on the insurer's claims practices.
Tennessee is among the latest of states to pass Nonadmitted and Reinsurance Reform Act related implementation legislation. During the session NAPSLO provided draft legislation and offered comments on legislation.
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.
Tennessee's bill would adopt SLIMPACT-lite, however, if SLIMPACT does not become effective by February 28, 2012, Tennessee would be authorized to enter into a cooperative agreement, compact or reciprocal agreement with another state(s) for the purpose of the collection of insurance premium taxes.
Under the bill surplus lines brokers would be required to file annual reports of surplus lines transactions. The bill would require a tax on the total gross premiums charged at a rate of 5%, which would be an increase from the current tax rate (from 3.25% on fire insurance, 4.0% on workers' comp and 2.5% for other lines) when Tennessee is the home state of the insured.
Tennessee would retain any premium tax allocated to a state that has failed to enter SLIMPACT with Tennessee. The bill provides that Tennessee's surplus lines law would apply only to surplus lines transactions where Tennessee is the insured's home state.
The bill would incorporate the exempt commercial purchaser (ECP) exemption and the bill repeals existing insurer eligibility provisions and incorporates the NRRA mandates regarding nationwide uniform insurer eligibility standards. However, the law as amended apparently would purport to continue to allow the Commissioner to make an insurer ineligible based on the insurer's claims practices.
Monday, June 13, 2011
NAPSLO Convention Registration Starts Tuesday
Registration for the 2011 NAPSLO Annual Convention, set for October 10-13 in San Diego, will start on Tuesday, June 14 and members can register online through the convention website at http://annual.napslo.org.
Convention registration fees are $825 for delegates and $395 for spouses until September 1. After September 1 fees will increase to $925 and $425. Representatives of member firms may register online for the convention or download registration forms from the convention site.
The convention will take place at the Manchester Grand Hyatt and San Diego Marriott Marquis & Marina, with the Opening Reception at the Marriott and all other NAPSLO programs at the Hyatt. Hotel rooms will be available at both the Grand Hyatt and the Marriott Marquis.
The convention will open on Monday, October 10, with registration opening at 10:00 a.m., followed by the Opening Reception Monday night. Tuesday will be mostly open for members to meet with other members, however there will be a Next Generation program from 3:00 - 4:00 p.m.
The main convention programs will take place on Wednesday and will feature Michael Lewis, author of The Blind Side and The Big Short as the Derek Hughes/NAPSLO Educational Foundation lecture series speaker. In addition, the traditional awards programs, ASLI recognition, and annual business meeting will also take place on Wednesday morning.
Convention registration fees are $825 for delegates and $395 for spouses until September 1. After September 1 fees will increase to $925 and $425. Representatives of member firms may register online for the convention or download registration forms from the convention site.
The convention will take place at the Manchester Grand Hyatt and San Diego Marriott Marquis & Marina, with the Opening Reception at the Marriott and all other NAPSLO programs at the Hyatt. Hotel rooms will be available at both the Grand Hyatt and the Marriott Marquis.
The convention will open on Monday, October 10, with registration opening at 10:00 a.m., followed by the Opening Reception Monday night. Tuesday will be mostly open for members to meet with other members, however there will be a Next Generation program from 3:00 - 4:00 p.m.
The main convention programs will take place on Wednesday and will feature Michael Lewis, author of The Blind Side and The Big Short as the Derek Hughes/NAPSLO Educational Foundation lecture series speaker. In addition, the traditional awards programs, ASLI recognition, and annual business meeting will also take place on Wednesday morning.
Friday, June 10, 2011
Alabama Enacts SLIMPACT-Lite Bill
The Alabama governor signed into law on Thursday a bill which would adopt the SLIMPACT-lite tax sharing agreement.
Alabama is among the latest of the states to pass Nonadmitted and Reinsurance Reform Act related implementation legislation. During the session NAPSLO provided draft legislation and offered comments on legislation.
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.
Alabama’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 also adopt uniform insurer eligibility requirements.
The bill provides for exclusive home state regulation of surplus lines compliance, but does not incorporate the NRRA's exempt Commercial Purchaser (ECP) exemption from state diligent search requirements.
Alabama is among the latest of the states to pass Nonadmitted and Reinsurance Reform Act related implementation legislation. During the session NAPSLO provided draft legislation and offered comments on legislation.
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.
Alabama’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 also adopt uniform insurer eligibility requirements.
The bill provides for exclusive home state regulation of surplus lines compliance, but does not incorporate the NRRA's exempt Commercial Purchaser (ECP) exemption from state diligent search requirements.
Thursday, June 09, 2011
Minnesota Passes NRRA Compliance Legislation; No Mention of Compacts
Minnesota recently enacted Nonadmitted and Reinsurance Reform Act (NRRA) compliance legislation but it the legislation did not include any mention of a compact.
Minnesota is among the states to pass NRRA related implementation legislation. During the session NAPSLO provided draft legislation, offered comments on legislation.
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.
Minnesota's bill only addresses premium tax, incorporating the NRRA mandate that only the home state of an insured may require the payment of nonadmitted insurance premium tax and the NRRA's definition of "home state." The bill does not include a tax sharing proposal.
The bill would require nonadmitted insurance premium tax to be paid based on 100% of the gross premiums and applying Minnesota's tax rates (3% for surplus lines, 2% for direct placements), "with no allocation of the tax to other states" when Minnesota is the home state of the insured.
Minnesota is among the states to pass NRRA related implementation legislation. During the session NAPSLO provided draft legislation, offered comments on legislation.
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.
Minnesota's bill only addresses premium tax, incorporating the NRRA mandate that only the home state of an insured may require the payment of nonadmitted insurance premium tax and the NRRA's definition of "home state." The bill does not include a tax sharing proposal.
The bill would require nonadmitted insurance premium tax to be paid based on 100% of the gross premiums and applying Minnesota's tax rates (3% for surplus lines, 2% for direct placements), "with no allocation of the tax to other states" when Minnesota is the home state of the insured.
Wednesday, June 08, 2011
Kentucky Issues Advisory Opinion on Impact of NRRA on State
The Kentucky Insurance Department has issued an Advisory Opinion to clarify the Department’s expectations of the compact provisions of Kentucky's new law (HB 167) which brings the state into compliance with the Nonadmitted and Reinsurance Reform Act (NRRA). The NRRA become effective July 21, 2011.
The bill authorizes the State to become a Compacting State under the Surplus Lines Insurance Multi-State Compliance Compact (SLIMPACT) but the opinion outlines how the state will follow the NRRA until the the compact comes into existence. The Kentucky also law amends provisions of Kentucky law to establish one uniform tax rate that would apply to non-admitted insurance on multi-state risks.
This Advisory Opinion also reviews provisions of the NRRA that preempt current Kentucky state law governing non-admitted insurance on multi-state risks. The Advisory Opinion notes that after July 21, 2011, NRRA preempts the following provisions of Kentucky law: Home State, Licensure Requirements, Exempt Commercial Purchaser, and Taxation on Non-Admitted Insurance on Multi-State Risks, and the opinion goes into detail on each area.
The bill authorizes the State to become a Compacting State under the Surplus Lines Insurance Multi-State Compliance Compact (SLIMPACT) but the opinion outlines how the state will follow the NRRA until the the compact comes into existence. The Kentucky also law amends provisions of Kentucky law to establish one uniform tax rate that would apply to non-admitted insurance on multi-state risks.
This Advisory Opinion also reviews provisions of the NRRA that preempt current Kentucky state law governing non-admitted insurance on multi-state risks. The Advisory Opinion notes that after July 21, 2011, NRRA preempts the following provisions of Kentucky law: Home State, Licensure Requirements, Exempt Commercial Purchaser, and Taxation on Non-Admitted Insurance on Multi-State Risks, and the opinion goes into detail on each area.
Friday, June 03, 2011
Rhode Island Approves SLIMPACT-Lite & General Compact Legislation
The Rhode Island Governor has signed into law two tax sharing compact related bills; one adopting SLIMPACT-Lite and the second provides general authorization for the commissioner to join a compact.
Rhode Island is among the latest of 26 states to pass Nonadmitted and Reinsurance Reform Act related implementation legislation. During the session NAPSLO provided draft legislation, offered comments on legislation and met with legislators.
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.
Rhode Island H5110 adopts SLIMPACT-lite and it establishes a Compact Commission would adopt rules on tax allocation, reporting, collection and distribution, and may also adopt uniform insurer eligibility requirements.
H5110 provides for exclusive home state regulation of surplus lines compliance, but does not incorporate the NRRA's ECP exemption from state diligent search requirements. The bill would provide the Superintendent with authority to enter into a different tax sharing agreement if SLIMPACT does not take effect or becomes ineffective, but only if the Division of Insurance has completed a fiscal analysis of the impact of the agreement or contract that examines the expected effects on Rhode Island's gross receipt of premium tax; reviewed whether the contract will create additional administrative burdens on the State of Rhode Island or surplus lines licensee; concluded, after conducting a public hearing, that entering into the agreement or contract: is in Rhode Island's financial best interest; and is consistent with the requirements of the NRRA.
The second bill, H5953, would generally authorize the Commissioner to participate in a tax sharing agreement and the clearinghouse established through such agreement, as well as to utilize the allocation schedule included in the agreement.
H5953 further authorizes the Commissioner to establish a "uniform, statewide rate of taxation applicable to lines of nonadmitted insurance subject to the agreement." The bill does not expressly reference NIMA but it does incorporate the "principal place of business/residence" and "group insurance" definitions from NIMA, which may lead to unintended consequences such as prohibiting Rhode Island residents from obtaining insurance under a group master policy issued under the surplus lines law of another state.
H5953 addresses surplus lines tax but not the tax on independently procured insurance. The bill would require the broker to collect and pay a 4% tax (up from 3%) on premiums allocated to exposures/locations in Rhode Island, and to pay tax on premiums allocated to exposures/locations in other states based on the tax rates and fees of those states, even if those states are not reciprocal in sharing taxes with Rhode Island.
H5953 does not incorporate the NRRA's mandates of exclusive home state regulation or taxation, exempt commercial purchaser (ECP) exemption or uniform insurer eligibility requirements.
Rhode Island is among the latest of 26 states to pass Nonadmitted and Reinsurance Reform Act related implementation legislation. During the session NAPSLO provided draft legislation, offered comments on legislation and met with legislators.
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.
Rhode Island H5110 adopts SLIMPACT-lite and it establishes a Compact Commission would adopt rules on tax allocation, reporting, collection and distribution, and may also adopt uniform insurer eligibility requirements.
H5110 provides for exclusive home state regulation of surplus lines compliance, but does not incorporate the NRRA's ECP exemption from state diligent search requirements. The bill would provide the Superintendent with authority to enter into a different tax sharing agreement if SLIMPACT does not take effect or becomes ineffective, but only if the Division of Insurance has completed a fiscal analysis of the impact of the agreement or contract that examines the expected effects on Rhode Island's gross receipt of premium tax; reviewed whether the contract will create additional administrative burdens on the State of Rhode Island or surplus lines licensee; concluded, after conducting a public hearing, that entering into the agreement or contract: is in Rhode Island's financial best interest; and is consistent with the requirements of the NRRA.
The second bill, H5953, would generally authorize the Commissioner to participate in a tax sharing agreement and the clearinghouse established through such agreement, as well as to utilize the allocation schedule included in the agreement.
H5953 further authorizes the Commissioner to establish a "uniform, statewide rate of taxation applicable to lines of nonadmitted insurance subject to the agreement." The bill does not expressly reference NIMA but it does incorporate the "principal place of business/residence" and "group insurance" definitions from NIMA, which may lead to unintended consequences such as prohibiting Rhode Island residents from obtaining insurance under a group master policy issued under the surplus lines law of another state.
H5953 addresses surplus lines tax but not the tax on independently procured insurance. The bill would require the broker to collect and pay a 4% tax (up from 3%) on premiums allocated to exposures/locations in Rhode Island, and to pay tax on premiums allocated to exposures/locations in other states based on the tax rates and fees of those states, even if those states are not reciprocal in sharing taxes with Rhode Island.
H5953 does not incorporate the NRRA's mandates of exclusive home state regulation or taxation, exempt commercial purchaser (ECP) exemption or uniform insurer eligibility requirements.
Hawaii Approves NRRA Compliance Legislation; State Could Join Compact Under Bill
The Hawaiian Governor has signed legislation this week which provides the Insurance Commissioner broad discretion to participate in a tax sharing system, as well as to adopt uniform insurer eligibility requirements.
Hawaii is among 26 states to pass NonAdmitted and Reinsurance Reform Act (NRRA) related implementation legislation and 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.
Hawaii's bill would provide the Commissioner broad discretion to participate in a tax sharing system, as well as to adopt uniform insurer eligibility requirements. While the bill authorizes does not expressly endorse NIMA, it does incorporate many of its provisions, including its definitions of "Home State," "Group Insurance" and "Principal Place of Business." The bill incorporates the NRRA's exempt commercial purchaser (ECP) exemption from the diligent search requirement.
Hawaii's bill would require brokers and insureds to report the multi-state allocation for transactions on a quarterly basis, which is inconsistent with the NRRA. The bill would require brokers to report all surplus lines business transacted during the quarter, not just transactions involving Hawaii Home State risks, and would require brokers to provide the following information "itemized by state": aggregate gross premiums; aggregate return premiums; aggregate net premiums and fees and aggregate remitted taxes and fees.
Brokers and insureds must apply the tax rate of each state where there are exposures for a multi-state risk, even if the other state does not participate in the new tax sharing system. Hawaii would retain all premium taxes on Hawaii Home State risks not paid to other states.
Hawaii is among 26 states to pass NonAdmitted and Reinsurance Reform Act (NRRA) related implementation legislation and 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.
Hawaii's bill would provide the Commissioner broad discretion to participate in a tax sharing system, as well as to adopt uniform insurer eligibility requirements. While the bill authorizes does not expressly endorse NIMA, it does incorporate many of its provisions, including its definitions of "Home State," "Group Insurance" and "Principal Place of Business." The bill incorporates the NRRA's exempt commercial purchaser (ECP) exemption from the diligent search requirement.
Hawaii's bill would require brokers and insureds to report the multi-state allocation for transactions on a quarterly basis, which is inconsistent with the NRRA. The bill would require brokers to report all surplus lines business transacted during the quarter, not just transactions involving Hawaii Home State risks, and would require brokers to provide the following information "itemized by state": aggregate gross premiums; aggregate return premiums; aggregate net premiums and fees and aggregate remitted taxes and fees.
Brokers and insureds must apply the tax rate of each state where there are exposures for a multi-state risk, even if the other state does not participate in the new tax sharing system. Hawaii would retain all premium taxes on Hawaii Home State risks not paid to other states.
Vermont Approves NRRA Compliance Legislation; Also Adopts SLIMPACT-Lite Tax Sharing System
The Vermont Governor has signed NonAdmitted and Reinsurance Reform Act (NRRA) compliance legislation that would adopt SLIMPACT-Lite.
Vermont is among the 26 states to pass NRRA related implementation legislation and during the session NAPSLO provided draft legislation and offered comments on legislation.
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.
Vermont’s bill would adopt SLIMPACT-lite and a Compact Commission would adopt rules on tax allocation, reporting, collection and distribution, and may also adopt uniform insurer eligibility requirements. The Vermont commissioner may enter into another compact if SLIMPACT does not become effective.
The non-SLIMPACT portion of the bill generally provides for exclusive home state regulation of surplus lines compliance, but also clarifies that all laws regarding nonadmitted insurance apply only when Vermont is the home state of the insured. The bill incorporates the NRRA's exempt commercial purchaser (ECP) exemption from the diligent search requirement.
The bill also incorporates the insurer eligibility requirements from the NRRA, but should be further modified to reflect the preemption of other requirements besides domiciliary state license and minimum capital and surplus, as well as the automatic eligibility of non-U.S. insurers that are IID-listed.
Vermont is among the 26 states to pass NRRA related implementation legislation and during the session NAPSLO provided draft legislation and offered comments on legislation.
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.
Vermont’s bill would adopt SLIMPACT-lite and a Compact Commission would adopt rules on tax allocation, reporting, collection and distribution, and may also adopt uniform insurer eligibility requirements. The Vermont commissioner may enter into another compact if SLIMPACT does not become effective.
The non-SLIMPACT portion of the bill generally provides for exclusive home state regulation of surplus lines compliance, but also clarifies that all laws regarding nonadmitted insurance apply only when Vermont is the home state of the insured. The bill incorporates the NRRA's exempt commercial purchaser (ECP) exemption from the diligent search requirement.
The bill also incorporates the insurer eligibility requirements from the NRRA, but should be further modified to reflect the preemption of other requirements besides domiciliary state license and minimum capital and surplus, as well as the automatic eligibility of non-U.S. insurers that are IID-listed.
Subscribe to:
Posts (Atom)