The Congressional mandate of making multistate surplus lines transactions and tax payments more uniform, efficient and streamlined for consumers, businesses and brokers is threatened by the Nonadmitted Insurance Multistate Agreement (NIMA), NAPSLO said in testimony submitted to the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity for a hearing on July 28 entitled “Insurance Oversight: Policy Implications for Consumers, Businesses and Jobs.”
“NAPSLO is increasingly concerned that the NRRA is being implemented in many states (even as promoted by NAIC) in such a way that they’ll make things worse – not better – for surplus lines stakeholders,” said NAPSLO’s testimony. “Unfortunately certain state interpretation and implementation of the NRRA has, in NAPSLO’s view, been inconsistent with Congress’s intent."
The House subcommittee hearing is set for 10:00 a.m. (Eastern) on Thursday and NAPSLO President Letha Heaton will be testifying before the subcommittee as part of an industry panel. A live webcast feed is scheduled to be available from the subcommittee website. Complete testimony and press release on testimony are available to download.
NAPSLO strongly opposes NIMA’s current tax allocation methodology as it is wholly unworkable for the vast majority of the industry, and if implemented will result in new costs and fees levied on surplus lines consumers. As part of its testimony, NAPSLO included comments from brokers on the difficulty they would have in operating under the NIMA allocation system.
NAPSLO urges parties to abandon the NIMA tax allocation methodology and instead adopt one based on state by state premium data from the “Schedule T” section of annual financial statement submitted to the NAIC by surplus lines carriers. Kentucky’s insurance commissioner has proposed a tax allocation formula to allocate taxes based on exposures. While NAPSLO favors a “Schedule T” approach, it also believes the approach proposed by Kentucky presents a workable compromise that would be a vast improvement over the NAIC-NIMA tax methodology.