Friday, March 30, 2012

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.

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