Friday, October 21, 2011

NAPSLO Joins Nine Other Industry Groups Urging NIMA States to Adopt the Kentucky Compromise for Allocating Surplus Lines Taxes

NAPSLO joined nine other industry trade groups in writing representatives of states who are part of the Nonadmitted Insurance Multi-State Agreement (“NIMA States”) to recommend their adoption of the allocation methodology proposed by the Kentucky Department of Insurance (“Kentucky compromise”).

NAPSLO joined the American Association of Managing General Agents, the American Bankers Insurance Association, the American Insurance Association, the Council of Insurance Agents & Brokers, the Independent Insurance Agents & Brokers of America, the National Association of Mutual Insurance Companies, the National Association of Professional Insurance Agents, the Property Casualty Insurers Association of America and the Risk and Insurance Management Society, Inc. in writing the letter urging adoption of the Kentucky allocation proposal.

The industry letter noted the Kentucky proposal would continue to require the allocation of casualty premiums on a state-specific or location-specific basis when a multistate policy’s premiums are determined on a state-specific or location-specific basis, but it permits the allocation of premiums to the home state if a single premium charge is applied and no location-specific rating occurs in connection with the placement. Industry groups previously voiced support for the Kentucky compromise in August writing representatives of the Surplus Lines Multistate Compliance Compact Commission (“SLIMPACT”) to urge the adoption of the Kentucky proposal. SLIMPACT members have stated their support of the plan. Many states revised their insurance laws this year for the purpose of compliance with the Nonadmitted and Reinsurance Reform Act (“NRRA”).

“We believe the Kentucky compromise is the option best suited and most likely to bring the various parties and interests together and produce the much-needed uniformity intended by the NRRA,” said David Leonard, Co-Chair of NAPSLO’s Legislative Committee. “We are most interested in working with states as we seek to realize the promise of uniformity while resolving the threat of unworkable allocation methods and competing tax sharing approaches.”

The Kentucky compromise includes refinements to the existing NIMA allocation method possessing considerable merit and meeting the needs of state officials without burdening companies, brokers and insureds with unnecessary and new data reporting requirements for the sole purpose of collecting taxes.

In contrast, the letter said that the NIMA allocation methodology would unavoidably result in new costs and fees, and would complicate, rather than simplify, surplus lines premium tax reporting and allocation procedures.

“The industry is concerned the NIMA allocation system would significantly expand the collection and reporting of information solely for tax allocation purposes,” said James Drinkwater, Co-Chair of NAPSLO’s Legislative Committee. “This represents new challenges, adds further complexity to the surplus lines marketplace, and exacerbates the burdens the NRRA was designed to relieve.”

To download a copy of the letter, CLICK HERE.

Delaware Issues Bulletin on New Category of Surplus Lines Insurer

The Delaware Insurance Department recently issued a bulletin reviewing the background for a new category of insurance company, "Domestic Surplus Lines Insurer (DSLI), which was created as part of new legislation this year.

The Nonadmitted Insurance Act [SB 109], enacted this year, creates the DSLI and it allows a Delaware-domiciled insurer to be treated as nonadmitted in Delaware for particular business purposes. A Delaware domestic surplus lines insurer will be domiciled and admitted in Delaware but, unlike all other Delaware-domiciled insurers, can write surplus lines policies in Delaware.

In the past, if a surplus lines insurer was admitted in Delaware, the company was not permitted to write coverage on the Delaware portion of a multi-state surplus lines policy, making it necessary to obtain that portion of the coverage from another insurer through a separate policy. Under the new law, this new type of insurer must fulfill all the requirements of an admitted domestic company, but will be considered nonadmitted for the writing of surplus lines business. This new law makes Delaware one of a handful of states in which a domestic insurer may offer surplus lines coverage in all 50 states including Delaware, its state of domicile.

A company that is licensed as a Delaware domestic surplus lines insurer may write surplus lines insurance business in any jurisdiction, including this state. Although the company is an admitted company, a domestic surplus lines insurer is limited to the writing of surplus lines business only.

The provisions of Chapters 42 and 44 of Title 18 regarding the Delaware Insurance Guaranty Funds will not apply to a domestic surplus lines insurer.

Companies applying to become Delaware domestic surplus lines insurers will have to prove adequate financial solvency, meet certain regulatory criteria, and specifically be approved by the Insurance Commissioner. The bulletin addresses the procedures that must be followed by companies wishing to become a Domestic Surplus Lines Insurer in Delaware.

Thursday, October 20, 2011

Lecture Series Renamed to Recognize E.G. Lassiter

The Derek Hughes/NAPSLO Educational Foundation Lecture Series has been renamed the E.G. Lassiter Lecture Series, presented by the Derek Hughes/NAPSLO Educational Foundation, Joseph Timmons, Foundation President, announced at the recent 2011 NAPSLO Annual Convention in San Diego.

Mr. Timmons said the change was made to recognize Mr. Lassiter's efforts to promote the lecture series presented at the annual convention. Mr. Lassiter, Chairman and CEO of RSUI Group, Inc., is retiring in 2012.

The Foundation Lecture Series was established in 1998 to bring prominent business or political individuals to the annual convention to speak on relevant topics of the day. Michael Lewis, author of The Blind Side, The Big Short, Liar's Poker and Boomerang, was the 2011 lecture series speaker, and his presentation was attended by a large number of members.

Wednesday, October 19, 2011

Hank Haldeman Presented Charles A. McAlear/NAPSLO Industry Award

Hank Haldeman, Co-Chair of NAPSLO’s Legislative Committee, was presented the Charles A. McAlear/NAPSLO Industry Award at the 2011 NAPSLO Annual Convention in San Diego.

Mr. Haldeman received the award from outgoing President Letha Heaton during the awards session of the program on October 12. The award was established by NAPSLO in the 1980s to honor individuals who have made significant contributions to the surplus lines industry and it was renamed in 1994 to recognize the Association's first president and founding member.

"I am surprised and flattered to be included amongst many real giants of our industry who have received this recognition,” said Mr. Haldeman. “Clearly, this is a reflection of the great importance that NAPSLO has placed upon the implementation of NRRA around the country, as we seek to realize the promise of uniformity while resolving the threat of unworkable allocation methods and competing tax sharing approaches.  The work is not complete here, but we hope to see a significant step forward as regulators, legislators and industry coalesce around the Kentucky compromise allocation method.  This has been a team effort, with many, both within and outside NAPSLO contributing substantially."

Mr. Haldeman has served as Co-Chair of NAPSLO’s Legislative Committee, Legislative Chair for the Surplus Lines Association of California and Legislative Chair & President of the California Insurance Wholesalers Association (CIWA).

In addition, David E. Leonard, CPCU, ARe, AIAF, ARM, Co-Chair of the Legislative Committee, received the Richard M. Bouhan Legislative Advocacy Award, which is presented to individuals whose advocacy helps advance the legislative interests of the surplus lines industry.  It was created in 2006 and recognized Mr. Bouhan’s legislative work on behalf of the surplus lines industry. Mr. Bouhan, who will be retiring next year, was also recognized during the program for his efforts for the Association over the past 30 years, including serving as Executive Director from 1987 to 2011.

Mr. Leonard, and Gilbert C. Hine, Jr., CPCU, CFP, Co-Chair of NAPSLO’s Education Committee, received NAPSLO President’s Award, which recognizes committee chairs for outstanding service.
Jeff Lamb, a member of NAPSLO’s Career Awareness and Internship Committee, received the W. Dana Roehrig (Past President’s) Award, which recognizes efforts of Association volunteers.

Kristen Skender, President of NAPSLO’s Next Generation, was presented the initial Steven R. Gross Next Generation Award to recognize contributions to the Association by members under 40. Mr. Gross is Co-Chair of NAPSLO’s Career Awareness and Internship Committee and oversaw the formation of the Next Generation.