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.

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