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.