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.