The Texas Governor has signed into law Nonadmitted and Reinsurance Reform Act (NRRA) compliance legislation. Texas is among the latest state to enact NRRA related implementation legislation. During the session NAPSLO provided draft legislation, offered comments and spoke 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 bringing their laws into compliance.
SB1, in part, amends the surplus lines premium tax and independently procured tax statutes (Sections 225 and 226, Texas Insurance Code) to conform with the provisions of the NRRA. The bill adds definitions for “affiliate,” “affiliated group,” “control,” “home state,” and “independently procured insurance.” It also provides that Texas may not impose a tax on nonadmitted insurance other than premiums paid for insurance in which Texas is the home state of the insured.
SB1 further enables Texas to tax 100% of multi-state risks, where it is the home state, in the event Texas does not join a tax compact. If Texas does join a tax compact, SB1 authorizes the state to allocate taxes in accordance with the terms of the agreement. SB1 refers to existing statutes for the authorization to enter a tax compact.