Tuesday, April 10, 2012

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.

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