Single-State filers in South Dakota Must Use Clearinghouse as of January 1

The South Dakota Division of Insurance recently released Bulletin 12-06 noting that beginning January 1, 2013 single-state filers must report surplus lines tax information and remit premium tax online via the Surplus Lines Clearinghouse’s website.

Single-state policies with an effective date before January 1, 2013, or endorsements on those policies, will continue to be filed with South Dakota until renewal. Single-state policies issued or renewed on or after January 1, 2013, including policy endorsements, must be filed with the Clearinghouse. Surplus lines filers may begin filing with the Clearinghouse on January 1, 2013.

The Clearinghouse is operated by the Florida Surplus Lines Service Office and South Dakota is one of five states, plus Puerto Rico, using the Clearinghouse as a member of Nonadmitted Insurance Multi-State Agreement (NIMA).

The bulletin noted that surplus lines filers should be aware of the policy data elements required to make the filings with the Clearinghouse as they may differ from the information currently required by the state to be collected for each policy. The data elements, additional information, and an online tax calculator can be found at the Clearinghouse website: www.slclearinghouse.com.

Bulletins 12-06, and an earlier bulletin, 12-03, require all surplus lines filers in South Dakota report information and remit surplus lines premium tax through the Clearinghouse website after January 1, 2013. Because South Dakota regulates surplus lines brokers, rather than agencies, all surplus lines filers must file surplus lines tax information and remit premium tax under the name of the surplus lines broker or individual independently procuring insurance.

Bulletin 12-03 provided guidance to surplus lines brokers and those who independently procure surplus lines insurance (“surplus lines filers”) on multi-state policies where South Dakota is considered the “Home State” under the Nonadmitted and Reinsurance Reform Act (NRRA). Bulletin 12-06 provides guidance to all surplus lines filers, including those who file single-state surplus lines policies where South Dakota is the “Home State” under the NRRA (“single-state filers”).

Additional information is available at the Division’s website: http://dlr.sd.gov/insurance.

Registration Opens for Mid-Year Leadership Forum

Online registration opens today for the 2013 NAPSLO Mid-Year Leadership Forum, February 25-27 at the Eden Roc Renaissance Miami Beach. NAPSLO members can register for the meeting through the REGISTER page, using the Member ID for their office location.

The registration fee for delegates is $825 and the fee for spouses is $425. Registration fees will increase on January 19 to $925 and $475, respectively. After completing the registration process, there will be a link for attendees to reserve a hotel room at the Eden Roc. Rooms are $304 for a regular room or $354 for an Oceanside view. A limited number of suites are also available to reserve online. NAPSLO's room block will be available until January 18, however NAPSLO cannot guarantee room availability if the room block sells out prior to January 18.

The Mid-Year meeting commences on Monday, February 25 with opportunities for networking and the Opening Reception will be that evening. Tuesday is left open for attendees to network with other members.

On Wednesday morning, February 27, a distinguished panel of industry leaders will discuss how the industry can, and should, use innovative thinking and long-term goals to position P&C brokers to rise to the occasion under the worst of circumstances. The panel features industry presidents and CEOs, and a surprise guest speaker from the military who has dealt with life-and-death consequences of crises every day.

The annual Derek Hughes/NAPSLO Educational Foundation Golf Invitational will be held Wednesday afternoon at the Miami Beach Golf Course. Attendees can register for the tournament online, or by filing out the paper application in the golf brochure and mailing to the NAPSLO office. The Mid-Year programs end on Wednesday night with a cocktail reception at 6:00 p.m. to allow attendees to network with other attendees prior to dinner.

South Carolina Issues Bulletin on NRRA Changes

South Carolina recently issued Bulletin 2012-08 to outline national regulatory changes that have affected the placement of nonadmitted insurance in the state following passage of the Nonadmitted and Reinsurance Reform Act and updating state law.

In 2012 South Carolina passed Act No. 283, which was retroactive to January 1, 2012, and it amended state law to implement the definitions from the NRRA; authorized the director or his designee to enter into an agreement for the allocation of taxes; and established a blended tax rate of 6% for the collection of broker premium taxes. In addition when South Carolina is the home state, 100% of the premium taxes for policies written by insurers not licensed in this state is due.

The blended rate of 6% combines the current state broker tax rate of 4% with the existing municipal tax rate of 2% for a single 6% rate. The Act further states that a municipality may not impose any additional license fee or tax based upon a percentage of the premium.

A key provision in the Bulletin regards premium tax payments. Brokers are required to pay the blended tax rate of 6% to the state via the online surplus lines tax application and file any required reports on the business transacted with the South Carolina Department of Insurance. Prior to this Bulletin, payments were sent to various agencies. Now Brokers will not have to submit tax forms to the Municipal Association of South Carolina or file forms with multiple places or pay taxes to multiple locations., simplifying tax payments greatly and placing South Carolina in the fully home state tax rule column.

During the payment period for the fourth quarter of 2012, which is January 1, 2013 through January 31, 2013, brokers will pay the 4% portion of the blended tax rate for all business reported during the fourth quarter. Brokers will also pay the 2% portion of the blended tax rate for ALL business reported for calendar year 2012 to the Department of Insurance via the online surplus lines premium tax application.

As Act No. 283 is effective retroactive to January 1, 2012, this procedure is required to collect the 2% portion of the blended tax rate which has not been reported to the Department of Insurance. Beginning, January 1, 2013, brokers will pay the blended tax rate of 6% quarterly on all submissions and endorsements reported to the department via the online surplus lines premium tax application.

Matt Nichols President as NAPSLO Members Elect 2012-13 Officers, Directors

Matthew D. Nichols, ASLI, President of All Risks, Ltd., was elected to serve as President of NAPSLO for the 2012-13 term.

“I’m very excited and honored to become the president of NAPSLO for the next 12 months,” said Mr. Nichols. “I look forward to leading the organization in conjunction with the NAPSLO team. I appreciate their participation and support and would like to see as much volunteering as anyone would like to do in the coming 12 months.”

NAPSLO member firms elected the slate of Officers and Directors at the Association’s Annual Business Meeting on Wednesday during the 2012 Annual Convention in Atlanta.

NAPSLO members elected the following NAPSLO officers for one-year terms:
• President - Matthew D. Nichols, ASLI, All Risks, Ltd., Hunt Valley, Maryland
• Vice President - Kevin T. Westrope, Westrope, Kansas City, Missouri
• Secretary - Hank Haldeman, The Sullivan Group, Los Angeles, California
• Treasurer - Gilbert C. Hine, Jr., CPCU, CFP, McClelland & Hine, Inc., San Antonio, Texas

Elected for three-year terms on the Board of Directors were:
• Gilbert C. Hine, Jr., CPCU, CFP, McClelland & Hine, Inc., San Antonio, Texas
• Davis D. Moore, Worldwide Facilities, Inc., Los Angeles, California
• Matthew D. Nichols, ASLI, All Risks, Ltd., Hunt Valley, Maryland
• Scott A. Culler, Markel West, Woodland Hills, California
• Michael D. Miller, CPCU, CLU, ARe, Scottsdale Insurance Company, Scottsdale, Arizona

Outgoing Past President Letha Heaton and Board member Greg Crouse were also recognized during the General Session for their outstanding service to the NAPSLO Board of Directors.

Timothy Pedersen Presented Charles A. McAlear/NAPSLO Industry Award

Timothy Pedersen Presented Charles A. McAlear Award Timothy Pedersen, President of Travis/Pedersen & Associates and a Past NAPSLO President, was presented the Charles A. McAlear/NAPSLO Industry Award by outgoing President Robert Sargent during Wednesday’s General Session program at the 2012 NAPSLO Annual Convention in Atlanta.

“We recognized the best and brightest in our surplus lines community today,” said outgoing President Robert Sargent. “Our industry has become very successful because of the efforts of these leaders, and it was a privilege to honor them today.”

NAPSLO’s McAlear Industry Award honors individuals who have made significant contributions to the surplus lines industry.

Mr. Pedersen was elected to the NAPSLO Board in 1993 and served as President from 1999 to 2000, and as Convention Chair he was instrumental in planning NAPSLO’s special 25th Anniversary Convention in New York in 1999. Since leaving the NAPSLO Board, he has remained active and visible within the Association, and industry, serving on the Illinois Surplus Lines Association Board as Treasurer.

The NAPSLO President's Award, which recognizes NAPSLO Committee Chairs for outstanding service, was presented to Greg Crouse, Chair of NAPSLO’s Membership Committee. The W. Dana Roehrig (Past President's) Award, which recognizes efforts of NAPSLO’s committee volunteers, was presented to Wendy Houser for service to NAPSLO’s Mid-Year Committee. Daniel F. Maher, Executive Director of the Excess Line Association of New York, was presented the Richard M. Bouhan Legislative Advocacy Award, honoring individuals whose advocacy helps advance the legislative interests of the surplus lines industry. The Steven R. Gross Next Generation Award, which recognizes contributions to NAPSLO by members under 40 years of age, was presented to Nick Abraham, outgoing president of NAPSLO’s Next Generation.

ASLI Designees Recognition
The 2011-2012 class of Associate in Surplus Lines Insurance (ASLI) designees were recognized during the ASLI Conferment Ceremony at the General Session.

The Distinguished Graduate in the 2011-2012 Class was Christopher D. Murphy, EMC Insurance Companies and recognized for Academic Excellence were Corissa M. Pate, John S. Slaba; and Julia L. Wilking. In addition to Mr. Murphy, designees recognized at the General Session were: William Brown, RPS; Timothy Byrne, Coastal Agents Alliance; Christopher Campbell, Insurance House; Elizabeth Hannon, Scottsdale Insurance Co.; Wesley Hartsoe, Insurance House; and Raul Plasencia, Risk Placement Services.

The ASLI program was developed jointly by the Derek Hughes/NAPSLO Educational Foundation and The Institutes in 1996. Since the program’s inception, more than 1,800 insurance professionals have earned the designation, including 109 during the past year.

Marketing Awards Presented 
Three firms were recognized in the annual NAPSLO Marketing Award contest for outstanding marketing efforts. Receiving the first place award was Venture Programs for their Preferred Club Program Gold Standard Campaign. Receiving honorable mention were USG Insurance Services for their 10th Anniversary Campaign and TAPCO Underwriters for their Product Ad, Email Blasts entry.

NAPSLO teamed up with the Insurance Marketing & Communication Association (IMCA) to offer NAPSLO members the opportunity to submit their best marketing campaigns to be recognized. More than 30 entries from NAPSLO member firms were received in the second year of the contest.

NAPSLO Interns Recognized
Six NAPSLO interns selected to attend the Annual Convention were also recognized during the General Session. NAPSLO selected 13 interns to work with NAPSLO members over the past summer and the top six were selected to attend the Annual Convention.

The six interns will be interviewed to select two for additional intern opportunities in London and Bermuda next year. Selected were: Cameron Annas, Appalachian State University; Kacy Jones, the University of Mississippi; Lynden Lyles, the University of Louisiana at Monroe; Thomas Metzger, Temple University; Eric Mutch, Illinois State University; and Will Smith, Georgia State University.

“I am excited to present to you our top six NAPSLO interns this year,” said Steve Gross, Co-Chair of the Career Awareness & Internship Committee. “Attracting top talent to our industry is what the NAPSLO internship program is all about, and I sincerely appreciate the hard work and support of their host firms this year.”

Broker firms hosting interns were: AmWINS Brokerage – Atlanta, AmWINS Brokerage – New York, Bliss & Glennon, Boston Insurance Brokerage, Burns & Wilcox, CRC – Atlanta, CRC - New Jersey, Crouse & Associates, Hull & Co., Insurance House, Preferred Concepts, LLC, The Sullivan Group, and Westrope.

Company host firms were: AXIS Insurance, Endurance, Great American Specialty E&S, James River Insurance Co., Liberty International, Markel Midwest, Markel Northeast, Maxum Specialty Insurance Group, Nautilus Insurance Co., RSUI Group, Inc., Scottsdale Insurance Co., Vela Insurance Services, and Western World Insurance Group.

Technology, Leadership Highlight Tuesday's Programs

NAPSLO’s technology program and NAPSLO’s Next Generation panel discussion among industry leaders on lessons learned from their first hard market were the focus of Tuesday’s programs.

The technology program, Current Technology Issues: Bringing Carriers into the Mix, reviewed broker, vendor and insurer technology approaches to smooth data transfer. “Carriers aren’t going to be successful if we mandate things,” said Greg Ricker, Strickland Insurance Group CIO and Co-Chair of the Joint Working Group’s Carrier Subgroup. “We really have to have everyone come together. This is not a carrier problem, it’s not a wholesaler problem, it’s an industry challenge. And there’s enormous interest in what we are doing.”

NAPSLO’s Next Generation sponsored the panel discussion, Lessons Learned from My First Hard Market, where industry leaders shared their tips for success in the business. “As the NAPSLO logo and phrase ‘uberrima fides’ suggests, you must act in utmost good faith, because your clients and colleagues want to do business with people they trust,” said Dave Leonard, Chairman and CEO of RSUI Group. “Demonstrate your expertise, your work ethic and the value you contribute to the insurance transaction.”

“I encourage all wholesalers to do what we do best – develop your expertise and your key relationships,” said Matthew D. Nichols, ASLI, President of All Risks, Ltd. “These fundamentals are key regardless of the market cycle.”

The program was moderated by Nick Abraham, NAPSLO’s Next Generation President.

Gov. Jeb Bush Address Highlights General Session

The highlight of the NAPSLO Annual Convention and today’s General Session will be the keynote address by former Florida Gov. Jeb Bush as part of the E.G. Lassiter Lecture Series, presented by the Derek Hughes/NAPSLO Educational Foundation. Gov. Bush will speak at 9:15 a.m. on America’s Promise in Uncertain Times in Atrium Ballroom A on the Atrium Level. In addition, the General Session will feature the traditional awards and recognition presentations.

Mr. Bush was Governor of Florida in 1998 and was re-elected in 2002, concluding his service in January 2007. He previously served as Florida’s secretary of commerce under Gov. Bob Martinez. He is currently the head of his own successful consulting business, Jeb Bush and Associates, where his clients range from small technology start-ups to well-known Fortune 500 companies. He is also the chairman of the Foundation for Excellence in Education, a national foundation focused on education reform.

“We are especially looking forward to Governor Bush and his remarks,” said Matthew D. Nichols, NAPSLO Vice President and 2012 Convention Chairman. “He is an exceptional speaker and, as a leader in Florida, he has a good appreciation of the importance of surplus lines insurance.”

NAPSLO honors during the General Session will include The Charles A. McAlear/NAPSLO Industry Award, which honors individuals who have made significant contributions to the surplus lines industry; the Richard M. Bouhan Legislative Advocacy Award, presented to individuals whose advocacy helps advance the legislative interests of the surplus lines industry; the NAPSLO President's Award, which recognizes NAPSLO Committee Chairs for outstanding service; the W. Dana Roehrig (Past President's) Award, which recognizes efforts of Association committee volunteers; and the Steven R. Gross Next Generation Award, which recognizes contributions by NAPSLO members under 40.

NAPSLO will also recognize the 2011-2012 class of Associate in Surplus Lines Insurance (ASLI) completers, winners of the NAPSLO Marketing Award contest, and the six 2012 NAPSLO interns selected to attend the convention.

Technology, Industry Leaders Focus of Tuesday’s Program

A program reviewing broker, vendor and insurer technology approaches to smooth data transfer, and a panel discussion among industry leaders on lessons learned from their first hard market will be the focus of today’s programs.

The technology program, Current Technology Issues: Bringing Carriers into the Mix, will include presentations from Tammie Miller, Risk Placement Services Director of Automation and Chair of the E&S Joint Working Group London Subgroup; Greg Ricker, Strickland Insurance Group CIO and Co-Chair of the Joint Working Group’s Carrier Subgroup; Scott Good, Scottsdale Insurance Co. Sr. Director, Customer Innovations and Co-Chair of the Joint Working Group’s Carrier Subgroup; and Lloyd’s Sarah Thacker, Senior Business Analyst, and Peter Montanaro, Head of Delegated Authorities. The program will take place at 8:30 a.m. in International 8 & 9 on the International Level of the Marriott.

NAPSLO’s Next Generation is sponsoring the panel discussion, Lessons Learned from My First Hard Market. It will feature J. Neal Abernathy, President and CEO of Swett & Crawford, Michael J. Carr, Senior Vice President responsible for Liberty International Underwriters’ (LIU) E&S Property division, David Leonard, Chairman and CEO of RSUI Group, and Matthew D. Nichols, ASLI, President of All Risks, Ltd. The program will be moderated by Nick Abraham, president of Next Generation and a Director within Markel’s Wholesale Marketing Department. Immediately following the panel, NAPSLO’s Next Generation will host a reception in A705 on the Atrium Level of the Marriott.

Opening Reception Highlight of Monday’s Program

The 2012 NAPSLO Annual Convention kicked off with the Opening Reception at the Hyatt Regency Atlanta on Monday night and many of the more than 3,400 attendees and spouses registered for the meeting attended the reception.

Other events on Monday included the Federal Legislative Update from NAPSLO’s Washington D.C. representative Maria Berthoud of FaegreBD. She reviewed current legislative priorities for NAPSLO, described the importance of the NAPSLO PAC, and highlighted the current landscape for the upcoming Presidential and Congressional elections.

“The two most important legislative priorities for NAPSLO in the coming year will be preservation of the NRRA provisions in the Dodd-Frank Act, as the repeal of Dodd-Frank will be contemplated in the coming Congress,” said Ms. Berthoud. “We will also be very focused on passage of NARAB II legislation, with hopes of activity in the lame duck session.”

Demmie Hicks of DBH Consultants provided her insights on Managing Change: Selling Strategies For A Transitioning Market, a leadership workshop presented by NAPSLO’s Next Generation.

“What does leadership and selling have in common?” asked Ms. Hicks. “Becoming aware of all of who you are allows you to have a greater impact on everything you do.”

NAPSLO's Brokers’ Lounge and Club Table Area were heavily used on Monday. “We are also pleased to see attendees taking advantage of the benefits offered by the expanded Broker’s Club,” said Convention Chair Matt Nichols. “Each year more and more firms are interested in reserving a table to meet with other attendees.”

A.M. Best Releases 2012 Special Report, U.S. Surplus Lines – Market Review

Domestic surplus lines writers saw a small increase in direct premiums written in 2011, breaking a four year decline, and the overall surplus lines industry reported a 1.8% decrease in direct written premiums, the fifth consecutive annual decline, according to A.M. Best’s 2012 Special Report, U.S. Surplus Lines – Market Review.

The report, produced by the A.M. Best Company with a grant from the Derek Hughes/NAPSLO Educational Foundation, represents the 19th annual study of the surplus lines industry.

“We are pleased to continue our support to A.M. Best in producing the annual special report,” said Joseph Timmons, President of the Derek Hughes/NAPSLO Educational Foundation. “The report has become the authoritative study of the industry, demonstrating the stability of the excess and surplus lines sector.”

The report noted domestic professional writers saw a 3.2% increase to $22.6 billion in direct premiums written in 2011. Lloyd’s remained virtually unchanged at $5.8 billion, regulated aliens reported a 32.5% decrease to $2.5 billion and domestic specialty, companies saw a 19.5% decline, to $231 million.

For the eighth year in a row, the surplus lines industry reported no financially impaired companies noting a marked contrast to the admitted property/casualty industry’s 34 disclosed financial impairments for the year.

The report indicates surplus lines insurers continue to demonstrate resiliency by remaining very well capitalized despite significant market challenges and unprecedented natural catastrophe events in 2011. The report continues to provide A.M. Best’s perspective on the state of the market and the relative positions of carriers in the market, and it examines the surplus lines sector’s financial condition and ratings distribution, market trends, regulatory and legislative developments, distribution issues, and impairment trends.

A panel of industry leaders, including NAPSLO President and Foundation Director Robert Sargent, Foundation Director Maureen Caviston, Lexington Insurance Company President David Bresnahan, and NAPSLO Executive Director and Foundation Director Brady Kelley, reviewed the report’s results as part of an A.M. Best produced, and Lexington sponsored, webinar on Monday, September 24. A copy of the webinar can be viewed at http://www.bestreview.com/webinars/surplus12.

A copy of the report was recently emailed to NAPSLO members, and copies will be available at NAPSLO’s 2012 Annual Convention. Members can either download the report from NAPSLO website or request an electronic copy by emailing info@napslo.org.

Surplus Lines Industry, Annual Market Report to be Focus of A.M. Best Webinar on September 24

A panel of industry leaders and editors of the A.M. Best Co.'s annual report on the excess and surplus lines sector will take part in a special one-hour webinar on September 24. The panel will review the market and highlights of the 2012 Special Report U.S. Surplus Lines – Market Review to be released soon.

The live 60-minute webinar will be offered at no charge and is scheduled for 2:00 p.m. Eastern on Monday, September 24. Registration is now open at the A.M. Best website.

Since 1994, the Derek Hughes/NAPSLO Educational Foundation has provided a grant to A.M. Best to produce the detailed report on the excess and surplus lines insurance sector. The 2012 report will update the state of the market and the relative positions of carriers in the market, examine the sector’s solvency performance, market trends, legislative and regulatory developments, and distribution issues.

“We are pleased to continue our support to A.M. Best in producing the annual special report,” said Joseph Timmons, President of the Derek Hughes/NAPSLO Educational Foundation. “The report has become the authoritative study of the industry, demonstrating the stability of the excess and surplus lines sector.”

Panelists for the webinar will include:
• David Bresnahan, President, Lexington Insurance Company
• Maureen Caviston, President, Partners Specialty Group and a former NAPSLO President
• Brady Kelley, Executive Director, NAPSLO
• Robert Sargent, President & CEO, Tennant Risk Services and current NAPSLO President

Webinar attendees can submit questions during registration or email questions to news@ambest.com during the live event, which will be streamed in video and audio format. Coverage of the webinar will be featured in an upcoming issue of Best's Review.

For more information about the webinar, please call A.M. Best at (908) 439-2200, ext. 5561, or e-mail lee.mcdonald@ambest.com.

Online Regulatory Compliance Course Updated

NAPSLO’s online Surplus Lines Regulatory Compliance Course, launched in 2011, has been updated and improved to provide a more meaningful learning experience.

Key improvements include: updated surplus lines and commercial lines comparative year-end data; information and examples on working with the Nonadmitted Reinsurance and Reform Act (NRRA); and updated state requirements on diligent searches, tax report filings, and stamping fees.

The compliance course is aimed at professionals with less than two years of surplus lines compliance experience, and others who deal less frequently with compliance issues. Regulatory staff, brokers and support teams, and others who place business in the nonadmitted market will also benefit.

The course focuses on regulatory compliance while the recently introduced online Surplus Lines Fundamentals Course provides a general overview of the industry. Both courses continue to be available at no charge for a limited time.

The compliance course contains four sections and eight lessons, and the lessons contain learning objectives. Topics include: an overview of the industry; broker licensing and record keeping; surplus lines insurer eligibility; compliance process and procedures on diligent searches, tax remittance, policy disclosure and delivery, and independent procurement/industrial insured exemptions; and the NRRA.

An interactive glossary, links to excellent outside resources, sample state requirements, key general information for filings and reports, and lesson specific self-mastery tools, are part of the course. Learners can also send specific course questions to education@napslo.org.

NAPSLO Issues Notice of Annual Business Meeting & Nominating Committee Report

NAPSLO has issued its Notice of Annual Business Meeting & Nominating Committee Report  and the 2012 Annual Business Meeting will be held in the Atrium A Ballroom at the Marriott Marquis Hotel in Atlanta, Georgia on Wednesday, October 10, 2012, at 10:45 a.m. Eastern.

At the Annual Business Meeting NAPSLO membership will act on the slate of officers and directors presented by the Nominating Committee and any other business properly brought before the membership.

The Nominating Committee's slate of Wholesale Broker Nominees for three-year terms are:
• Gilbert C. Hine, Jr., CPCU, CFP, McClelland & Hine, Inc., San Antonio, Texas
• Davis D. Moore, Worldwide Facilities, Inc., Los Angeles, California
• Matthew D. Nichols, ASLI, All Risks, Ltd., Hunt Valley, Maryland

Company Director Nominees for three-year terms are:
• Scott A. Culler, Markel West, Woodland Hills, California
• Michael D. Miller, CPCU, CLU, ARe, Scottsdale Insurance Company, Scottsdale, Arizona

Officer Nominees for one-year terms in 2012 – 2013 are:
• President - Matthew D. Nichols, ASLI, All Risks, Ltd., Hunt Valley, Maryland
• Vice President -  Kevin T. Westrope, Westrope, Kansas City, Missouri
• Secretary - Hank H. Haldeman, The Sullivan Group, Los Angeles, California
• Treasurer - Gilbert C. Hine, Jr., CPCU, CFP, McClelland & Hine, Inc., San Antonio, Texas

The members of the 2012 Nominating Committee are: Letha E. Heaton (Chair & Immediate Past President), Admiral Insurance Co.; Jim Carey, Admiral Insurance Company; Hank H. Haldeman, The Sullivan Group; Jacqueline M. Schaendorf, Insurance House, Inc.; and John F. Wood, III, Specialty Risk Associates, Inc.

Illinois Becomes 49th State to Pass NRRA Compliance Legislation

Illinois became the 49th state to enact Nonadmitted and Reinsurance Reform Act enabling legislation with the signing of HB1577. The bill, signed by the Governor on August 14, authorizes the state to tax the gross premium on a surplus lines policy when Illinois is the home state of the insured but does not authorize tax sharing.

The bill includes most of the significant NRRA definitions and defines affiliate, affiliated group, exempt commercial purchaser, home state, qualified risk manager and state. This bill does not limit the scope of the law to policies where Illinois is the home state of the insured and taxes the gross premium when it is the home state of the insured.

The bill includes NRRA eligibility terms but goes beyond the NRRA in continuing to require that the broker use insurers that have standards of solvency and management that are adequate for the protection of policyholders or the broker is to provide a warning to the policyholder if the insurer does not meet such standards.

Illinois did not implement NRRA legislation in 2011 but issued a bulletin saying the state would tax 100% of the premium if Illinois were the home state in the policy. Comprehensive information on 2012 legislation in Illinois and other states is available on NAPSLO's website, in addition to a number of NRRA resources. To date the only Michigan and the District of Columbia have not passed NRRA compliance legislation.

Technology Program Added to Convention

A program to review recent actions by U.S. carriers and the London market concerning technology issues has been added to the schedule of the 2012 NAPSLO Annual Convention in Atlanta.

The session, Current Technology Issues: Bringing Carriers into the Mix, will take place on Tuesday, October 9 from 8:30 a.m. to 9:30 a.m. and will include Adam Stafford, Head of Electronic Distribution for Lloyd's; Tammie Miller, Risk Placement Services Director of Automation and Chair of the E&S Joint Working Group London Subgroup; and Greg Ricker, Strickland Insurance Group CIO and Co-Chair of the Joint Working Groups Carrier Subgroup.

The program will review proof-of-concepts demonstrating the goal of transferring data from retailers to managing general agents/brokers and to carriers. Panelists will also review the information requested by London brokers and syndicates on binding business and the efforts by the London subgroup to work with U.S. MGAs and brokers to supply the requested information. In addition, recent actions on technology issues in the London market will be discussed.

The panel will also review actions by the E&S Joint Working Group. The Working Group's carrier subgroup has been working with ACORD and the vendor community to create a common messaging solution.

The London subgroup has focused on communications and standards between MGAs and the London market and is making great strides in workflow efficiency and reporting. Current activities include understanding risk modeling and the data required for analysis, rolling out the newly developed XML bordereaux standard, working towards a claim standard that has been submitted and seeking approval, and helping develop standards around reporting risk data.

NAPSLO Special Report & Legislative Update

NAPSLO issued a Special Report and Legislative Update to provide a special update to note the two-year anniversary of the Nonadmitted and Reinsurance Reform Act (NRRA) and also information on other recent legislative actions and activities.

In addition to the review of the NRRA, other legislative issues covered in the report include NAPSLO approving policy positions on Zero Reporting Requirements and Certificate of Insurance Requirements; its support of federal legislation to reform the National Association of Registered Agents and Brokers (NARAB); and comments on the Federal Insurance Office.

States Still Wary of Surplus Lines Compacts, Business Insurance Article Notes

Most states continue to be wary of participating in either of the competing surplus lines tax agreements, a new Business Insurance article reports.

The article, which includes comments from NAPSLO Executive Director Brady Kelley,  is available from Business Insurance at http://www.businessinsurance.com/article/20120715/NEWS07/307159973?tags=|311|73|303#full_story

South Carolina Gov. Signs NRRA Legislation

On June 29, Governor Nikki Haley of South Carolina signed Senate Bill 1419  into effect, bringing the number of states to implement NRRA legislation up to 49. The new law incorporates most NRRA terms and authorizes the Director of the Department of Insurance to collect and retain surplus lines tax on 100 percent of the premium of risks in which South Carolina is the home state. While NAPSLO recommended South Carolina more clearly utilize the home state definition throughout the legislation, it does include the home state definition consistent with the NRRA. It also authorizes the Director to participate in a clearinghouse arrangement with other states, subject to approval by South Carolina’s General Assembly; however, we are not aware of any specific plans for South Carolina at this time.

In the event a state for whom South Carolina has potentially collected premium taxes is not a member of the Compact, South Carolina will retain its tax at a 6% rate. Therefore, South Carolina becomes the 35th state to implement the home state tax approach now representing near 75% of nationwide premium.

Taxes due shall be remitted to the Department no later than thirty days after March 31st, June 30th, September 30th and December 31st of each year.  The 6% tax rate is a blended rate accounting for state and municipal taxes. The Department will continue to be responsible for submitting a portion of the collected tax to the appropriate municipality on an annual basis.

South Carolina did not accept NAPSLO’s recommendation to fully incorporate the insurer eligibility provisions of the NRRA. Instead, the bill provides that, at the request of a licensed resident broker, the Director may approve certain nonadmitted insurers as eligible surplus lines insurers to write business on risks located in South Carolina that one or more South Carolina licensed insurers have declined to write. It also allows the Director to require additional documents to maintain the insurers' status as an eligible surplus lines insurer.

With South Carolina’s law,  Michigan and Washington, D.C. are the only jurisdictions who have not  yet introduced NRRA legislation to clarify the national NRRA landscape. We have no word yet on when we might see legislative action in those states, but the continued growth in home-state taxation continues to be positive and beneficial for surplus lines brokers.

Comprehensive information on 2012 legislation in South Carolina and other states is available on NAPSLO’s website, in addition to a number of NRRA resources.

Keri Kish Named Director of Government Relations

NAPSLO is pleased to announce Keri Kish has joined the NAPSLO team as Director of Government Relations for the Association.

“We are thrilled to have Keri on the NAPSLO team. Her background and experience will be a tremendous asset to the NAPSLO membership as we continue our work on a number of issues facing the surplus lines industry at the state and federal level," said Brady Kelley, NAPSLO Executive Director.

As Director of Government Relations, Ms. Kish will be responsible for implementing the membership’s regulatory and legislative outreach directives and continuing to build upon NAPSLO’s strong reputation as a premier source of information and advocacy for the surplus lines industry.

Previously, Ms. Kish served as Antifraud Counsel at the National Association of Insurance Commissioners in Kansas City, Mo. Prior to joining the NAIC in 2006, she was a Staff Attorney at the Kansas Insurance Department for Commissioner Sandy Praeger. She began her career as Assistant County Attorney with the Ford County (Kan.) Attorney's Office.

While at the NAIC, she provided senior staff support to insurance fraud and multistate market conduct settlement task forces and working groups, acted as a liaison for the membership with associations and governmental agencies and provided membership support services to state insurance regulators. She was the Administrating Attorney at the Kansas Insurance Department of the Kansas Workers’ Compensation Fund.

Ms. Kish received her law degree from Washburn University’s School of Law in 1998 and an undergraduate degree in political science from the University of Kansas.

Reminder - Free Webinar on Surplus Lines Fundamentals Course is Tuesday

A free webinar on the new online course titled Surplus Lines Fundamentals, is set for Tuesday, July 10, at 2:00 p.m., Eastern Daylight Time. In May, The Institutes and NAPSLO unveiled the course in May and the two groups will offer the free webinar reviewing the course, which is designed for anyone who wants to learn how the surplus lines market works.

The webinar will:

• Provide an overview of the course content
• Describe the intended audiences for the course
• Offer suggestions for adding the course to your training programs
• Show how this course can prepare learners for the ASLI designation program

The 20-minute webinar will be presented by Randall D. Jones, NAPSLO’s Education Director, and Arthur L. Flitner, Senior Director of Knowledge Resources at The Institutes.

To register for the webinar, use the following link: http://customerrelations.theinstitutes.org/acton/form/2211/0003:d-0002/0/index.htm

The course represents the newest addition to NAPSLO’s online course offerings and is ideal for training new hires of surplus lines insurers, wholesale brokers, managing general agents, and program managers. It will also serve retail agents and brokers who want to learn how to access the surplus lines market when they encounter a hard-to-place risk.

Learners who complete the course and built-in assessments earn an online certificate of completion. A separate online exam will be required only if the learner wishes to earn continuing education (CE) credit. The Institutes are filing the course for CE credit in all but two states; however, it will eventually be filed in all states. The course fee is $65 with CE credit or $60 without the CE credit option.

NIMA Clearinghouse Updates; Nevada Withdraws

The NIMA Surplus Lines Clearinghouse has announced that Nevada submitted a notice of withdrawal from NIMA on June 29, 2012. On July 2nd, Nevada released Bulletin 12-005 indicating it will collect 100% of the nonadmitted insurance premium tax when Nevada is the home state of the insured. Where Nevada is not the home state of the insured, no premium tax filing in Nevada will be required.

Based on the resolution approved by the NIMA states on June 12th, Nevada will not be considered a NIMA participating state for the purposes of filing and allocating taxes for new and renewal policies effective on or after July 1, 2012 where the home state of the insured is a NIMA participating state. The remaining five NIMA states (Florida, Louisiana, South Dakota, Utah, and Wyoming) and Puerto Rico represent 17 percent of nationwide surplus lines premium. Thirty-four states, representing 73 percent of nationwide premium volume, have no current plans to participate in tax-sharing agreements and are collecting 100% of the surplus lines premium tax when they are the home state.

In its July 1st press release, the Surplus Lines Clearinghouse announced reporting entities may register to begin filing with the Clearinghouse by visiting www.slclearinghouse.com. It noted policies filed through the Clearinghouse during the 3rd quarter will be invoiced on October 1st. Tutorials are available on the Clearinghouse website at http://www.slclearinghouse.com/Education/VideoLibrary.aspx.

On July 2nd, the Surplus Lines Clearinghouse released the NIMA States Tax Table to serve as a guide for brokers and policyholders when determining the applicable taxes, fees, and assessments charged by the NIMA participating states. It highlights some of the nuances among the NIMA states, which include:
1. Louisiana and Utah will not collect any tax on premium allocated to a state that is not participating in NIMA (a non-participating state);
2. Florida is the only NIMA state that will tax premium allocated to non-participating states at each non-participating state’s tax rate. When either Puerto Rico, South Dakota or Wyoming are the home state, they will apply their home state tax rate to any premium allocated to a non-participating state.
3. Utah is the only NIMA state that will apply a stamping fee to Utah allocated premium.
4. Florida and South Dakota apply certain assessments and tax rates to certain premium and specific lines of coverage.

Reporting entities are encouraged to review the NIMA State Tax Table  and the Surplus Lines Clearinghouse Tax Calculator for help in navigating the tax rates, fees and assessments to be charged by the NIMA states on nonadmitted, multi-state insurance premium to be filed through the Clearinghouse.

Please make sure to check out our recent E-News updates regarding recent NIMA developments. They can be found at http://www.napslo.org/imispublic/Content/NavigationMenu/News/ENews/2012/default.htm. Please don’t hesitate to contact the NAPSLO office at (816) 741-3910 should you have any questions or need any additional information.

Georgia’s Supreme Court Upholds Diminution In Value Recovery Ruling

The Georgia Supreme Court has ruled that insurance policyholders may recover losses for “diminution in value” in addition to the repair costs associated with damages to real estate property.

The court ruled in Royal Capital Development LLC v. Maryland Casualty Co., that a 2001 Georgia Supreme Court decision, which allowed coverage for the cost of repair plus diminution in value under automobile policies, should also be applied to claims for damage to real property, including damage to commercial buildings.

 The court said the ruling would place “injured parties, as nearly as possible, in the same position they would have been in if the [property damage] had never occurred.” Under the ruling, insurers now must pay for damage repairs to a home or business and also for the diminished value of the property.

As a result of the decision, insurers that insure property risks in Georgia and wish to exclude “diminution in value” would have to include the exclusionary language in their policy wordings.

The Court rejected a 2007 Georgia Court of Appeals decision holding that allowing damages for diminution in value as well as for the costs of repair would be an impermissible “double recovery.” Maryland Casualty has filed a motion asking the court to reconsider its opinion.

Richard Bouhan Recognized in National Underwriter's Living Legends Series

Richard Bouhan, former NAPSLO Executive Director, was recognized as one of the insurance industry's Top 10 Living Legends by the National Underwriter in their June 25 Property & Casualty issue.

The magazine selected the industry’s Top 25 Living Legends and the Top 10 were featured in the magazine. The full list of Top 25 Living Legends were profiled online. The magazines said the selected individuals were "people whose accomplishments will be remembered for a long, long time" and that "their contributions to P&C insurance have been epic, monumental—and are sure to be discussed and studied for decades to come. Each profiled visionary has fundamentally changed the way insurance is done, likely forever."

Mr. Bouhan, who is continuing his work as Counsel on Special Projects for NAPSLO, has been with NAPSLO for more than 30 years, joining the Association as Government Relations Director and later serving as Executive Director from 1987 to 2011.

Mr. Bouhan joined Edmund Kelly, Jack Byrne, Richard Scruggs, Karen Clark, Barney Frank, Pat Ryan, Brian Duperreault, Peter Lewis, and Hank Greenberg in the Top 10. Other major E&S industry representatives in the Top 25 included William R. Berkley, Peter Levene, and Alan J. Kaufman.

Hawaii Withdraws from NIMA

The NIMA Surplus Lines Clearinghouse today announced that Hawaii submitted a notice of withdrawal from NIMA on June 7, 2012. On June 12th, the NIMA states approved the following resolution:

“Policies effective during the time in which a state is a NIMA Participating State (including the 60-day withdrawal period from NIMA) will be filed with the Clearinghouse through the end of the withdrawal period. However, Participating States which tender notice of withdrawal prior to the date of the Clearinghouse implementation will not participate in the Clearinghouse tax filing or tax allocation.”

As a result, Hawaii will not be considered a NIMA participating state for the purposes of filing and allocating taxes for new and renewal policies effective on or after July 1, 2012 where the Home State of the insured is a NIMA participating state. Remaining NIMA jurisdictions include Florida, Louisiana, Nevada, Puerto Rico, South Dakota, Utah and Wyoming.

Please make sure to check out our recent E-News updates regarding recent NIMA developments. They can be found at http://www.napslo.org/imispublic/Content/NavigationMenu/News/ENews/2012/default.htm.

Convention Registration Opens on June 6!

Registration for the NAPSLO Annual Convention, set for October 8-11 in Atlanta, opens on Wednesday and members can register on-line using their NAPSLO Member ID.

Convention registration fees are $825 for delegates and $395 for spouses until September 4.  After September 4 fees will increase to $925 and $425. Representatives of member firms may register on-line for the convention or download registration forms from the convention site.

The convention will take place at the Atlanta Marriott Marquis & Marina and the Hyatt Regency Atlanta, with the Opening Reception at the Hyatt and all other NAPSLO programs at the Marriott. Hotel rooms will be available at both hotels.

The convention opens on Monday, October 8. However, to assist delegates with Monday morning meetings, NAPSLO will offer early packet pickup from 6:00 – 8:00 p.m. on Sunday, October 7.

The featured program of the convention will be an address by Jeb Bush, former Florida Governor, on Wednesday, October 10. Gov. Bush was selected to give the E.G. Lassiter Lecture Series, presented by the Derek Hughes/NAPSLO Educational Foundation.

Other programs include a Happy Hour in the Brokers’ Lounge from 3:00-4:00 p.m. on Monday, followed by the Opening Reception from 5:30-7:30 p.m.

NAPSLO’s Next Generation group will host a panel discussion on Tuesday from 3:00-4:00 p.m. regarding lessons from a hard market, followed by a cocktail reception from 4:00-5:30 p.m. The Next Generation is also hosting workshops on Monday on “Managing Change: Selling Strategies for a Transitioning Market.”

The traditional awards and recognition programs and the Association's Annual Business Meeting will take place on Wednesday morning.

Mississippi Releases Bulletin to Provide Guidance Following Withdrawal from NIMA

Bulletin 2012-3 was issued by the Mississippi Insurance Department on May 11, 2012, to provide guidance to surplus lines insurance producers concerning the reporting, payment, collection and allocation of taxes and fees for multi-state policies under the “home state” requirements of the NRRA. The updated guidance follows Mississippi’s April 17, 2012 letter of withdrawal from NIMA.

The bulletin also references Senate Bill 2626, which was signed by Governor Bryant on April 17, 2012 to reduce the Mississippi windpool fee from 5% to 3% for policies with effective dates on and after July 1, 2012.

Mississippi’s Bulletin2012-3 is effective from and after May 11, 2012.

Georgia Updates Law to Use its Tax Rate on Multi-state Policies

On May 2, the Georgia Governor signed legislation updating Georgia law to require the use of Georgia’s tax rate on multi-state surplus lines policies where Georgia is the insured’s home state, unless the state elects to join a tax sharing agreement or compact with other states.

In 2011, Georgia passed legislation that applied the other states’ rates on a multi-state policy regardless of whether Georgia joined a compact or agreement. The new law changes the 2011 legislation by eliminating the application of other states’ rates on the portion of an exposure in another state, unless Georgia joins a tax sharing compact or agreement. The new law also applies the Georgia tax rate to independently procured insurance policies, unless the state elects to join a multi-state tax sharing system.

Georgia’s 2011 NRRA legislation included many NRRA terms and authorized the state to enter into a tax sharing agreement or compact with other states. At this time, Georgia has not joined any tax sharing agreement or compact.

Comprehensive information on the Georgia legislation and other states’ NRRA legislative actions is available on the NAPSLO's website, in addition to a number of other useful NRRA implementation resources.

NAPSLO, The Institutes Develop Online Course - Surplus Lines Fundamentals

The Institutes, in collaboration with NAPSLO, have developed a new online course titled Surplus Lines Fundamentals.

The course was created based on recommendations from NAPSLO to produce an “Excess & Surplus Lines Primer” for anyone seeking to understand how the surplus lines market works.

Surplus Lines Fundamentals is an ideal course for training new hires of surplus lines insurers, wholesale brokers, managing general agents, and program managers. It is also an appropriate course for retail agents and brokers who want to learn how to access the surplus lines market when they encounter a hard-to-place risk.

The new online course consists of four concise assignments, which explain:

1. Why the surplus lines market is needed; 
2. How the surplus lines distribution system works and how it is regulated; 
3. How surplus lines insurers differ from admitted insurers; and 
4. How underwriting expertise and form/rate flexibility allow the surplus lines market to successfully insure risks that the admitted market cannot or will not insure.

Learners who complete the course and built-in assessments earn an online certificate of completion. A separate online exam will be required only if the learner wishes to earn continuing education (CE) credit. The Institutes are filing the course for CE credit in all but two states; however, it will eventually be filed in all states.

“Surplus Lines Fundamentals will help beginners to understand the operation of the surplus lines market and prepare for their job duties and further training,” said Arthur Flitner, CPCU, senior director of knowledge resources at The Institutes. Flitner worked closely with NAPSLO Education Director Randall Jones to plan and oversee development of the course.

“This new offering supplements NAPSLO’s surplus lines schools, the CEU courses, and also the Associate in Surplus Lines Insurance (ASLI) designation,” said NAPSLO President Bob Sargent, CPCU, RPLU, ARM. “Together these programs help NAPSLO members ensure their employees continue to develop the specialty lines expertise they need to assist their customers.”

For more information about Surplus Lines Fundamentals, call The Institutes’ Customer Service Department at (800) 644-2101 or visit The Institutes’ Web site at www.TheInstitutes.org.

Important Message Regarding NIMA

NAPSLO has received notice of several states’ withdrawals from the Nonadmitted Insurance Multi-State Agreement (NIMA). Specifically, as reported in a Q&A on surplus lines taxes from the State of Hawaii on April 26th, the States of Connecticut, Mississippi and Alaska have submitted notice of withdrawal from NIMA.

NAPSLO will be reaching out to the remaining NIMA members (Florida, Hawaii, Louisiana, Nevada, Puerto Rico, South Dakota, Utah and Wyoming) to seek additional information and guidance for NIMA’s targeted July 1, 2012 effective date.

Oklahoma Enacts New Law to Clarify NRRA Rules

Oklahoma recently enacted new legislation to clarify a number of issues with the surplus lines code and require the state’s tax rate to be used for multi-state policies written after the July 21, 2011 effective date of the NRRA, clarifying legislation passed in 2011.

The new law, HB 2458, signed by the Governor on April 16, also contains a provision stating the Oklahoma Insurance Commissioner is not required to join a tax sharing system and that the Oklahoma tax rate shall apply unless the state decides to join a multi-state tax sharing system. The bill also made it clear that a number of provisions apply only when Oklahoma is the “home state” of the insured.

Oklahoma passed NRRA related legislation in 2011 that incorporated some NRRA terms, included some NIMA definitions and authorized the Commissioner to enter into NIMA or some other tax sharing system. The 2012 law adds some NRRA terms and definitions but fails to include the NRRA definitions of affiliate, affiliated group, control, premium tax, qualified risk manager, and state. This bill and the 2011 legislation incorporated the NIMA definitions of home state for group policyholder, principal place of business and principal residence. The 2012 bill contains a provision that indicates it “relates back to the effective date of the implementation of the Nonadmitted and Reinsurance Reform Act.”

HR 2458 retains the requirement that an Oklahoma surplus lines license is required only when Oklahoma is the home state of the “insurer” and that the procuring broker be licensed in the “insurer’s home state.” These requirements are inconsistent with the NRRA that limits any licensing requirement for surplus lines exclusively to the “insured’s” home state.

The legislation also imposes a direct premium tax on “domestic surplus lines insurers” (until Oklahoma joins a tax-sharing arrangement) while simultaneously requiring that surplus lines brokers “collect and pay” surplus lines tax “on any broker-procured surplus lines insurance.” This appears to create double taxation on surplus lines policies issued by Oklahoma domestic surplus lines insurers, for which NAPSLO will continue to seek clarification.

Comprehensive information on 2012 legislation in Oklahoma and other states is available on NAPSLO's website, in addition to a number of NRRA resources.

Update on New York Regulation 194

In a March 8, 2012 decision, the State of New York Supreme Court, Appellate Division, Third Judicial Department ruled that New York’s Regulation 194 is a reasonable exercise of the New York Insurance Superintendent’s broad power to implement New York insurance law. The purpose of this notification is to ensure NAPSLO members are aware of the court's ruling and the available resources regarding Regulation 194.

Since 2005, several states have adopted laws requiring all producers to disclose the amount of compensation they receive from an insurer and to obtain the customer’s acknowledgement concerning such compensation. New York Regulation 194 goes further in requiring all producers to disclose their role in the transaction as well as the factors that determine or may alter their compensation.

During its development, NAPSLO and other associations representing wholesale brokers and MGAs suggested that Regulation 194 should not apply to wholesalers. As a result, New York agreed to exempt certain producers, such that Regulation 194 would not apply to a producer who does not have direct sales or solicitation contact with the purchaser. This exemption has been maintained throughout the debate of Regulation 194, which became effective January 1, 2011.

Answers to Frequently Asked Questions regarding Regulation 194 can be found on the New York Department of Insurance website. Circular letter No. 18, released on November 5, 2010, sets forth the Department's expectations regarding compliance by insurance producers, and authorized insurers with Regulation 194. While the FAQs state that Regulation 194 applies to excess lines brokers, the FAQ material subsequently states that regulation’s disclosure requirements do not apply to “a wholesaler or managing general agent, whose primary contact is with the selling agent or broker, and who has no contact with the purchaser that involves sales or solicitation.”   However, if the wholesale producer or MGA has direct sales or solicitation contact with the buyer, then the wholesaler or MGA must provide the disclosures required by the Regulation.

Further, the regulation does not apply to (1) the placement of reinsurance; (2) the placement of insurance with a captive insurance company pursuant to Article 70 of the New York Insurance Law; or (3) renewals, except that if the purchaser requests more information about the producer's compensation less than 30 days prior to a renewal or less than 30 days after a renewal, the insurance producer must disclose to the purchaser in a prominent writing the required disclosures within five business days.

Kentucky Updates NRRA Related Legislation

Kentucky has enacted SB 295 to update its surplus lines code to add provisions to conform to the  Nonadmitted and Reinsurance Reform Act (NRRA). Specifically, H 295 adds NRRA definitions of  admitted insurer, affiliate, exempt commercial purchaser and home state to Kentucky's surplus lines code.

H 295 also uses NRRA criteria for surplus lines insurer eligibility but did not include NRRA definitions of affiliated group, control, premium tax, qualified risk manager or state.  Kentucky passed SLIMPACT in 2011 and H295 was necessary to update the surplus lines code to be consistent with the NRRA.

In addition to the NRRA terms, the law, signed by the Governor on April 11, has additional reforms in that it eliminates the underlying license requirement for a nonresident surplus lines broker. It also limits the bond requirement to be applicable only to resident surplus lines brokers.

The new law does not mention tax sharing but the 2011 legislation adopted SLIMPACT, which authorized tax sharing should SLIMPACT becomes operational. SLIMPACT is not yet operational because it requires a minimum of 10 states and only 9 have passed SLIMPACT at this time. This bill also does not address the use of the other state's tax rates for a multi-state risk but the SLIMPACT Commission has indicated it intends to use the other states rates, at least for property insurance.

Kentucky law previously allowed the Commissioner to declare a surplus lines insurer ineligible, but an amendment in H 295 indicated the Commissioner shall mail notice of ineligibility if the Commissioner believes that a surplus lines insurer no longer meets the standards.  It is not clear if the bill limits the Commissioner's ability to declare an insurer ineligible for any reason other than failure to comply with NRRA eligibility standards.

Comprehensive information on 2012 legislation in Kentucky and other states is available on NAPSLO's website, in addition to a number of NRRA resources.

Colorado Passes NRRA Compliance Legislation

Colorado became the third state in 2012 to pass Nonadmitted and Reinsurance Reform Act enabling legislation among states that did not act in 2011. Colorado H 1215 contains many of the NRRA provisions, taxes the gross premium instead of an allocated share, and authorizes the Commissioner to enter into a tax sharing agreement with other states.

The bill, signed by the Governor on April 13, does not mention key NRRA reforms such as single-state compliance, single-state broker licensing or specifically mention single-state tax payments. However, it taxes at the Colorado rate unless the Commissioner elects to join a tax sharing compact or agreement, in which case the compact or agreement will establish the allocation methodology.

The bill authorizes the Commissioner to enter into a tax sharing agreement if its purposes are limited to facilitating the allocation of premium taxes, adopting uniform requirements for the collection and allocation of premium taxes and coordinating the reporting of premium taxes.

The bill defines affiliate, affiliated group, control, home state and nonadmitted insurance consistent with the NRRA, but does not contain definitions from the NRRA regarding  exempt commercial purchasers and qualified risk managers. It does provide that an insurer must meet NRRA eligibility requirements or separately apply for and be placed on the states list of eligible insurers.

Colorado did not implement NRRA legislation in 2011, such that it has taxed only the in-state portions of a risk after the effective date of the NRRA. Comprehensive information on 2012 legislation in Colorado and other states is available on NAPSLO's website, in addition to a number of NRRA resources.

We Are Hiring! NAPSLO Has Director of Government Relations Opening in Kansas City

The National Association of Professional Surplus Lines Offices, Ltd. (NAPSLO) currently has an opening for a Director of Government Relations in its Kansas City, Missouri headquarters office.

The primary goals of this open position are to: (1) implement an effective government relations and legislative advocacy program to achieve the Association’s federal and state legislative and regulatory goals as directed by the Board of Directors, Executive Committee, Legislative Committee and management; (2) provide high-quality support of all NAPSLO member inquiries and assist NAPSLO members in their regulatory compliance efforts at the state and national level by disseminating relevant information and developing a comprehensive network of compliance contacts from within the NAPSLO membership, establishing NAPSLO as a premier regulatory compliance resource; (3) enhance the level of support to the NAPSLO PAC and raise awareness of its benefits to the membership; (4) augment the effectiveness and teamwork of the NAPSLO staff by providing strong leadership, membership service, strategic planning and project management skills; and (5) enrich the quality and quantity of NAPSLO’s work product, information and services to members.

A more complete description of the Director of Government Relations position is available for download.

 To apply for this position, please submit your resume to cheryl@napslo.org.

E&S School Registration Deadline is May 7

Registration is now underway for the 2012 NAPSLO E&S School, scheduled to take place June 11-14 at the Eric P. Newman Education Center in St Louis.

The deadline to register for the school is May 7 and the cost of the school is $1,200. Registration materials can be downloaded from the NAPSLO website.

The E&S School's curriculum will focus on nine segments: Cops - Regulation and oversight of the E&S industry; Distribution System - The complexity, purpose and variations in the E&S market; E&S Marketing - The basics of marketing; Market Dynamics - The study of changing environments and leadership in the E&S market; MGAs and Brokers - How MGAs and Brokers maintain, market and manage business with an emphasis on Internet technology; Risk Takers - Characteristics of surplus lines and admitted markets; The Confusement of the Business - Definitions, acronyms and professionalism in the E&S market; The Lloyd’s Market - An overview of the role and practices of Lloyd’s in the marketplace; and Where’s The Money? - The importance of reviewing financial statements and accounting procedures.

A focal point of the school will be the Perspectives from the Top by Gail Soja, President of Chubb Custom Insurance Company. In addition, there will be an Executive Panel featuring Wendy Houser, Managing Director of Wholesale Marketing, Markel Corporation; Lana Parks, CPCU, CIC, President, The Parks Group; and Mark Patterson, Executive Vice President, Partners Specialty Group, LLC.

Wisconsin Enacts NRRA Related Bill

With the signing of Senate Bill 378, Wisconsin is the second state to pass Nonadmitted and Reinsurance Reform Act legislation among states that did not take action in 2011. The Wisconsin Governor signed into law the bill on Friday, April 6, and the bill incorporates several provisions of the NRRA, including exclusive home state regulation provisions consistent with the NRRA.

The bill does not authorize tax sharing with other states, instead requiring taxing the gross premium when Wisconsin is the home state of the insured. The bill also incorporates most NRRA terms and contains amendments to rectify the holding in the Gillen case in providing that arbitration/appraisal provisions in a policy form do not need to be filed by a surplus lines insurer.

This law includes NRRA eligibility criteria but goes beyond the NRRA to require alien insurers to meet "additional requirements regarding the use of the list established by rule of the Commissioner." This bill does includes the NIMA definitions of principal residence which provides that if 100% of the risk is outside of this state then the home state is the state to which the greatest percentage of the insured's taxable premium for that insurance contract is allocated. It also contains the NIMA definition of principal place of business (insured maintains its headquarters and where the insured's high level officers direct, control and coordinate business activities).

Wisconsin did not pass NRRA related legislation in 2011 and taxed only the in-state portions of the risk after the effective date of the NRRA. Comprehensive information on 2012 legislation in Wisconsin and other states is available on NAPSLO's website, in addition to a number of NRRA resources.

Registration Deadline Extended to April 13 for NAPSLO's Executive Leadership School

The registration deadline for the NAPSLO Executive Leadership School, set for April 23-26 at the University of Virginia Darden School of Business in Charlottesville, has been extended to April 13 as a limited number of spots remain.

Established in 2009, NAPSLO's Executive Leadership School is a three-day MBA Executive Level program reviewing business and insurance topics by faculty at one of America’s leading universities.

Tuition for the school is $2,995 and the brochure and registration materials are available to download from the NAPSLO Website.

The Executive Leadership School is designed for senior-level members who wish to broaden their perspectives on important social, political, and economic issues influencing the insurance industry. Participants enhance their leadership skills to more effectively manage change at the personal, team, and organizational levels, and will return to their organizations with the tools and mindsets to think and act more strategically.

Iowa First State to Pass NRRA Legislation in 2012

Iowa became the first state in 2012 to adopt Nonadmitted and Reinsurance Reform Act related legislation among the states that did not take action in 2011. The Iowa Governor signed into law HF 2145 on Thursday and the bill incorporates several provisions of the NRRA, as well as exclusive home state regulation provisions consistent with the NRRA.

The bill authorizes Iowa to tax the gross premium on a surplus lines policy when Iowa is the home state of the insured. The bill does not authorize tax sharing. The bill uses the NRRA definitions of affiliate, affiliated group, control, exempt commercial purchaser, home state, nonadmitted insurer and qualified risk manager.

The bill also retains the provisions from the pre-NRRA statute that allows the Commissioner to declare a surplus lines Insurer ineligible if it is of unsound financial condition, acted in an untrustworthy manner, no longer meets the eligibility standards, willfully violated the laws of the state, fails to conduct its claims settlement practices in a fair and reasonable manner or has committed an unfair or deceptive insurance trade practice.

Iowa did not pass NRRA related legislation in 2011 and taxed only the in-state portions of the risk after the effective date of the NRRA. Comprehensive information on 2012 legislation in Iowa and other states is available on NAPSLO's website, in addition to a number of NRRA resources.

Entry Deadline is April 2 for NAPSLO Marketing Campaign Competition

The deadline for the 2012 NAPSLO Marketing Campaign Award competition, conducted in partnership with the Insurance Marketing and Communications Association's Showcase Awards Program, is April 2.

The IMCA’s Showcase Award creative team will be judging the competition, but the award will be presented at the NAPSLO annual convention in October. The traditional IMCA Showcase Awards will be presented at the IMCA annual convention in Denver, June 24-27. Entry fees are  $100 per entry for members.

The NAPSLO Marketing Campaign Award competition is open to NAPSLO members only. To be judged, materials must have been in the marketplace between January 1, 2011 and March 15, 2012. The campaign entries must include a minimum of two communication vehicles (non-electronic and/or electronic) that share a common campaign theme. Additional information on the contest is available on the NAPSLO website.

Registration Deadline is April 2 for Executive Leadership School

The registration deadline for the NAPSLO Executive Leadership School, set for April 23-26 at the University of Virginia Darden School of Business in Charlottesville, is April 2 and NAPSLO members are encouraged to take advantage of the three-day MBA Executive Level program at one of America’s leading universities.

The brochure and registration materials for the Executive Leadership School are available to download from the NAPSLO Website. Tuition for the school is $2,995.

This program is designed for senior-level members who wish to broaden their perspectives on important social, political, and economic issues influencing the insurance industry. Participants enhance their leadership skills to more effectively manage change at the personal, team, and organizational levels, and will return to their organizations with the tools and mindsets to think and act more strategically.

Faculty members are selected from the Darden School of Business faculty to provide a framework for future success in strategically managing, developing and leading your firm.

Attendees will develop the enterprise perspective required to make winning choices about running their businesses in today’s complex environment. Participants will crystallize their personal world views about how to compete successfully in their market spaces, develop a deeper understanding of social, political, and economic forces affecting their business environments and relate the broad issues in the world to NAPSLO’s industry and to the career experiences—and challenges—of peer participants.

Texas Comptroller to offer Limited Tax Amnesty Program This Summer

The Texas Comptroller of Public Accounts announced it will oversee a limited Tax Amnesty Program to run from June 12 to Aug. 17, 2012.

Under the “Fresh Start” program, the Comptroller will waive penalties and interest for businesses that file delinquent tax reports and pay all taxes due, or amend reports that underreported taxes and pay the taxes due.

The program’s website indicated that tax reports originally due before April 1, 2012 are eligible for this limited amnesty but the amnesty does not apply to filing periods under audit, or identified for an audit or investigation.

According to the state, the amnesty is intended to apply to those who didn't file a tax report, underreported tax on a previously filed report, or don’t have a permit to report and remit Texas taxes.

Additional information on the program is available at http://freshstart.texas.gov.

Wyoming Tax Multistate Policies Using Home Rate Under New Legislation

The Wyoming Governor has signed into law House Bill 15, which incorporates several provisions of the Nonadmitted and Reinsurance Reform act (NRRA) as well as exclusive home state regulation provisions consistent with the NRRA. It enables the Wyoming Insurance Department to eventually utilize electronic transaction reporting for brokers.

HB 15 authorizes the Commissioner to continue to tax multi-state surplus lines policies at the Wyoming rate, which is consistent with the Department’s instructions to use Wyoming's tax rate for multi-state policies with a home state in Wyoming until the Nonadmitted Insurance Multi-State Agreement and related clearinghouse operations become operational.

In 2011, Wyoming approved legislation to allow the state to join NIMA but member states have delayed the operational start date until July 1, at the earliest.

Information on 2012 legislation in Wyoming and other states is available on NAPSLO's website.

NRRA Implementation Process Reviewed by NAPSLO in American Agent & Broker Column

NAPSLO's actions on implementation of the Nonadmitted and Reinsurance Reform Act (NRRA) are highlighted in the March issue of the American Agent & Broker magazine in an article by Executive Director Brady Kelley.

The article, Implementing NRRA, can be viewed online at the magazine's web site. The article reviews recent actions by states to modify their laws on taxing premiums, the status of the Nonadmitted Insurance Multi-State Agreement (NIMA) and Surplus Lines Insurance Multistate Compliance Compact (SLIMPACT), the prospects for tax sharing by the states, and the cost/benefits of tax sharing.