Tuesday, January 10, 2012

South Dakota Confirms Change in Effective Date of the NIMA Provision

In a discussion this week with the South Dakota Division of Insurance, Insurance Director Merle Scheiber confirmed the deferral of the effective date of the Nonadmitted Insurance Multi-State Agreement (NIMA) and confirmed guidance to surplus lines insurance producers concerning the requirements for reporting, payment, collection and allocation of taxes for multi-state policies for which South Dakota is the home state.

Until further notice, the tax allocation provisions of NIMA will not apply, and the taxes due under a multi-state policy should be remitted entirely to South Dakota when it is the home state of the insured. The Department confirmed, when South Dakota is the home state of the insured, the taxes due under the multi-state policy shall be calculated on the gross premium of the policy at South Dakota’s tax rate.

Surplus lines premium and related taxes should not be allocated or calculated using the other states’ rates for portions of a multi-state risk outside of South Dakota until further instructions are provided by the South Dakota Division of Insurance.

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