NAPSLO Blog

Surplus Lines Law Group Spring Meeting Set For April 26-27 in Las Vegas

2012-01-26T18:05:00.002-06:00

The Surplus Lines Law Group spring meeting is set for April 26-27, 2012 at the Westin Casuarina in Las Vegas and registration materials are available on the Nevada Surplus Lines Association website.

A link to the hotel for hotel reservations is also on the site. The group rate for the conference is available until April 25, 2012, subject to availability.

The meeting is sponsored by the Nevada Surplus Lines Association (NSLA) and the Insurance Licensing Services of America (ILSA).

Wyoming to Apply State Tax Rate to Gross Premium of Multi-State Policies Through June

2012-01-12T10:25:00.000-06:00

The Wyoming Insurance Department has announced that for all multi-state policies, where Wyoming is the home state, with effective dates July 21, 2011 through June 30, 2012, the entire gross premium will be taxed at the Wyoming tax rate of 3 percent.

The announcement was made to provide updated guidance regarding the filing of multi-state policies under the provisions of the Nonadmitted and Reinsurance Reform Act (NRRA). This additional guidance was necessary because the NIMA clearinghouse will not be operational before July 1, 2012.

Effective July 1, 2012, the NIMA premium tax allocation formula will be applied to all multi-state policy transactions. The affidavit at the department website may be used to report both single and multi-state transactions to the Wyoming Insurance Department. The 2011 Surplus Lines annual statement and tax payment is due March 1, 2012. Implementation of the quarterly reporting and tax payment procedures are being deferred until the NIMA Clearinghouse is operational.

South Dakota Confirms Change in Effective Date of the NIMA Provision

2012-01-10T16:29:00.000-06:00

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.

Montana Agrees to Apply Its Own Tax Rate on Multi-State Surplus Lines Policies

2012-01-10T15:20:00.000-06:00

As part of a decision amending surplus lines regulations, the Montana Commissioner of Securities and Insurance has agreed that producers should charge Montana's tax rate on multi-state surplus lines policies where Montana is the home state of the insured.

During the review of the proposed regulations, NAPSLO had urged the state to interpret the regulations so that when Montana is the home state on a risk, the entire gross premium – regardless of whether a multistate risk is covered – be taxed at the Montana rate, rather than using the tax rate of each state involved in the transaction on that portion of the risk.

The department agreed with NAPSLO’s position to “continue to tax at 100% of the premium where Montana is the home state until such time as it is participating in a tax sharing system with other states."

The decision formally notes that “the entire premium (gross premium) will be taxed at the Montana tax rate in 33-2-705, MCA, regardless of whether the coverage includes risks or exposures partially located or to be performed in another state.”

Nebraska Withdraws from NIMA

2012-01-10T08:26:00.002-06:00

The Nebraska Department of Insurance notified the Governance Committee of the Nonadmitted Insurance Multistate Agreement (NIMA) that it is withdrawing as a participatory state from NIMA effective March 5, 2012.

In a notice from the department, Nebraska said while a clearinghouse to be established under NIMA could collect and allocate surplus lines premiums taxes, the time frame offered to surplus lines brokers and insureds independently procuring nonadmitted insurance to report all such business transacted during a designated quarter directly conflicted with Nebraska statutory provisions. As a result, the department said that all quarterly surplus lines filings and tax payments shall be filed with the department.

Nebraska was among 11 states (plus Puerto Rico) that had signed onto NIMA as a way to report, collect, allocate and distribute surplus lines tax revenues following the passage of the Nonadmitted and Reinsurance Reform Act (NRRA). Because of delays in establishing the clearinghouse, a number of the NIMA states have recently issued bulletins and clarifying guidance regarding the reporting and payment of taxes. All of the bulletins and clarifying guidance can found on the NAPSLO blog as they are released.

Florida Issues Bulletin with Further Filing Guidance on Florida Multi-State Policies

2012-01-05T11:39:00.001-06:00

The Florida Surplus Lines Service Office (FLSLO) issued Bulletin 2012-01 on January 4, 2012, to provide updated guidance regarding the filing of multi-state policies under the provisions of the Nonadmitted and Reinsurance Reform Act (NRRA).

This additional guidance was necessary as a result of recent amendments to NIMA, and because the NIMA clearinghouse will not be operational before July 1, 2012.

Therefore, until further notice, Florida surplus lines agents and Independently Procured Coverage filers should resume filing Florida home state policies with the FLSLO.

The FLSLO’s January 4, 2012 bulletin can be found on the FLSLO website.

Texas Stamping Office Issues Bulletin on Individual State Premium Reporting

2012-01-03T16:22:00.002-06:00

The Surplus Lines Stamping Office of Texas issued a bulletin on December 28 noting that even though Texas has not joined an agreement or compact with other states to allocate premium taxes on multi-state policies, the Texas Comptroller of Public Accounts and the Texas Department of Insurance are requiring reporting of allocation of premium for each state covered under the policy, by individual state name, when Texas is the home state on a multi-state policy. This is effective with policies reported to the Stamping Office 01/01/12 and after.

For EFS users filing programmatically, the stamping office said this change is available in version 2.1, as previously notified as referenced in the Programmers Technical Reference Supplement Guide.

The bulletin notes that the change will occur automatically for those EFS users filing by web entry. The Breakdown of States Summary / Other States / Exempt Premium form has been modified to allow entry of individual states and their associated premium for those of you still filing by paper. Please remember that the premium for each individual state must total to the premium entered for the Breakdown of States Summary.

Refer to bulletins SO 2011-11 and SO 2011-12 for detailed information previously provided regarding the reporting of the breakdown of states premium.

Louisiana Issues Bulletin Regarding Change in Effective Date of NIMA

2011-12-30T09:45:00.000-06:00

Bulletin 2011-04 was issued by the Louisiana Department of Insurance on December 29, 2011, to provide updated guidance to surplus lines insurance brokers concerning the Nonadmitted Multi-State Agreement (NIMA) and the requirements for reporting, payment, collection and allocation of taxes for multi-state policies.

This additional guidance was necessary as a result of recent amendments to NIMA, and because the NIMA clearinghouse will not be operational before July 1, 2012.

Therefore, in Louisiana, until further notice, the tax allocation provisions of NIMA will not apply. For any multi-state surplus lines policy with an effective date on or after July 21, 2011, and for which Louisiana is the home state of the insured, all brokers, producers or independently procuring insureds are instructed to collect and remit surplus lines premium taxes only on that portion of the premium allocable to Louisiana.

Louisiana’s December 29, 2011 bulletin can be found on the Louisiana Department of Insurance website.

Nevada Issues Updated Statement Regarding Change in Effective Date of NIMA

2011-12-30T08:50:00.000-06:00

In a statement from the Nevada Division of Insurance on December 22, 2011, the Division provided updated guidance to surplus lines insurance producers concerning the Nonadmitted Multi-State Agreement (NIMA) and the requirements for reporting, payment, collection and allocation of taxes and fees for multi-state policies for the first and second quarters of 2012.

The additional guidance was necessary because it is apparent NIMA clearinghouse will not be operational before July 1, 2012. In an emergency meeting on December 20, 2011, NIMA Participating States amended Paragraph 24 of the NIMA Agreement to change the effective date of the premium tax allocation schedule from January 1, 2012 to July 1, 2012, which defers the applicability of multi-state premium tax allocations and the NIMA allocation schedule until July 1, 2012.

Therefore, in Nevada, for the first and second quarters of 2012, the tax allocation provisions of NIMA will not apply, and the taxes and fees due under a multi-state policy would be remitted entirely to the home state of the insured, pursuant to that state’s statutory and regulatory requirements.

Nevada’s Statement dated December 22, 2011 can be found on the Nevada Surplus Lines Association website.

Mississippi Announces Change in Effective Date of the NIMA Premium Tax Allocation Schedule from January 1, 2012 to July 1, 2012

2011-12-23T09:30:00.007-06:00

Bulletin 2011-11 was issued by the Mississippi Insurance Department on December 22, 2011, to provide guidance to surplus lines insurance producers concerning NIMA and the requirements for reporting, payment, collection and allocation of taxes and fees for multi-state policies for the first and second quarters of 2012.

The additional guidance was necessary because it is apparent the NIMA clearinghouse cannot be operational before July 1, 2012. In an emergency meeting on December 20, 2011, the NIMA Participating States amended Paragraph 24 of the NIMA Agreement to change the effective date of the premium tax allocation schedule from January 1, 2012 to July 1, 2012, which defers the applicability of multi-state premium tax allocations and the NIMA allocation schedule until July 1, 2012.

Therefore, for the first and second quarters of 2012, the tax allocation provisions of NIMA will not apply, and the taxes and fees due under a multi-state policy would be remitted entirely to the home state of the insured, pursuant to that state’s statutory and regulatory requirements.

Mississippi’s Bulletin 2011-11 can be found on the Mississippi Insurance Department website at http://www.mid.state.ms.us/bulletins/201111bul.pdf.

Texas Insurance Department Issues Bulletin on Fees on Surplus Lines Policies

2011-12-19T14:56:00.000-06:00

The Texas Department of Insurance (TDI) has issued a bulletin to inform surplus lines agents about new requirements which include late-filing fees, a safe harbor provision, and possible enforcement actions. The department is offering a December 2011 settlement program for resolving pending disciplinary matters regarding late-filed surplus lines policies.

Texas Insurance Code requires a surplus lines agent to file a new or renewal surplus lines policy with the Surplus Lines Stamping Office of Texas within 60 days of the date a policy is issued or becomes effective. The new law provides two regulatory options (fees and penalties) for surplus lines agents who have filed policies late. The official bulletin lists the fee schedule. For more information about the calculation or remittance of fees, contact Kathy Wilcox at the insurance department at (512) 322-3535 or Kathy.Wilcox@tdi.state.tx.us.

Until January 1, 2012, agents may self-report late-filed policies with effective or issue dates before January 1, 2010, and pay a $50 fee per policy. This provision does not apply to policies that have already been listed on an SLSOT late-filers report.

To help resolve pending surplus lines late-filed policies disciplinary matters, TDI’s Enforcement Section will offer special incentives for settlement during December 2011. Staff will contact agents with pending disciplinary matters to offer resolution through Consent Orders.

For more information or questions about the settlement program, please contact Stephen Chen at 512-322-3428 or Stephen.Chen@tdi.state.tx.us. After the December 2011 Settlement Program, penalties for late filers will be assessed based on the guidelines in the Texas Insurance Code Section.

NAPSLO Submits Comments to Federal Insurance Office

2011-12-16T16:12:00.001-06:00

NAPSLO today submitted its response to the Federal Insurance Office (FIO) request for comment for “Public Input on the Report to Congress on How to Modernize and Improve the System of Insurance Regulation in the United States.” To review a copy of NAPSLO’s comments, click here.

NAPSLO Notes Passing of Daniel C. O'Leary, III

2011-12-16T14:37:00.000-06:00

Daniel C. O'Leary, III, of Shelly, Middlebrooks & O'Leary, Inc., passed away on December 13. He was a respected and loving father, husband, mentor and friend, as well as a successful business and community leader in Jacksonville.

He was a lifetime resident of Jacksonville and went to college at Gordon College and the University of Florida. After college he served as a commissioned officer in the US Army, then followed his father into the insurance business with Shelly, Middlebrooks and O'Leary. Dan stayed with the company all his working life, becoming Chairman in 1985 and serving in that capacity until his passing.

Services will be held at 11:00 a.m. Saturday, December 17, 2011, in St. Matthews Catholic Church, 1773 Blanding Boulevard. There will be a reception at the church following the service. Visitation will be from 6:00 to 8:00 p.m. on Friday, December 16, at the Hardage-Giddens Oaklawn Chapel, 4801 Hendricks Ave., Jacksonville. The family suggests donations in Dan's memory to the Paul Harris foundation of the Riverside Rotary Club.

Dan is survived by his loving wife of 36 years, Mary Frances Perret O'Leary, his daughter Erin O'Leary, his son Conor O'Leary, daughter in-law Shannon Sheridan O'Leary, granddaughter Eliza O'Leary, his mother, Mrs. Daniel C. O'Leary, Jr. (Bobbie), his sister Robin O'Leary and his two brothers, Timothy and Patrick O'Leary.

NAPSLO Mid-Year Registration Open

2011-12-06T08:24:00.002-06:00

Online registration is now open for the 2012 NAPSLO Mid-Year Leadership Forum, February 29-March 2 at the Fairmont Scottsdale Princess Resort, in Scottsdale, Arizona.

NAPSLO members can register for the meeting through the REGISTER page at the Mid-Year website.

The registration fee for delegates is $825 and the fee for spouses is $425. Registration fees will increase on January 20 to $925 and $475. At the end of the registration process there will be a link for attendees to reserve a hotel room at the Fairmont Scottsdale. Rooms are $329 plus a $2 daily
housekeeping fee.

Mid-Year meeting programs get underway on Wednesday, February 29 at 6:00 p.m. with the Opening Reception. Thursday is left open for attendees to meet with other members.

On Friday morning there will be a leadership program, and a short legislative program on the NonAdmitted and Reinsurance Reform Act (NRRA). The leadership program, Leading Flawless Execution from the Top, will be presented by Afterburner, a cutting-edge management training team
composed of a select group of our nation's top military fighter pilots.

Following the programs on Friday, the annual Derek Hughes/NAPSLO Educational Foundation Golf Invitational will take place that afternoon at the Grayhawk Golf Course. Attendees can register for the tournament online.

The Mid-Year programs end on Friday night with a cocktail hour at 6:00 p.m. to allow attendees to network with other attendees prior to dinner.

NAPSLO Notes Passing of Samuel Bergerman

2011-11-21T13:40:00.001-06:00

Samuel Bergerman, 74, of Livingston, N.J., died Friday morning, Nov. 18, as the result of a tragic accident. The funeral was scheduled for the Bernheim-Apter-Kreitzman Suburban Funeral Chapels, 68 Old Short Hills Rd., Livingston, N.J., on Monday, Nov. 21.
Mr. Bergerman was the owner of Anglo-American, Ltd., in Verona, N.J., for over 35 years and was a member of NAPSLO, as well as a member of P.I.A. (Professional Insurance Agents).

A lifelong New Jersey resident, Mr. Bergerman was born in Newark, N.J., on June 19, 1937 and was graduated from Rutgers University. He lived in Livingston for almost 42 years. He was a member of Maplewood Country Club, Maplewood, N.J., and Wycliffe Golf and Country Club, Wellington, Fla.

He was also a member of Temple Beth Shalom in Livingston, N.J. Sam is survived by his loving wife of almost 47 years, Hermine Bergerman of Livingston, as well as his three children, Jill Wishnew of Livingston, Matthew Bergerman of Westfield, N.J., and Adam Bergerman of Livingston, and seven grandchildren.

Randall Jones Named NAPSLO's Education Director; NAPSLO Advanced School Renamed to Honor Retiring Education Coordinator

2011-11-15T23:32:00.001-06:00

Randall D. Jones has assumed the position of Education Director for NAPSLO and is responsible for exploring and developing new educational programs along with the oversight of existing programs, including the highly successful NAPSLO schools.

"I am excited to join NAPSLO and work with our new surplus lines compliance course, which has been approved for CE credits in 48 states to date," said Mr. Jones.

Mr. Jones has assumed this role due to the retirement of Marcus Payne as the NAPSLO Education Coordinator. Mr. Payne was instrumental in establishing the outstanding reputation and success of the existing NAPSLO schools.

NAPSLO announced that the NAPSLO Advanced School, which takes place each fall in St. Louis, has been renamed the Marcus Payne NAPSLO Advanced School in honor of Mr. Payne, who retired this year as NAPSLO’s Education Coordinator. Mr. Payne was part of the E&S School since it was founded in 1990 and the Advanced School since it started in 1995. He served as an instructor and panelist and then, beginning in 2000, as Education Coordinator.

Mr. Jones began working with NAPSLO in 2010 as a planning facilitator to help the Education Committee in the drafting of a new strategic plan. Based upon member feedback, obtained during the planning process, Mr. Jones has been directing the development of several new educational offerings that will include the newly released on-line course for excess and surplus lines regulatory compliance.

“The NAPSLO schools are a great foundational source of education and unique peer networking experience for members in the industry and will continue to provide this significant benefit to NAPSLO members," said Mr. Jones. “We also want to explore additional alternative curriculum delivery and learning opportunities that supplement these excellent schools.”

NAPSLO currently offers the E&S School for individuals with two to five years experience in the surplus lines industry; the Advanced School for those with more than five years experience; and the Executive Leadership School for senior level employees. In addition NAPSLO works with Success CE to offer on line continuing education courses and has worked with the AAMGA and PLUS to make their educational programs and courses available to NAPSLO members.

Mr. Jones has been involved with NAPSLO’s educational efforts since 1995 when he was an instructor at the first NAPSLO Advanced School and has led reinsurance and alternative market courses each year since.

Prior to accepting the position he was providing strategic consulting and executive coaching for a select number of clients in the specialty insurance industry. He also serves as a director on several boards for privately held companies through Strategic Advisors Group LLC.

Mr. Jones has been in the insurance business for 35 years, including serving as President/CEO of Northland Insurance Companies and President/CEO of Maxum Indemnity. Mr. Jones has also served on the NAPSLO Board of Directors as a co-chair of the Education Committee, the NAPSLO Education Board of Trustees, the NAII Specialty Lines Committee and the Minnesota Insurance Federation of Executives.

He received a Bachelor of Science degree in Criminal Justice from Southern Illinois University and has completed the Wharton School Insurance Executive Program, among other insurance specific programs and is scheduled to graduate from Central Michigan University with a Master’s degree in Education, focusing on adult learning and curriculum.

Lunsford, Flowers Selected As London, Bermuda Scholarships Recipients

2011-11-03T09:34:00.000-05:00

Allyson Lunsford of Appalachian State University was selected as the 2012 Joseph H. Blades Memorial Scholarship recipient. Andy Flowers of Troy University was selected as the 2012 Bermuda Internship recipient. Ms. Lunsford will receive a 3-week internship in London with a NAPSLO member firm and Mr. Flowers will receive a 3-week internship in Bermuda with a NAPSLO member firm.

Emily Crow, Brandon Dennis, Benjamin Delinski, Amanda Woods, Ms. Lunsford and Mr. Flowers were the six interns selected to attend the convention and were interviewed by the Internship Committee to determine the Bermuda and London scholars.

Intern Resumes

Intern resumes are available on the NAPSLO Web site at www.napslo.org, under the Internship section. NAPSLO member firm login and password are required. Interns participate in a comprehensive nine week program to gain experience working in various departments of both company and broker areas of business.

2012 Internship

The application deadline for the 2012 program is December 1. For more details and to apply online, visit: http://www.napslonextgen.org/Internship.html

NAPSLO Introduces Online Surplus Lines Compliance Course

2011-11-02T09:58:00.001-05:00

NAPSLO is introducing the first truly online learning experience offered by the Association, the NAPSLO Surplus Lines Compliance Course. This course, offered through NAPSLO and Success CE at http://napslo.successce.com is available in both CE credit and no CE credit versions.

"NAPSLO developed the online course to provide industry professionals the background to assist them in dealing with the complex surplus lines regulatory issues," said Randall Jones, NAPSLO's new Director of Education as of Nov. 15. "NAPSLO saw the need for the course because there was limited educational courses on surplus lines compliance and we believe this will greatly benefit the industry."

Benefits
The course offers substantial benefits to organizations and professionals who operate within and navigate through complex excess and surplus lines regulatory issues. The course is targeted to professionals with less than two years of surplus lines compliance experience, and other professionals who deal less frequently with compliance issues.

Examples of learners who will benefit from this course include regulatory staff, brokers and their support teams, and others who place business in the non-admitted market.

Course Sections
The course includes four sections, and eight lessons, with learning objectives within each lesson. The course provides an overview of the E&S Industry and Surplus Lines Brokers and Insurers and teaches students the basics of Surplus Lines Broker Licensing and Record Keeping, Insurer Eligibility, Non-Admitted Compliance: Process and Procedures, Diligent Search, Tax Remittance, Policy Disclosure and Delivery, and Independent Procurement/Industrial Insured Exemption.

The course also covers the Nonadmitted and Reinsurance Reform Act (NRRA) and discusses NRRA/Exempt Commercial Policyholder (ECP) Laws.

The course contains an interactive glossary, links to excellent outside resources, sample state requirements, key general information for filings and reports, and lesson specific self-mastery tools, all packaged in an easy and fun to read format. Learners can also send specific course questions to education@napslo.org.

Students taking the course also may take exams for CE Credits and the course has been approved for 3 hours credit in most states, except for 2 hours in the State of Washington. When registering for the course students should check on the availability of CE credits in their state.

Cost & Registration
The cost of the course is $14.95 for the course and CE exams and credits, or $7.00 for the course only, no CE exams and credits. For a limited time, NAPSLO is providing a subsidy for all course costs. Please check for availability of this limited subsidy when registering for the course at http://napslo.successce.com. For more information on the course, download a flyer.

NAPSLO Joins Nine Other Industry Groups Urging NIMA States to Adopt the Kentucky Compromise for Allocating Surplus Lines Taxes

2011-10-21T16:25:00.001-05:00

NAPSLO joined nine other industry trade groups in writing representatives of states who are part of the Nonadmitted Insurance Multi-State Agreement (“NIMA States”) to recommend their adoption of the allocation methodology proposed by the Kentucky Department of Insurance (“Kentucky compromise”).

NAPSLO joined the American Association of Managing General Agents, the American Bankers Insurance Association, the American Insurance Association, the Council of Insurance Agents & Brokers, the Independent Insurance Agents & Brokers of America, the National Association of Mutual Insurance Companies, the National Association of Professional Insurance Agents, the Property Casualty Insurers Association of America and the Risk and Insurance Management Society, Inc. in writing the letter urging adoption of the Kentucky allocation proposal.

The industry letter noted the Kentucky proposal would continue to require the allocation of casualty premiums on a state-specific or location-specific basis when a multistate policy’s premiums are determined on a state-specific or location-specific basis, but it permits the allocation of premiums to the home state if a single premium charge is applied and no location-specific rating occurs in connection with the placement. Industry groups previously voiced support for the Kentucky compromise in August writing representatives of the Surplus Lines Multistate Compliance Compact Commission (“SLIMPACT”) to urge the adoption of the Kentucky proposal. SLIMPACT members have stated their support of the plan. Many states revised their insurance laws this year for the purpose of compliance with the Nonadmitted and Reinsurance Reform Act (“NRRA”).

“We believe the Kentucky compromise is the option best suited and most likely to bring the various parties and interests together and produce the much-needed uniformity intended by the NRRA,” said David Leonard, Co-Chair of NAPSLO’s Legislative Committee. “We are most interested in working with states as we seek to realize the promise of uniformity while resolving the threat of unworkable allocation methods and competing tax sharing approaches.”

The Kentucky compromise includes refinements to the existing NIMA allocation method possessing considerable merit and meeting the needs of state officials without burdening companies, brokers and insureds with unnecessary and new data reporting requirements for the sole purpose of collecting taxes.

In contrast, the letter said that the NIMA allocation methodology would unavoidably result in new costs and fees, and would complicate, rather than simplify, surplus lines premium tax reporting and allocation procedures.

“The industry is concerned the NIMA allocation system would significantly expand the collection and reporting of information solely for tax allocation purposes,” said James Drinkwater, Co-Chair of NAPSLO’s Legislative Committee. “This represents new challenges, adds further complexity to the surplus lines marketplace, and exacerbates the burdens the NRRA was designed to relieve.”

To download a copy of the letter, CLICK HERE.

Delaware Issues Bulletin on New Category of Surplus Lines Insurer

2011-10-21T10:55:00.004-05:00

The Delaware Insurance Department recently issued a bulletin reviewing the background for a new category of insurance company, "Domestic Surplus Lines Insurer (DSLI), which was created as part of new legislation this year.

The Nonadmitted Insurance Act [SB 109], enacted this year, creates the DSLI and it allows a Delaware-domiciled insurer to be treated as nonadmitted in Delaware for particular business purposes. A Delaware domestic surplus lines insurer will be domiciled and admitted in Delaware but, unlike all other Delaware-domiciled insurers, can write surplus lines policies in Delaware.

In the past, if a surplus lines insurer was admitted in Delaware, the company was not permitted to write coverage on the Delaware portion of a multi-state surplus lines policy, making it necessary to obtain that portion of the coverage from another insurer through a separate policy. Under the new law, this new type of insurer must fulfill all the requirements of an admitted domestic company, but will be considered nonadmitted for the writing of surplus lines business. This new law makes Delaware one of a handful of states in which a domestic insurer may offer surplus lines coverage in all 50 states including Delaware, its state of domicile.

A company that is licensed as a Delaware domestic surplus lines insurer may write surplus lines insurance business in any jurisdiction, including this state. Although the company is an admitted company, a domestic surplus lines insurer is limited to the writing of surplus lines business only.

The provisions of Chapters 42 and 44 of Title 18 regarding the Delaware Insurance Guaranty Funds will not apply to a domestic surplus lines insurer.

Companies applying to become Delaware domestic surplus lines insurers will have to prove adequate financial solvency, meet certain regulatory criteria, and specifically be approved by the Insurance Commissioner. The bulletin addresses the procedures that must be followed by companies wishing to become a Domestic Surplus Lines Insurer in Delaware.

Lecture Series Renamed to Recognize E.G. Lassiter

2011-10-20T08:52:00.001-05:00

The Derek Hughes/NAPSLO Educational Foundation Lecture Series has been renamed the E.G. Lassiter Lecture Series, presented by the Derek Hughes/NAPSLO Educational Foundation, Joseph Timmons, Foundation President, announced at the recent 2011 NAPSLO Annual Convention in San Diego.

Mr. Timmons said the change was made to recognize Mr. Lassiter's efforts to promote the lecture series presented at the annual convention. Mr. Lassiter, Chairman and CEO of RSUI Group, Inc., is retiring in 2012.

The Foundation Lecture Series was established in 1998 to bring prominent business or political individuals to the annual convention to speak on relevant topics of the day. Michael Lewis, author of The Blind Side, The Big Short, Liar's Poker and Boomerang, was the 2011 lecture series speaker, and his presentation was attended by a large number of members.

Hank Haldeman Presented Charles A. McAlear/NAPSLO Industry Award

2011-10-19T15:14:00.007-05:00

Hank Haldeman, Co-Chair of NAPSLO’s Legislative Committee, was presented the Charles A. McAlear/NAPSLO Industry Award at the 2011 NAPSLO Annual Convention in San Diego.

Mr. Haldeman received the award from outgoing President Letha Heaton during the awards session of the program on October 12. The award was established by NAPSLO in the 1980s to honor individuals who have made significant contributions to the surplus lines industry and it was renamed in 1994 to recognize the Association's first president and founding member.

"I am surprised and flattered to be included amongst many real giants of our industry who have received this recognition,” said Mr. Haldeman. “Clearly, this is a reflection of the great importance that NAPSLO has placed upon the implementation of NRRA around the country, as we seek to realize the promise of uniformity while resolving the threat of unworkable allocation methods and competing tax sharing approaches. The work is not complete here, but we hope to see a significant step forward as regulators, legislators and industry coalesce around the Kentucky compromise allocation method. This has been a team effort, with many, both within and outside NAPSLO contributing substantially."

Mr. Haldeman has served as Co-Chair of NAPSLO’s Legislative Committee, Legislative Chair for the Surplus Lines Association of California and Legislative Chair & President of the California Insurance Wholesalers Association (CIWA).

In addition, David E. Leonard, CPCU, ARe, AIAF, ARM, Co-Chair of the Legislative Committee, received the Richard M. Bouhan Legislative Advocacy Award, which is presented to individuals whose advocacy helps advance the legislative interests of the surplus lines industry. It was created in 2006 and recognized Mr. Bouhan’s legislative work on behalf of the surplus lines industry. Mr. Bouhan, who will be retiring next year, was also recognized during the program for his efforts for the Association over the past 30 years, including serving as Executive Director from 1987 to 2011.

Mr. Leonard, and Gilbert C. Hine, Jr., CPCU, CFP, Co-Chair of NAPSLO’s Education Committee, received NAPSLO President’s Award, which recognizes committee chairs for outstanding service.
Jeff Lamb, a member of NAPSLO’s Career Awareness and Internship Committee, received the W. Dana Roehrig (Past President’s) Award, which recognizes efforts of Association volunteers.

Kristen Skender, President of NAPSLO’s Next Generation, was presented the initial Steven R. Gross Next Generation Award to recognize contributions to the Association by members under 40. Mr. Gross is Co-Chair of NAPSLO’s Career Awareness and Internship Committee and oversaw the formation of the Next Generation.

New California Bill Adds Filing Requirements

2011-09-26T21:27:00.001-05:00

The Governor of California has signed Senate Bill 131, which specifies that certain filing requirements now applies to certain surplus line brokers.

The bill, which was signed into law, requires that the information in a sworn statement be expanded to include certain premium information for single and multistate risks. Requires the filing to apply to a home state insured that directly procures insurance with a nonadmitted insurer. Requires that when multiple brokers are involved in placing a policy, only the one responsible for filing the report would be considered transacting business for tax purposes.

This bill would specify that the sworn statement filing requirements apply to surplus line brokers placing business for a home state insured. The bill require that the information in the sworn statement be expanded to include the total amount of gross premium, the total gross premium for single state risks where 100% of the premium is attributable to risks in California, and for multistate risks, the percentage of gross premium allocated to California and each other state. The bill also requires that the sworn statement filing also apply to a home state insured that directly procures insurance with a nonadmitted insurer. However, the bill authorizes the commissioner to waive or modify any of the foregoing requirements by public notice published on the department's Internet Web site.

The bill changes the definition of "business done" or "business transacted" to mean all insurance business conducted by a surplus line broker for a home state insured or directly procured by the home state insured. The bill also requires that when 2 or more licensed surplus line brokers are involved in placing a policy, only the one responsible for filing the confidential written report, as specified, would be considered transacting business for tax purposes, and only one licensed surplus broker would be required to include the policy in his or her sworn statement.

The surplus line broker required to include the policy in his or her sworn statement would be either the one responsible for negotiating, effecting the placement, remitting the premium to the nonadmitted insurer or its representatives, and filing the confidential written report, or the one surplus line broker delegated the responsibility for the filing of the confidential written report pursuant to a written agreement, as provided.

State of Excess & Surplus Lines Market to be Focus of A.M. Best Webinar on September 28

2011-09-07T11:09:00.001-05:00

Editors of A.M. Best's annual report on the state of excess and surplus lines market and industry leaders will appear in a one-hour webinar examining the implications of the current landscape. The webinar will also examine trends in coverage, mergers & acquisitions and other factors affecting this fast-moving and important sector of the property/casualty insurance industry.

The live webinar is scheduled for Wednesday, September 28, at 2:00 p.m. Eastern and you can register at A.M. Best's webinar page.

Panelists for this webinar include:

• David Bresnahan, President, Lexington Insurance Company
• Dave Obenauer, President, Crump Insurance Services, Inc.
• Dick Bouhan, Secretary, Derek Hughes/NAPSLO Educational Foundation
• James Drinkwater, President, AmWINS Brokerage
• Carole Ann King, Managing Senior Business Analyst, A.M. Best Company

The event is presented by Lexington Insurance Company. A.M. Best and the Derek Hughes/NAPSLO Educational Foundation annually produce a detailed report on the excess and surplus lines insurance sector. The report updates the relative positions of carriers in the market and examines regulatory developments, distribution, solvency, availability and coverage. That report will be the starting point for the webinar discussion.

Attendees can submit questions in advance 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 (908) 439-2200, ext. 5561, or e-mail lee.mcdonald@ambest.com.

Brady R. Kelley Named Executive Director

2011-08-31T13:56:00.000-05:00

The NAPSLO Board of Directors announced that Brady R. Kelley has accepted the position of Executive Director of the Association and will join NAPSLO on September 12, replacing Richard M. Bouhan who will be retiring from the organization following 30 years of service.

Mr. Kelley most recently was Chief Financial and Business Strategy Officer for the National Association of Insurance Commissioners (NAIC), the U.S. standard-setting and regulatory support organization governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories.

“After an extensive search we are very pleased to announce that Mr. Kelley has accepted the position as Executive Director,” said NAPSLO President Letha Heaton. “We would also thank Mr. Bouhan for his many years of service to the Association and the surplus lines industry.”

Mr. Bouhan will remain with the Association through June of 2012 working on the transition and also legislative and legal issues for NAPSLO. Mr. Bouhan joined the Association in 1981 as Legislative Director and became Executive Director in 1988.

Mr. Kelley has served as Chief Financial and Business Strategy and previously served as Chief Financial Officer, Director of Financial Services, and Financial Services Manager since joining the NAIC in 1998. He also served as a senior accountant for Price Waterhouse after graduating with a bachelor’s degree in accounting from the University of Missouri. He has also received the CPA designation.

“We are sad to see him leave us, and excited for the opportunity this provides him and his family,” said NAIC Chief Executive Officer, Dr. Therese M. (Terri) Vaughan. “Having appreciated his talents for 13 years at the NAIC, we applaud the wisdom of NAPSLO’s choice and wish Brady the very best of luck.”

More States Adopt NAPSLO’s View on Requiring Surplus Lines Brokers to Have P&C License

2011-08-25T12:40:00.001-05:00

A recent survey by the NARAB Working Group has shown that a number of states have adopted NAPSLO’s position that under Gramm-Leach-Bliley Act of 1999 states can not require surplus lines brokers to have underlying P&C license if they are not handling the diligent search for a policy.

One of the goals of Gramm-Leach-Bliley was to allow easier access to surplus lines licenses to out of state residents. A number of states required that before a broker could acquire a surplus lines license they would need to acquire an underlying property and casualty license. NAPSLO argued that if the broker was not performing the diligent search of the state’s admitted market, under GLB they did not need an underlying P&C license.

The NARAB survey showed that Idaho, Illinois, Kansas, Kentucky, Maine, Maryland, Mississippi, Montana, Nebraska, North Dakota, Oregon, Rhode Island, and Wyoming eliminated the underlying license requirement for those brokers that do not conduct diligent searches. In addition, a number of other states had previously passed legislation that adopted this view.

New Jersey Enacts Law to Collect 100% of the Tax and Allows State to Join A Compact

2011-08-21T20:12:00.000-05:00

The New Jersey Governor has signed into law Nonadmitted and Reinsurance Reform Act (NRRA) compliance legislation that would authorize the state to collect 100% of the tax on U.S. premiums and allows the state to join a compact or tax sharing agreement.

New Jersey is among the latest states to enact NRRA related implementation legislation. During the session NAPSLO provided draft legislation and offered comments.

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are bringing their laws into compliance.

New Jersey SB 2390 authorizes New Jersey to collect 100% of the tax on U.S. premiums for a surplus lines or independently procured insurance policy when New Jersey is the home state of the insured. It also authorizes the Commissioner to enter into, modify and terminate one or more tax sharing agreements or compacts.

The bill provides that in determining whether to enter into a compact or tax sharing agreement, the Insurance Commissioner must consider: efficiencies to be achieved; the amount of revenue to be generated through participation; and any other material factor. In addition, a decision by the Commissioner to enter into a tax sharing arrangement is subject to nullification by the Joint Budget Oversight Committee

The bill defines home state per the NRRA, however limits the imposition of nonadmitted insurance premium tax to U.S. premium. The bill does not incorporate the NRRA's exempt commercial purchaser (ECP) exemption or insurer eligibility requirements.

Delaware Enacts NRRA Bill Requiring 100% of Premium to be Taxed; Establishes Procedure to Enter Compact

2011-08-19T12:10:00.000-05:00

The Delaware Governor has signed into law Nonadmitted and Reinsurance Reform Act (NRRA) compliance related legislation that would authorize the state to collect 100% of the tax on the U.S. premium and allows the state to join a compact or tax sharing agreement.

Delaware is among the latest states to enact NRRA related implementation legislation. During the session NAPSLO provided draft legislation and offered comments.

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are bringing their laws into compliance.

Delaware's SB109 provides authorization for participation in an interstate cooperative compact or agreement, however it requires the insurance commissioner to establish a NRRA Implementation Revenue Study committee to study the fiscal impact of entering into a compact.

The law provides that 100% of the premium for all policies written on home state insureds, whether single-state or multi-state, is considered Delaware premium for tax purposes; provides for the payment of premium tax on independently procured nonadmitted insurance; and provide for penalties for noncompliance with tax filing requirements.

SB 109 further adds definitions for "home state," "affiliated group" and "control," adopts the NRRA exempt commercial purchaser exemption, and amends insurer eligibility requirements.

NAPSLO Applauds Regulators' Approval of Kentucky Allocation Proposal

2011-08-19T09:54:00.000-05:00

NAPSLO applauded insurance regulators' decision to approve a proposal by the Kentucky Department of Insurance on how to allocate surplus lines premium taxes. In a non-binding straw vote on Thursday, the SLIMPACT (Surplus Lines Multistate Compliance Compact) Commission voted to approve the allocation method proposed by Kentucky.

“NAPSLO, and the industry, were pleased to see regulators vote to approve Kentucky’s allocation proposal,” said NAPSLO Legislative Co-Chair David Leonard. “The Kentucky proposal presents a workable methodology that would be a vast improvement over other tax methodologies under discussion and we hope that other state groups will also adopt the proposal.”

The commissioners, representing the nine states that adopted SLIMPACT legislation, were meeting to discuss issues regarding the compact following the Nonadmitted and Reinsurance Reform Act (NRRA), a part of the 2010 Dodd-Frank Act, becoming effective on July 21, 2011. The Commission must adopt a tax allocation formula and Kentucky, one of the nine states, proposed a tax allocation formula that would allocate surplus lines taxes based on exposures, however, most casualty would not be allocated, an approach similar to what is in use today. The Kentucky formula could be used in any tax-allocation agreement as necessary between different states.

“Adoption of Kentucky’s proposal would basically continue the current allocation system rather than require brokers to implement a new system,” said NAPSLO Legislative Co-Chair Hank Haldeman. “It is significant step toward implementing uniformity and simplicity in filing multistate taxes, which is sorely needed.”

NAPSLO joined eight other industry trade groups in writing SLIMPACT Commissioners to recommend that they adopt the allocation methodology proposed by Kentucky. The industry groups supporting the Kentucky proposal were the American Association of Managing General Agents, the American Bankers Insurance Association, the American Insurance Association, the California Insurance Wholesalers Association, the Council of Insurance Agents & Brokers, the Independent Insurance Agents & Brokers of America, the National Association of Mutual Insurance Companies, and the Risk Management Society.

The SLIMPACT commission is presently composed of Alabama, Kansas, Kentucky, Indiana, New Mexico, North Dakota, Rhode Island, Tennessee, and Vermont

Oregon Enacts NRRA Legislation; State Can Join Compact with Legislature's Approval

2011-08-10T08:30:00.000-05:00

The Oregon Governor recently signed into law Nonadmitted and Reinsurance Reform Act (NRRA) compliance legislation that allows the director of the Department of Consumer and Business Servies, following legislative approval, to enter into a compact or to otherwise establish procedures with other states to allocate premium taxes.

Oregon is among the latest states to enact NRRA related implementation legislation. During the session NAPSLO provided draft legislation, offered comments and spoke with representatives of the department of insurance.

The NRRA mandates that beginning July 21, 2011 the insured's home state is the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are bringing their laws into compliance.

Oregon's HB 2679 does not implement all NRRA mandates, though it does adopt the NRRA's exempt commercial purchaser (ECP) exemption from the diligent search requirement (and allows the director to waive the requirement for additional commercial insureds based on criteria that are more liberal than the ECP criteria). The bill also adds definitions for "home state," "affiliated group" and "control."

HB 2679 provides that after receiving express legislative approval, the Director of the Department of Consumer and Business Services is authorized to enter into a compact or to otherwise establish procedures with other states to allocate among the states the premium taxes paid to an insured's home state.

The bill also imposes a tax on independently procured insurance (same rate of 2% as for surplus lines) which Oregon does not currently have. Both the independent procurement and surplus lines tax would be imposed only on the premiums attributable to Oregon exposures. The bill also requires surplus lines licensees to pay a state fire marshal tax "equal to 0.3 percent of the premium or fees charged by the insurer or the insurer's agents and other intermediaries for the insurance."

NAPSLO, Other Industry Groups Urge SLIMPACT States to Adopt Kentucky's Allocation Proposal

2011-08-09T09:48:00.000-05:00

NAPSLO joined five other industry trade groups in writing representatives of the Surplus Lines Multistate Compliance Compact Commission to recommend that they adopt an allocation methodology proposed by the Kentucky Department of Insurance.

NAPSLO joined the American Association of Managing General Agents, the American Bankers Insurance Association, the American Insurance Association, the Council of Insurance Agents & Brokers, and the Independent Insurance Agents & Brokers of America in writing the letter urging adoption of the Kentucky proposal.

Kentucky has proposed a tax allocation formula that would allocate surplus lines taxes based on exposures. However, brokers would not allocate most casualty, an approach similar to what has been in use. Following the July 28 hearing before House Financial Subcommittee on Insurance, Housing and Community Opportunity industry groups have voiced support for a unified tax allocation methodology.

"We believe the Kentucky proposal would allow brokers to continue to operate under a basically unchanged allocation system. That consistency is important to the industry and the insureds that we serve," said NAPSLO Legislative Co-Chair Hank Haldeman. "We hope that the states in the NIMA agreement will also adopt the Kentucky proposal as a way to handle tax allocation."

The joint industry letter said Kentucky's proposal possesses considerable merit and meets the needs of state officials without unnecessarily burdening companies, brokers and insureds with unreasonable data reporting requirements. It added that the Kentucky proposal is the option best suited and most likely to bring the various parties and interests together to produce much-needed uniformity.

Nine states have passed SLIMPACT legislation and a tenth state is needed to create a clearinghouse. Because of the timing established in the SLIMPACT legislation, the earliest possible date a SLIMPACT clearinghouse could began to process taxes is January 1, 2013.

New Jersey Seeks Comments on Fee Changes

2011-08-02T11:45:00.001-05:00

In order to implement a 2010 statute, the New Jersey Department of Banking and Insurance has issued a proposal for public comment that would change the limits of fees for surplus lines insurance.

Under the proposal, in addition to allowing to charge a fee for the actual cost incurred for any services performed by a person that is not associated with the surplus lines producer such as inspection services, a surplus lines producer may charge a fee to an originating broker in connection with the negotiation or procurement of any contract of surplus lines insurance in the following amounts:
1. For personal lines, a fee not to exceed $50; and
2. For commercial lines, a fee that is the greater of two percent of the premium for the applicable policy period or $100, but in no event in excess of $250.

New Jersey statutes previously limited surplus lines producers to charge a fee to an originating broker in connection with the negotiation or procurement of any contract of surplus lines insurance that didn’t exceed $50, plus the actual cost incurred for any services performed by a person that is not associated with the surplus lines producer, such as inspection services. Effective October 1, 2010, the $50 maximum fee was deleted and the maximum amount was to be set by the Insurance Commissioner.

The proposed amendment retains the existing fee limit currently applicable with respect to personal lines surplus lines insurance, and increases the amount permitted for commercial lines surplus lines insurance. The proposed fee amounts are based on discussions the Department has had with surplus lines producers, trade associations and representatives.

The Department is also proposing to clarify that the applicability of the provisions on fees in that subsection to personal lines surplus lines insurance is limited to the originating or retail producer, and does not extend to the surplus lines producer.

A 60-day comment period ending September 20 is provided for this notice of proposal, and comments should be sent to Robert J. Melillo, Chief Legislative and Regulatory Affairs, Department of Banking and Insurance, 20 West State Street, PO Box 325, Trenton, NJ 08625-0325.

Surplus Lines Premiums in Stamping Offices Increase in 2011, Items Processed Down Slightly

2011-08-01T09:16:00.000-05:00

Surplus lines premium written in the 14 stamping offices states increased for the first half of 2011 compared to 2010, according to a report from the Surplus Lines Stamping Office of Texas.

Premiums reported by the stamping offices for the first six months of the year increased by 11.4% to $10.2 billion, compared to $9.15 billion in 2010, in large part as New York reported an increase in premiums from $1.356 billion to $2.522 billion in 2011 because of late-filed premiums from prior years' policies during the first six months of 2011.

While premiums increased, the number of items recorded by the stamping offices dropped slightly, from 1,599,590 in 2010 to 1,576,569, a 1.4% decrease. New York reported a 4.4% increase while Florida reported a 12.3% decrease.

Seven states reported increases in premium, from 0.5% in Pennsylvania to the 85.9% in New York and 4.1% in California. Seven states reported declines, ranging from 1.2% decline in Texas to a 16.4% decline in Nevada.

NAPSLO Testifies Before House Subcommittee

2011-07-28T16:12:00.001-05:00

Representatives of NAPSLO and other industry groups testified during a hearing of the Subcommittee on Insurance, Housing and Community Opportunity this morning on “Insurance Oversight: Policy Implications for Consumers, Businesses and Jobs” and a video copy of the testimony has been posted on the House Financial Services Committee website.

Congressional Intent of NRRA is Threatened, NAPSLO Testifies to House Subcommittee

2011-07-27T15:57:00.002-05:00

The Congressional mandate of making multistate surplus lines transactions and tax payments more uniform, efficient and streamlined for consumers, businesses and brokers is threatened by the Nonadmitted Insurance Multistate Agreement (NIMA), NAPSLO said in testimony submitted to the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity for a hearing on July 28 entitled “Insurance Oversight: Policy Implications for Consumers, Businesses and Jobs.”

“NAPSLO is increasingly concerned that the NRRA is being implemented in many states (even as promoted by NAIC) in such a way that they’ll make things worse – not better – for surplus lines stakeholders,” said NAPSLO’s testimony. “Unfortunately certain state interpretation and implementation of the NRRA has, in NAPSLO’s view, been inconsistent with Congress’s intent."

The House subcommittee hearing is set for 10:00 a.m. (Eastern) on Thursday and NAPSLO President Letha Heaton will be testifying before the subcommittee as part of an industry panel. A live webcast feed is scheduled to be available from the subcommittee website. Complete testimony and press release on testimony are available to download.

NAPSLO strongly opposes NIMA’s current tax allocation methodology as it is wholly unworkable for the vast majority of the industry, and if implemented will result in new costs and fees levied on surplus lines consumers. As part of its testimony, NAPSLO included comments from brokers on the difficulty they would have in operating under the NIMA allocation system.

NAPSLO urges parties to abandon the NIMA tax allocation methodology and instead adopt one based on state by state premium data from the “Schedule T” section of annual financial statement submitted to the NAIC by surplus lines carriers. Kentucky’s insurance commissioner has proposed a tax allocation formula to allocate taxes based on exposures. While NAPSLO favors a “Schedule T” approach, it also believes the approach proposed by Kentucky presents a workable compromise that would be a vast improvement over the NAIC-NIMA tax methodology.

Nevada hopes to profit from insurance pact - NevadaAppeal.com

2011-07-23T21:35:00.002-05:00

The Nevada Board of Examiners this week approved joining the Nonadmitted Insurance Multi-State Agreement (NIMA), however the Insurance Department said it would monitor the process and if the state loses money rather than gain, they'll advise the board immediately as the state can pull out of the pact on 60 days notice, according to an article in the Nevada Appeal.

Nevada hopes to profit from insurance pact | NevadaAppeal.com

Surplus Lines Industry Enters New Era on Multistate Risks Taxes with NRRA Now Effective

2011-07-21T08:52:00.003-05:00

Surplus lines brokers entered a new era on handling multistate risks on Thursday when the Nonadmitted and Reinsurance Reform Act (NRRA) became effective, and representatives of NAPSLO said the change reflects a long campaign to simplify the tax payment process on multistate risks.

"With the NRRA becoming effective on July 21 surplus lines brokers will see a system where there is one state compliance, one state taxation, national standards for company eligibility and national exempt commercial purchaser rules," said NAPSLO Executive Director Richard Bouhan. "These are issues the industry has been working on for a number of years and are pleased to see this law take effect."

While July 21st is an important day for the industry, because of the need to quote policies in advance a number of brokers have already been working under the new law. To assist brokers with the changes, NAPSLO has been providing information on the new law on its website.

“Brokers have been working for quite some time on policies that will be effective on July 21 or after, and so have already been operating under the new NRRA rules," said Mr. Bouhan. "In addition, it has been estimated that up to 95% of all surplus lines risks are single state risks so the NRRA may only impact a limited number of risks"

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over multistate surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are bringing their laws into compliance and California and Texas are the most recent states to enact NRRA compliance legislation.

"NAPSLO applauds California and Texas for enacting their bill as it conforms the states' codes to the NRRA," said NAPSLO Legislative Co-Chair Hank Haldeman. "It was important for the largest surplus lines states to bring its laws into compliance prior to the NRRA's effective date."

Overall 43 states passed legislation to bring their state laws into compliance with the NRRA; three states (Iowa, Illinois and Colorado) adjourned without taking action; and four states (Michigan, Wisconsin Massachusetts, and South Carolina) and the District of Columbia have not passed any legislation. Of the 43 states, three states (Delaware, Oregon, and New Jersey) have approved legislation but the governors have not taken action on the bills.

In addition, six states have signed an agreement to be part of the Nonadmitted Insurance Multistate Agreement (NIMA) and nine states passed Surplus Lines Insurance Multi-State Compliance Compact (SLIMPACT) legislation.

"While a number of states have indicated a willingness to take part in a tax sharing compact, no compact is in operation," said Legislative Co-Chair Dave Leonard. “As of July 21st taxes on all surplus lines policies will be paid to the home state of insured and the home state becomes the sole regulator of the transaction."

Texas Passes NRRA Legislation Focusing on Compliance, Tax Payment

2011-07-20T08:15:00.001-05:00

The Texas Governor has signed into law Nonadmitted and Reinsurance Reform Act (NRRA) compliance legislation. Texas is among the latest state to enact NRRA related implementation legislation. During the session NAPSLO provided draft legislation, offered comments and spoke with representatives of the department of insurance.

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are bringing their laws into compliance.

SB1, in part, amends the surplus lines premium tax and independently procured tax statutes (Sections 225 and 226, Texas Insurance Code) to conform with the provisions of the NRRA. The bill adds definitions for “affiliate,” “affiliated group,” “control,” “home state,” and “independently procured insurance.” It also provides that Texas may not impose a tax on nonadmitted insurance other than premiums paid for insurance in which Texas is the home state of the insured.

SB1 further enables Texas to tax 100% of multi-state risks, where it is the home state, in the event Texas does not join a tax compact. If Texas does join a tax compact, SB1 authorizes the state to allocate taxes in accordance with the terms of the agreement. SB1 refers to existing statutes for the authorization to enter a tax compact.

California Enacts NRRA Legislation; Law Doesn't Address Compact, Sharing Premium Taxes

2011-07-18T08:12:00.000-05:00

California has enacted Nonadmitted and Reinsurance Reform Act (NRRA) compliance legislation that authorizes the imposition of surplus lines premium tax and independent procurement tax on 100% of premium, however the bill does not addresses compacts or sharing premium taxes with other states.

California is among the latest states to enact NRRA related implementation legislation. During the session NAPSLO provided draft legislation, offered comments and met with legislators and representatives of the department of insurance.

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are bringing their laws into compliance.

California's bill, A315, authorizes the imposition of surplus lines premium tax and independent procurement tax on 100% of the premium, however, as amended, the bill does not addresses sharing premium taxes with other states.

The bill proposes what is essentially an "A" list/"B" list approach to eligible surplus lines insurers. The "B" list appears to follow the NRRA mandated standards, however requires B list insurers to file a number of documents with the Department (e.g., certificate of capital and surplus issued by the insurer's domiciliary jurisdiction, certified copy of the insurer's license, etc.). Obtaining "A" listed status would entail all of the burdens of current eligibility in California.

The bill does include the NRRA definition of exempt commercial purchaser (ECP) concept and allows free export of ECP business subject to the conditions set forth in the NRRA. The bill further requires brokers to undertake additional record keeping requirements related to NRRA. Brokers will now need to record the insured's home state, if an ECP, verify that the insured qualifies as an ECP, determine whether the risk is single state or multistate and if multistate, allocate premium taxes even though there are no provisions for sharing of taxes with other states.

The amended version notes that "if a new or renewal policy has an effective date between January 1, 2011, to July 20, 2011, inclusive, and is placed on or before July 20, 2011, then the policy shall be considered to be business done by the surplus line broker as of the effective date. If a new or renewal policy has an effective date between January 1, 2011, to July 20, 2011, inclusive, then the policy shall be considered to be business done by the home state insured who directly procures policies as of the effective date."

Louisiana Joins Florida, Hawaii, & Mississippi in NIMA Coalition

2011-07-14T12:34:00.002-05:00

Louisiana is now participating in an agreement designed to help states efficiently comply with the requirements of the federal surplus lines regulations that become effective later this month. Insurance Commissioner James Donelon signed the agreement on behalf of Louisiana to join the Non-Admitted Insurance Multi-State Agreement (NIMA) coalition, according to the Insurance Journal.

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are bringing their laws into compliance.

In June the Florida Office of Insurance Regulation (Office) that Florida has entered into an agreement with Mississippi and Hawaii to start NIMA.

Wisconsin Commissioner Issues Bulletin on Federal Case on Forms Filing

2011-07-12T13:48:00.002-05:00

The Wisconsin Office of the Commissioner of Insurance (OCI) has issued a bulletin to insurers regarding Surplus Lines Forms Filings following a recent decision in federal court.

The bulletin noted that in the Gillen case, the Federal District Court in the Eastern District of Wisconsin held that s. 631.20 (form filing) and s. 631.85 (arbitration clause approval required) applied to a surplus lines policy. The surplus lines insurer tried to compel arbitration of an indemnity liability claim of its insured. The court ruled the arbitration clause was unenforceable because the form had not been filed with and the arbitration clause approved by OCI under the cited statutes.

The bulletin added that as a result of the Gillen case, the OCI has received inquiries from surplus lines companies regarding the requirement of and procedure for filing with the OCI forms that are written under s. 618.41, Wis. Stat. OCI has not historically required surplus lines insurers to file forms in Wisconsin and, notwithstanding the Gillen decision [747 F. Supp. 2d 1058], the Office continues its position that surplus lines forms need not be filed, including those with arbitration clauses. All surplus lines insurers placing business in Wisconsin are informed that the OCI does not consider policy forms issued under s. 618.41, Wis. Stat., on business that is resident or located in Wisconsin to be subject to ss. 631.20 and 631.85, Wis. Stat. Therefore, companies writing in Wisconsin on a surplus lines basis are not required by OCI to file their forms with the Office.

Funeral Arrangements for Kevin Cole

2011-07-11T11:20:00.001-05:00

Funeral arrangements for Kevin Cole, a longtime member of the NAPSLO Legislative Committee who passed away last week, have been announced

A Wake Services will be held on Thursday July 14, 2011 from 6:00-9:00 p.m. and on Friday from 10:00 a.m. until 12:30 p.m. at E. J. Fielding Funeral Home, 2260 West 21st. Ave., Covington, Louisiana.

A Funeral Mass will be on Friday July 15, 2011 at 1:00 p.m. at St. Joseph Abbey, 75376 River Road, St. Benedict, LA. (St. Joseph Abbey is just north of Covington) Interment will follow the Mass at St. Joseph Abbey Cemetery.

The full obituary is available to view and there is also a guest book on the site for your convenience.

NAPSLO Notes Passing of Kevin Cole, Longtime Member of NAPSLO's Legislative Committee

2011-07-08T15:14:00.004-05:00

Kevin Cole, a director of the law firm of Galloway, Johnson, Tompkins, Burr & Smith and a longtime member of NAPSLO’s Legislative Committee, passed away on Thursday following a car accident.

Funeral arrangements for Mr. Cole, who worked in the firm’s Mandeville, La. office, are pending and more information will be announced by his law firm and the E.J. Fielding Funeral Home.

Missouri Approves NRRA Compliance Legislation; Bill Does Not Address Compact

2011-07-08T10:05:00.000-05:00

Missouri has enacted the Nonadmitted and Reinsurance Reform Act (NRRA) compliance legislation, however the legislation does not address the state joining a compact or tax sharing agreement.

Missouri is among the latest states to pass NRRA implementation legislation and during the session NAPSLO provided draft legislation, offered comments on legislation and testified during a hearing.

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance.

Missouri’s bill does not address premium tax sharing, but would require the payment of premium tax based on 100% of the gross premium. The bill provides for exclusive home state regulation of nonadmitted insurance and defines home state per the NRRA as well as principal place of business. It incorporates the NRRA's Exempt Commercial Purchaser (ECP) exemption and generally incorporates the NRRA insurer eligibility requirements.

NCOIL Issues Letter Urging Support of Simple & Efficient Surplus Lines Tax Allocation Formulas

2011-07-08T08:50:00.000-05:00

Representatives of the National Council of Insurance Legislators are urging fellow legislators to not allow Surplus Lines Insurance Multi-State Compliance Compact (SLIMPACT) to be molded into NIMA and are encouraging states to pursue allocation formulas that appropriately respond to the concerns that spurred the NRRA.

In a letter from legislators from states that supported SLIMPACT to SLIMPACT Commission Representatives, the sponsors wrote to “strongly urge you to pursue surplus lines tax allocation formulas that will be simple and efficient,” the letter said. “We have grave concerns with formulas — such as those called for under a Nonadmitted Insurance Multi-State Agreement (NIMA)—that would complicate existing practices and that would cause undue burdens for those that have advocated modernization, including insurance industry representatives, brokers, or insureds.”

The state legislators said they do not support SLIMPACT being molded into NIMA and endorsed SLIMPACT as a means to streamline surplus lines taxation and regulation. They added they did not support allocation formulas not “based upon readily available data with simplicity and uniformity for the Surplus Line Licensee as a material consideration.”

The lawmakers express concern that the U.S. Congress could again intervene in surplus lines regulation if the states do not provide the uniformity sought under Dodd-Frank. "The new Federal Insurance Office (FIO) also is likely monitoring state activity and could recommended follow-up federal legislation if we are not successful," the letter said.

“As state officials, like you, we believe that the states must continue to regulate insurance. We are concerned that our inability to streamline an issue as relatively simple as paying tax on a multi-state risk could embolden the efforts of those who argue against state regulation and who would like to see us fail."

Surplus Lines Law Group Fall Meeting Set for Sept. 22-23 in Charleston; Registration Now Open

2011-07-05T11:59:00.001-05:00

The fall meeting of the Surplus Lines Law Group is set for September 22-23, 2011 at the Renaissance Charleston Hotel in Charleston, South Carolina and registration is now open.

The meeting will open with a dinner on Thursday, September 22, followed by meeting on the morning of Friday, September 23. To attend, please click on the following link to register and then make your hotel reservation using the information below.

Click Here to Register for Meeting

Hotel Accommodations

Attendees are responsible for their own individual hotel reservations for the meeting. Group rates are $179 per night if reserved by September 8, 2011. To reserve a hotel room by phone, call (800) 468-3571 or (843) 534-0300 and reference the NAPSLO Surplus Lines Law Group meeting.

You may reserve a room online for the night of September 22 at the group rate through the hotel's website. Attendees arriving prior to September 22 or departing after September 23 must call the hotel to make a reservation.

If you have any questions regarding the meeting or registration, please contact Steve Stephan at NAPSLO at 816-741-3910.

Pennsylvania Enacts NRRA Legislation; No Mention of Compact, Tax Sharing Agreement

2011-07-01T09:30:00.000-05:00

The Pennsylvania Governor has signed into law Nonadmitted and Reinsurance Reform Act (NRRA) compliance related legislation that does not address a compact or tax sharing agreement.

Pennsylvania is the latest state to enact NRRA related implementation legislation. During the session NAPSLO provided draft legislation, offered comments and spoke with representatives of the department of insurance.

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are bringing their laws into compliance.

Pennsylvania's SB 1096 requires the payment of surplus lines tax and independently procured insurance tax based on 100% of the entire premium when Pennsylvania is the home state, without allocation to other states. The bill would maintain annual reporting and payment of surplus lines taxes for surplus lines brokers. It provides for exclusive home state regulation and taxation per the NRRA. The provisions regarding premium tax would be effective for "policies placed after June 30, 2011."

The bill defines home state per the NRRA, incorporates the NRRA's exempt commercial purchaser (ECP) exemption and also incorporates the NRRA's insurer eligibility requirements.

Louisiana Enacts NRRA Legislation Allowing State to Enter NIMA or other Tax Sharing Agreements

2011-07-01T08:12:00.001-05:00

The Louisiana Governor has signed into law a bill that authorizes the Commissioner to enter into NIMA or other cooperative compacts or agreements with other states.

Louisiana is among the latest states to enact Nonadmitted and Reinsurance Reform Act (NRRA) related implementation legislation. During the session NAPSLO provided draft legislation and offered comments.

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are bringing their laws into compliance.

Louisiana HB469 is primarily a premium tax bill that authorizes the Commissioner to enter into NIMA or other cooperative compacts or agreements with other states and to maintain the state's revenues from surplus lines insurance premium taxes and to comply with the NRRA.

The bill provides that "there shall be a tax on all premiums paid for surplus lines insurance" covering multistate risks and for which Louisiana is the home state of the insured and "surplus lines brokers and independently procuring insureds shall remit the tax to the Commissioner...." The tax rate applied to premiums allocated to Louisiana is 5% and the tax rates and fees applied to premiums allocated to other states participating in a tax sharing system with Louisiana are the tax rates and fees of those other state.

The bill would require brokers and insureds to file quarterly reports on multistate risks when Louisiana is the home state of the insured, on a form prescribed by the Commissioner which would conform to any tax sharing agreement or compact and would retain the current quarterly reporting requirement for single state risks.

The bill incorporates the NRRA's definition of "home state," but does not address any of the NRRA reforms other than regarding payment of nonadmitted insurance premium tax when Louisiana is the home state.

NAPSLO Offering State-by-State Review of NRRA Compliance Legislation on Website

2011-06-29T11:55:00.000-05:00

NAPSLO has added to its website a state-by-state review of legislation passed at the state level during the past few months to bring states into compliance with the Nonadmitted and Reinsurance Reform Act (NRRA).

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance. Also, many states have passed laws based on NRRA with differing requirements and effective dates.

Earlier this year NAPSLO put together a new section of the website - New Surplus Lines Law - which included a section reviewing legislation under consideration at the state level. With more than 30 states passing legislation NAPSLO has now added a section reviewing the laws enacted by each state.

In the State Update Review section there is a table listing all of the states and links to reviews to most of the legislation completed. Additional states are being added as the review process of the legislation is completed.

The pages include information on state bulletins/regulations/rules; the status of joining compacts or other tax sharing agreements; the new laws definition of "home state"; exempt commercial purchaser (ECP) status; eligibility information; tax reporting status; tax processing fee information; and contact information for the state insurance department or stamping office.

Alaska Approves Legislation to Enter NIMA-type Agreement to Share Premium Taxes

2011-06-26T13:52:00.001-05:00

Alaska has enacted legislation which provides authority for the Director to enter into a NIMA-type agreement with other states to share premium taxes.

Alaska is among the latest of states to pass NonAdmitted and Reinsurance Reform Act (NRRA) related implementation legislation. During the session NAPSLO provided draft legislation, supplied comments on legislation and Director of Government Relations Steve Stephan and Executive Director Richard Bouhan testified during hearings.

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance

Alaska's bill provides authority for the Director to enter into a NIMA-type agreement with other states to share premium taxes. Allocation would be done according to a schedule set forth by regulation, and the tax rates of each state would apply to multistate exposures. There are also requirements for allocating premium when a policy covers more than one classification. Brokers would be required to file quarterly allocation reports, even though the NRRA only permits annual reports. Alaska would retain any premium tax not allocated and paid to another state when Alaska is the home state.

The bill incorporates the exempt commercial purchaser (ECP) exemption from the NRRA and adopts the NRRA's uniform eligibility requirements for U.S. domestic and non-U.S. insurers (retaining alternative criteria for non-U.S. insurers besides International Insurers Department listing), but the Director would retain existing statutory authority to declare an insurer ineligible based on any number of factors including quality of management, financial condition, capital and surplus of a parent company, underwriting profit, investment income trends, trade and claims practices, reserving practices, company record and reputation within the industry, all of which eligibility requirements are preempted by the NRRA. The Director would be authorized to participate in an interstate agreement to develop alternative nationwide uniform eligibility requirements for U.S. domestic insurers.

Oregon Legislative Counsel Questions Delegation of Authority in Compact Bill

2011-06-22T13:04:00.000-05:00

Legislation delegating legislative authority to insurance departments as part of laws allowing states to enter into unspecified tax sharing agreements or interstate compacts is unconstitutional, according to an opinion issued by the Oregon Legislative Counsel Committee.

In a written response to a state senator regarding a bill under consideration by the Oregon Legislature, the Legislative Counsel Committee stated that under Oregon’s constitution, the authorization in HB 2679 to allow the Director of the Department of Consumer and Business Services “to enter into a compact, or other tax sharing arrangement, constitutes an “unconstitutional delegation of authority.”

Oregon, along with other states, are considering, or have considered, legislation to enter into a compact or establish agreements with other states to allocate premium taxes paid to an insured’s home state.

some States have considered such legislation in connection with other legislation updating state laws to bring them into compliance with the Nonadmitted and Reinsurance Reform Act, which goes into effect on July 21.

The Oregon counsel’s office said that the “Legislative Assembly may delegate some portion of its authority to state agencies, as it deems appropriate”, however the authority to enter into an interstate compact has not been delegated by the Legislative Assembly in the past (with one exception), and the bill “does not contain sufficient standards and safeguards regarding the delegation of legislative authority and because the subject of the delegation, the power to tax, is a core legislative function.”

Citizens and Catastrophe Fund Assessment Base Under Review by Florida Insurance Officials

2011-06-22T11:21:00.000-05:00

Principals with the Office of Insurance Regulation, Citizens Property Insurance Corporation and the Florida Hurricane Catastrophe Fund are reviewing the premium assessment base for Florida policyholders relating to multi-state risks when Florida is the home state, according to the Florida Surplus Line Service Office.

The FSLSO noted that after reviewing the language of the federal NRRA and provisions of SB 1816, it appears that the assessments levied against Florida policyholders will be limited to the portion of premium covering only the exposures in Florida and not the entire gross premium of the policy.

The FSLSO also noted Surplus lines agents and Independently Procured Coverage filers will be required to submit the gross policy premium allocated by state for multi-state new business and renewal policies, and any subsequent endorsements to those policies, effective on or after July 1, 2011. As provided, SB 1816 dictates that multi-state exposures filed with Florida will be taxed on the gross premium using the tax rates of the states applicable to the premium allocated for each state where the risk is located. Service fees will be calculated at Florida's fee on 100% of the gross premium of the policy.

Connecticut Enacts NRRA Bill Authorizing Revenue/Insurance Commissioner to Enter Tax Sharing Agreement

2011-06-21T14:20:00.002-05:00

The Connecticut Governor signed into law a bill on Tuesday that authorizes the Commissioner of Revenue Services and/or the Insurance Commissioner to enter into a tax sharing agreement or compact.

Connecticut is the 34th state to enact Nonadmitted and Reinsurance Reform Act (NRRA) related implementation legislation. During the session NAPSLO provided draft legislation, offered comments on legislation, and spoke with insurance department officials.

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance.

Connecticut's bill (HB6652) as amended, authorizes the Commissioner of Revenue Services and/or the Insurance Commissioner to enter into a tax sharing agreement or compact including, but not limited to, NIMA.

The agreement/compact may provide for the application of the premium tax rate(s) for surplus lines and independently procured insurance of each state where there are insured risks, a standardized allocation formula and for taxes to be allocated to Connecticut when it is the home state and the other state where insured risks are located has not entered into the agreement/compact.

The agreement/compact may also provide for certain enumerated requirements and procedures that appear to be based on NIMA. The agreement/compact would control over any conflicting statutory provisions. The bill would require premium tax payments to Connecticut when it is the home state to be based on 100% of the entire premium basis and applying Connecticut's 4% tax rate, though as noted this requirement would not apply if there is a conflicting tax agreement/compact provision. Premium tax payments would need to be made quarterly (again subject to any agreement/compact).

The changes to the premium tax provisions would apply to insurance "that is procured, continued or renewed on or after July 1, 2011." This bill also incorporates the NRRA's exempt commercial purchaser (ECP) exemption.

NAPSLO Questions Long-Term Viability of NAIC's NIMA Multistate Tax Compact

2011-06-17T09:44:00.001-05:00

Representatives of NAPSLO questioned the long-term viability of the Nonadmitted Insurance Multistate Agreement (NIMA) to collect and distribute surplus lines premium taxes in light of the announcement by the Florida Office of Insurance Regulation (Office) that Florida has entered into an agreement with Mississippi and Hawaii to start NIMA.

"Signing the contract doesn't mean that the NIMA clearinghouse will become operational or that states will ultimately share revenue," said Richard Bouhan, Executive Director of NAPSLO. "It is not clear why any state, much less a large state, would stay in the NIMA system if it would cause a loss of revenue to the state. If the NIMA clearinghouse becomes operational, some states will lose tax revenue and some states will gain revenue. NIMA failed to create a revenue-neutral allocation system so its long-term viability is in question."

Under the Nonadmitted and Reinsurance Reform Act passed last year NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states have been working to bring their laws into compliance.

"Many issues need to be resolved before states could begin sharing revenue. For example, the creation of a clearinghouse for the states to share tax revenue will require compliance with state procurement laws," said Mr. Bouhan. "This could prevent some states from joining NIMA or force some to withdraw before the clearinghouse becomes operational. NIMA only requires 60 days notice to withdraw."

In addition to concerns about the viability of NIMA, NAPSLO officials questioned how NIMA would operate and whether it would be a burden on surplus lines brokers.

"NAPSLO is concerned that NIMA imposes a burdensome data reporting system on policyholders and brokers, since much of the required data would have to be created outside of the normal course of business. NIMA reinstates the type of tax system that the Dodd-Frank bill tried to eliminate. Instead of relying upon the home-state tax rate, NIMA attempts to impose the taxes, fees and assessments of multiple states on a single policy based upon dozens of different allocation formulas such as sales, receipts, employees etc. NIMA is basically the same system that Congress was seeking to reform."

As of June 16, 33 states have enacted NRRA related compliance laws and legislation is under review by Governors in Alaska, Connecticut and Missouri. Nine other states have bills under consideration by their legislatures; two states and the District of Columbia are not currently considering legislation, and three state legislatures adjourned without taking action. Of the 36 state legislatures taking action, 18 have passed laws allowing the state to join a multistate tax sharing agreement, nine passed bills allowing the state to specifically join SLIMPACT, eight states passed compliance legislation without addressing a tax sharing agreement and one state (Nebraska) passed legislation allowing the state to only join the NAIC’s NIMA tax compact.

Many of the largest states have elected not to join NIMA at this time. New York, California, Illinois, Ohio, Maryland, Missouri, Virginia, Washington, and others have declined to authorize the state to enter into the NIMA system. Pennsylvania has a bill pending to conform the state code to the NRRA, but it fails to authorize the state to join NIMA. Nine other states authorized their state to enter into SLIMPACT an alternative compact model. The state where the principal place of business resides is the only state that may tax a nonadmitted policy under the NRRA. It is possible that NIMA is failing to attract the states with the most corporate headquarters because those states may lose revenue if they join. Some of the states that are not joining NIMA appear to be states that have a concentration of corporate headquarters.

"Another potential obstacle to the long term viability of the NIMA clearinghouse is that some states will avoid the NIMA system if their policyholders experience a tax increase after they join NIMA," said NAPSLO Director of Government Relations Steve Stephan. "For example, joining the NIMA tax compact could represent a tax increase for some Hawaiian policyholders because they would face paying the higher assessments charged by Florida and Mississippi. Many states are simply unwilling to impose a tax increase of any size."

Maine Enacts NRRA Legislation Allowing State to Enter Tax Sharing Agreement

2011-06-16T14:02:00.000-05:00

The Maine Governor has signed into law a bill that authorizes the Maine Tax Assessor, after consulting with the Department of Professional and Financial Regulation, Bureau of Insurance, to enter into a tax sharing agreement.

Maine is the 33rd state to enact Nonadmitted and Reinsurance Reform Act (NRRA) related implementation legislation. During the session NAPSLO provided draft legislation, offered comments on legislation, and participated in working group meetings to discuss improvements to the legislation.

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance.

Maine's bill generally authorizes the Maine Tax Assessor, after consulting with the Department of Professional and Financial Regulation, Bureau of Insurance, to enter into a tax sharing agreement. The Assessor may not enter into a tax sharing agreement unless he or she completes a fiscal analysis of the impact of the agreement on the state's receipt of premium tax. The Assessor must also conclude, after consultation with certain industry representatives, that entering into the agreement is in the state's financial best interest, does not significantly increase administrative burden and cost to the state, surplus lines insurers and insureds, and is consistent with the NRRA requirements.

Maine's bill provides that all gross direct insurance premiums paid to nonadmitted insurers are subject to taxation under the Maine nonadmitted insurance laws if Maine is the insured's home state. The bill further provides that "for any nonadmitted insurance premiums that are subject to taxation by this State and interstate allocation of taxes…, the rate of taxation on each participating state's share of the premium must be that state's applicable nonadmitted insurance premium tax rate." The bill clarifies that all nonadmitted insurance premium tax other than for surplus lines insurance must be paid by the insured. These provisions apply to taxes on all premiums received on or after July 1, 2011.

This new legislation provides that Maine nonadmitted insurance laws apply "exclusively to transactions when [Maine] is the home state of the applicant or insured. It also adopts the NRRA definition of "home state" and clarifies the exempt commercial purchaser (ECP) exemption by adopting the explicit language from the NRRA.

Finally, the bill incorporates the NRRA insurer eligibility requirements, but retains the superintendent's authority to place on a white list those insurers that appear to be sound financially and have satisfactory claims practices. Maine continues to require producers to place business with only those insurers appearing on the list (if any such list has been published).

New Hampshire Approves NRRA Bill Allowing Commissioner to Join Tax Sharing System

2011-06-16T07:00:00.003-05:00

The New Hampshire Governor has signed Nonadmitted and Reinsurance Reform Act (NRRA) compliance legislation that would give discretion for the Commissioner to participate in a tax sharing system for premium taxes on multistate risks.

New Hampshire is the 32nd state to enact NRRA related implementation legislation and during the session NAPSLO provided draft legislation, offered comments, and talked with representatives of the Department of Insurance.

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance.

New Hampshire bill is mainly a premium tax bill and it provides broad discretion for the Commissioner to participate in a tax sharing system for premium taxes on multi-state risks. There is authorization for the Commissioner to use the allocation schedule included in such a system, which suggests the Commissioner could use a different allocation schedule than other participating states.

On placements involving multistate risks, the bill requires surplus lines brokers and insureds to apply the tax rates of each state where there are risks outside of New Hampshire and authorizes New Hampshire to retain all taxes not paid to other states. Brokers and insureds apparently would be required to allocate and calculate tax for each state applying each state's own tax rate, even if the state does not participate in the new tax sharing system.

The bill contains the NRRA's definition of "Home State" (minus the definitions related to affiliated groups) but does not otherwise use the term in the operative statutory text and the bill would adopt the NRRA's uniform insurer eligibility standards (the bill presumes any alternative nationwide uniform eligibility requirements would be part of the tax sharing agreement). The bill also would allow a New Hampshire domestic insurer to be designated as a surplus lines insurer.

Nevada Approves NRRA Legislation Allowing Commissioner to Enter Into Compact With Approval by State Board of Examiners

2011-06-15T13:17:00.000-05:00

The Nevada Governor has signed into law Nonadmitted and Reinsurance Reform Act (NRRA) compliance legislation which authorizes the Commissioner, with the approval of the State Board of Examiners, to enter into a tax sharing agreement.

Nevada is among the latest of states to pass NRRA related implementation legislation. During the session NAPSLO provided draft legislation and offered comments on legislation.

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance.

Nevada’s bill authorizes the Commissioner, with the approval of the State Board of Examiners, to enter into a tax sharing agreement. The bill was amended to remove a specific authorization to join NIMA, in favor of a more generic authorization to join a nonspecified compact. The bill provides that if the Commissioner conducts a hearing regarding participation in a tax agreement, within 18 months after the Commissioner enters into the agreement, the Commissioner must submit the findings to the State Board of Examiners as well as to the Legislative Counsel Bureau. The State Board of Examiners has the authority to approve the Commissioner's continued participation in the tax agreement if it is found to be in the best interest of the state (or to approve withdrawal if it is found not to be in the state's best interest).

The bill also allows the Commissioner may adopt regulations as necessary "to ensure compliance with federal law relating to nonadmitted insurance." If the Commissioner has entered into a tax sharing agreement, the tax rate of each participating state where risks are located would apply to premium allocated to that state; Nevada's tax rate would apply to the portion allocated to those states that have not entered into the agreement and Nevada would retain those taxes.

If the Commissioner has not entered into a tax sharing agreement, Nevada will collect and retain nonadmitted insurance premium tax based on 100% of the premium when the insured's home state is Nevada. The bill requires quarterly multistate allocation reports. It also incorporates the NRRA's definition of "home state", but also adds the NIMA definitions of "principal place of business" and "group policyholder" which if enacted could effectively preclude Nevada consumers from participating in surplus lines group insurance programs.

The bill incorporates the NRRA's exempt commercial purchaser (ECP) exemption (with a more liberal standard for a city or county), and provides for the exclusive home state regulation of surplus lines transactions and taxation, including surplus lines broker licensing. The bill also incorporates the NRRA/NAIC insurer eligibility requirements.

FSLSO to Offer Two NRRA webinars in June

2011-06-14T14:08:00.000-05:00

The Florida Surplus Lines Service Office has two webinars scheduled this month regarding understanding the Nonadmitted and Reinsurance Reform Act (NRRA).

The first webinar, Understanding More About the NRRA: Commonly Asked Questions and Possible Scenarios is scheduled for Friday, June 24 from 3:00 p.m. - 4:00 p.m. Eastern and is targeted towards agents.

This webinar is a follow-up to FSLSO's original webinar and will take a more in-depth look at how Florida's surplus lines agents' filing procedures will change as a result of the passage of SB 1816 and the implications of the NRRA. Additionally, this presentation will go over some of the more frequently-asked-questions being sent to FSLSO by the agent community, including common placement scenarios and filing questions.

The second webinar, Understanding the NRRA: What Insurers Should Know and How to Be Prepared, is set for Wednesday, June 29 from 2:30 p.m. - 3:30 p.m. Eastern and is targeted towards insurers.

The webinar will provide an overview of the NRRA, the NAIC's response through the Nonadmitted Insurance Multi-state Agreement (NIMA), and Florida's legislative initiatives outlined in SB 1816.

Additionally, this webinar will discuss the provisions of the NRRA that will affect Florida's surplus lines insurer force including changes to insurer filing procedures, insurer management systems, and additional staff training.

Links to registration to both webinars are available on the FSLSO website at http://www.fslso.com/statutes/leg/2010/fed/index.aspx.

North Carolina Passes NRRA Compliance Law; Study to Determine if State to Join a Compact

2011-06-14T10:27:00.000-05:00

The North Carolina Governor has signed into law Nonadmitted and Reinsurance Reform Act compliance legislation which authorizes a study to determine whether the state will join a tax sharing agreement or compact.

North Carolina is among the latest of states to pass Nonadmitted and Reinsurance Reform Act related implementation legislation. During the session NAPSLO provided draft legislation, offered comments on legislation and met with the Department of Insurance.

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance.

North Carolina’s legislation does not authorize the Commissioner to enter into a tax sharing compact or agreement. Rather, it requires a study committee, in cooperation with the Commissioner, to examine the impact of the state’s entry into a tax compact or agreement, then report its findings and any proposed legislation to the 2012 Regular Session of the 2011 General Assembly.

The legislation also would add a provision to the surplus lines tax section stating that if other states have failed to enter into a tax sharing compact or procedures with North Carolina, the tax collected (at North Carolina's 5% rate) shall be retained by North Carolina. This legislation also expressly provides for exclusive home state taxation and regulation, and incorporates the exempt commercial purchaser exemption.

Tennessee Approves SLIMPACT-Lite but State Could Join Other Tax Sharing Agreement

2011-06-14T10:25:00.000-05:00

The Tennessee Governor has signed into law a bill that would adopt SLIMPACT-Lite, however if the compact is not effective by early next year the bill allows the state to enter into another tax sharing agreement.

Tennessee is among the latest of states to pass Nonadmitted and Reinsurance Reform Act related implementation legislation. During the session NAPSLO provided draft legislation and offered comments on legislation.

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance.

Tennessee's bill would adopt SLIMPACT-lite, however, if SLIMPACT does not become effective by February 28, 2012, Tennessee would be authorized to enter into a cooperative agreement, compact or reciprocal agreement with another state(s) for the purpose of the collection of insurance premium taxes.

Under the bill surplus lines brokers would be required to file annual reports of surplus lines transactions. The bill would require a tax on the total gross premiums charged at a rate of 5%, which would be an increase from the current tax rate (from 3.25% on fire insurance, 4.0% on workers' comp and 2.5% for other lines) when Tennessee is the home state of the insured.

Tennessee would retain any premium tax allocated to a state that has failed to enter SLIMPACT with Tennessee. The bill provides that Tennessee's surplus lines law would apply only to surplus lines transactions where Tennessee is the insured's home state.

The bill would incorporate the exempt commercial purchaser (ECP) exemption and the bill repeals existing insurer eligibility provisions and incorporates the NRRA mandates regarding nationwide uniform insurer eligibility standards. However, the law as amended apparently would purport to continue to allow the Commissioner to make an insurer ineligible based on the insurer's claims practices.

NAPSLO Convention Registration Starts Tuesday

2011-06-13T14:15:00.001-05:00

Registration for the 2011 NAPSLO Annual Convention, set for October 10-13 in San Diego, will start on Tuesday, June 14 and members can register online through the convention website at http://annual.napslo.org.

Convention registration fees are $825 for delegates and $395 for spouses until September 1. After September 1 fees will increase to $925 and $425. Representatives of member firms may register online for the convention or download registration forms from the convention site.

The convention will take place at the Manchester Grand Hyatt and San Diego Marriott Marquis & Marina, with the Opening Reception at the Marriott and all other NAPSLO programs at the Hyatt. Hotel rooms will be available at both the Grand Hyatt and the Marriott Marquis.

The convention will open on Monday, October 10, with registration opening at 10:00 a.m., followed by the Opening Reception Monday night. Tuesday will be mostly open for members to meet with other members, however there will be a Next Generation program from 3:00 - 4:00 p.m.

The main convention programs will take place on Wednesday and will feature Michael Lewis, author of The Blind Side and The Big Short as the Derek Hughes/NAPSLO Educational Foundation lecture series speaker. In addition, the traditional awards programs, ASLI recognition, and annual business meeting will also take place on Wednesday morning.

Alabama Enacts SLIMPACT-Lite Bill

2011-06-10T11:55:00.002-05:00

The Alabama governor signed into law on Thursday a bill which would adopt the SLIMPACT-lite tax sharing agreement.

Alabama is among the latest of the states to pass Nonadmitted and Reinsurance Reform Act related implementation legislation. During the session NAPSLO provided draft legislation and offered comments on legislation.

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance.

Alabama’s bill adopts Slimpact-lite, which provides for the creation of a compact commission that would adopt rules on tax allocation, reporting, collection and distribution, and may also adopt uniform insurer eligibility requirements.

The bill provides for exclusive home state regulation of surplus lines compliance, but does not incorporate the NRRA's exempt Commercial Purchaser (ECP) exemption from state diligent search requirements.

Minnesota Passes NRRA Compliance Legislation; No Mention of Compacts

2011-06-09T19:56:00.000-05:00

Minnesota recently enacted Nonadmitted and Reinsurance Reform Act (NRRA) compliance legislation but it the legislation did not include any mention of a compact.

Minnesota is among the states to pass NRRA related implementation legislation. During the session NAPSLO provided draft legislation, offered comments on legislation.

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance.

Minnesota's bill only addresses premium tax, incorporating the NRRA mandate that only the home state of an insured may require the payment of nonadmitted insurance premium tax and the NRRA's definition of "home state." The bill does not include a tax sharing proposal.

The bill would require nonadmitted insurance premium tax to be paid based on 100% of the gross premiums and applying Minnesota's tax rates (3% for surplus lines, 2% for direct placements), "with no allocation of the tax to other states" when Minnesota is the home state of the insured.

Kentucky Issues Advisory Opinion on Impact of NRRA on State

2011-06-08T09:35:00.001-05:00

The Kentucky Insurance Department has issued an Advisory Opinion to clarify the Department’s expectations of the compact provisions of Kentucky's new law (HB 167) which brings the state into compliance with the Nonadmitted and Reinsurance Reform Act (NRRA). The NRRA become effective July 21, 2011.

The bill authorizes the State to become a Compacting State under the Surplus Lines Insurance Multi-State Compliance Compact (SLIMPACT) but the opinion outlines how the state will follow the NRRA until the the compact comes into existence. The Kentucky also law amends provisions of Kentucky law to establish one uniform tax rate that would apply to non-admitted insurance on multi-state risks.

This Advisory Opinion also reviews provisions of the NRRA that preempt current Kentucky state law governing non-admitted insurance on multi-state risks. The Advisory Opinion notes that after July 21, 2011, NRRA preempts the following provisions of Kentucky law: Home State, Licensure Requirements, Exempt Commercial Purchaser, and Taxation on Non-Admitted Insurance on Multi-State Risks, and the opinion goes into detail on each area.

Rhode Island Approves SLIMPACT-Lite & General Compact Legislation

2011-06-03T15:55:00.000-05:00

The Rhode Island Governor has signed into law two tax sharing compact related bills; one adopting SLIMPACT-Lite and the second provides general authorization for the commissioner to join a compact.

Rhode Island is among the latest of 26 states to pass Nonadmitted and Reinsurance Reform Act related implementation legislation. During the session NAPSLO provided draft legislation, offered comments on legislation and met with legislators.

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance.

Rhode Island H5110 adopts SLIMPACT-lite and it establishes a Compact Commission would adopt rules on tax allocation, reporting, collection and distribution, and may also adopt uniform insurer eligibility requirements.

H5110 provides for exclusive home state regulation of surplus lines compliance, but does not incorporate the NRRA's ECP exemption from state diligent search requirements. The bill would provide the Superintendent with authority to enter into a different tax sharing agreement if SLIMPACT does not take effect or becomes ineffective, but only if the Division of Insurance has completed a fiscal analysis of the impact of the agreement or contract that examines the expected effects on Rhode Island's gross receipt of premium tax; reviewed whether the contract will create additional administrative burdens on the State of Rhode Island or surplus lines licensee; concluded, after conducting a public hearing, that entering into the agreement or contract: is in Rhode Island's financial best interest; and is consistent with the requirements of the NRRA.

The second bill, H5953, would generally authorize the Commissioner to participate in a tax sharing agreement and the clearinghouse established through such agreement, as well as to utilize the allocation schedule included in the agreement.

H5953 further authorizes the Commissioner to establish a "uniform, statewide rate of taxation applicable to lines of nonadmitted insurance subject to the agreement." The bill does not expressly reference NIMA but it does incorporate the "principal place of business/residence" and "group insurance" definitions from NIMA, which may lead to unintended consequences such as prohibiting Rhode Island residents from obtaining insurance under a group master policy issued under the surplus lines law of another state.

H5953 addresses surplus lines tax but not the tax on independently procured insurance. The bill would require the broker to collect and pay a 4% tax (up from 3%) on premiums allocated to exposures/locations in Rhode Island, and to pay tax on premiums allocated to exposures/locations in other states based on the tax rates and fees of those states, even if those states are not reciprocal in sharing taxes with Rhode Island.

H5953 does not incorporate the NRRA's mandates of exclusive home state regulation or taxation, exempt commercial purchaser (ECP) exemption or uniform insurer eligibility requirements.

Hawaii Approves NRRA Compliance Legislation; State Could Join Compact Under Bill

2011-06-03T15:53:00.002-05:00

The Hawaiian Governor has signed legislation this week which provides the Insurance Commissioner broad discretion to participate in a tax sharing system, as well as to adopt uniform insurer eligibility requirements.

Hawaii is among 26 states to pass NonAdmitted and Reinsurance Reform Act (NRRA) related implementation legislation and during the session NAPSLO provided draft legislation, offered comments on legislation and testified during a hearing.

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance.

Hawaii's bill would provide the Commissioner broad discretion to participate in a tax sharing system, as well as to adopt uniform insurer eligibility requirements. While the bill authorizes does not expressly endorse NIMA, it does incorporate many of its provisions, including its definitions of "Home State," "Group Insurance" and "Principal Place of Business." The bill incorporates the NRRA's exempt commercial purchaser (ECP) exemption from the diligent search requirement.

Hawaii's bill would require brokers and insureds to report the multi-state allocation for transactions on a quarterly basis, which is inconsistent with the NRRA. The bill would require brokers to report all surplus lines business transacted during the quarter, not just transactions involving Hawaii Home State risks, and would require brokers to provide the following information "itemized by state": aggregate gross premiums; aggregate return premiums; aggregate net premiums and fees and aggregate remitted taxes and fees.

Brokers and insureds must apply the tax rate of each state where there are exposures for a multi-state risk, even if the other state does not participate in the new tax sharing system. Hawaii would retain all premium taxes on Hawaii Home State risks not paid to other states.

Vermont Approves NRRA Compliance Legislation; Also Adopts SLIMPACT-Lite Tax Sharing System

2011-06-03T15:53:00.000-05:00

The Vermont Governor has signed NonAdmitted and Reinsurance Reform Act (NRRA) compliance legislation that would adopt SLIMPACT-Lite.

Vermont is among the 26 states to pass NRRA related implementation legislation and during the session NAPSLO provided draft legislation and offered comments on legislation.

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance.

Vermont’s bill would adopt SLIMPACT-lite and a Compact Commission would adopt rules on tax allocation, reporting, collection and distribution, and may also adopt uniform insurer eligibility requirements. The Vermont commissioner may enter into another compact if SLIMPACT does not become effective.

The non-SLIMPACT portion of the bill generally provides for exclusive home state regulation of surplus lines compliance, but also clarifies that all laws regarding nonadmitted insurance apply only when Vermont is the home state of the insured. The bill incorporates the NRRA's exempt commercial purchaser (ECP) exemption from the diligent search requirement.

The bill also incorporates the insurer eligibility requirements from the NRRA, but should be further modified to reflect the preemption of other requirements besides domiciliary state license and minimum capital and surplus, as well as the automatic eligibility of non-U.S. insurers that are IID-listed.

Florida’s Approves NRRA Bill to Share Taxes With Other States; Requires Multi-State Policies to Use Each State's Tax Rate

2011-05-31T13:47:00.000-05:00

The Florida Governor signed legislation late last week authorizing the Department of Financial Services and the Office of Insurance Regulation to enter into an agreement with other states to share taxes. The legislation also requires that taxes be calculated on a gross premium basis but at the individual states’ tax rates for which each portion of the risk is located.

Florida is the 23rd state to pass NonAdmitted and Reinsurance Reform Act related implementation legislation. During the session NAPSLO provided draft legislation, offered comments on legislation and testified during a hearing.

The NRRA mandates that beginning July 21, 2011 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance.

Florida’s bill generally authorize the DFS and the OIR to enter into an agreement with other states to share taxes. The bill outlines the terms of such agreement and requires the Florida Surplus Lines Service Office to implement the agreement. The bill does not expressly limit the tax sharing agreement the DFS/OIR may enter into.

The bill requires that for multi-state policies filed in Florida effective July 21, 2011, taxes will now be calculated on a gross premium basis but at the individual states’ tax rates for which each portion of the risk is located. The service fee and assessments will be calculated on a gross premium basis as well, but at Florida’s current rate schedule.

The bill does not incorporate the NRRA's mandates for exclusive home state regulation, an exempt commercial purchaser (ECP) exemption or nationwide uniform insurer eligibility standards, although these are standard NRRA provisions. A Broker Protocol with additional information is available on the NAPSLO website.

The Florida Surplus Lines Service Office website provides additional information regarding the state's action on the NRRA, including links to a recent webinar and Frequently Asked Questions.

Oklahoma Approves NRRA Legislation Allowing State to Join NIMA or Other Compacts

2011-05-20T09:57:00.002-05:00

The Oklahoma Governor has signed legislation on Thursday which authorizes the Commissioner to enter into the Nonadmitted Insurance Multistate Agreement (NIMA) or any other multistate agreement or compact.

Oklahoma is the 22nd state to pass NonAdmitted and Reinsurance Reform Act related implementation legislation and during the session. NAPSLO provided draft legislation and offered comments on legislation. However, there are several bills under consideration and any subsequent bill signed into law will take precedence over a previously signed bill.

The NRRA mandates that beginning July 21 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance.

Oklahoma’s bill authorizes the Commissioner to enter into NIMA or "any other multistate agreement or compact with the same function and purpose." To participate in a NIMA-type agreement, the Commissioner is authorized to establish a uniform statewide rate of taxation (that encompasses all existing rates of taxation, fees and assessments imposed by Oklahoma), and the Commissioner is required to document how that rate is calculated.

The bill authorizes the Commissioner to adopt the multistate agreement's allocation schedule and requires surplus lines brokers to submit any required information to the clearinghouse established by the Commissioner through the multistate agreement, and to make quarterly premium tax payments to the clearinghouse.

The bill provides that the tax provisions shall apply equally to single state risks and multistate risks and requires brokers and insureds to apply the tax rates of each state where there are insured locations/exposures for a multistate risk even if a state is not sharing taxes with Oklahoma on a reciprocal basis. The bill also provides that Oklahoma will retain any premium tax allocated to a state that is not reciprocal with Oklahoma.

Oklahoma's bill would not change the state's annual reporting of surplus lines transactions by surplus lines brokers, which reports would need to show the information required to be submitted to the clearinghouse.

The bill defines "home state" per the NRRA, but does not incorporate the NRRA's mandate of exclusive home state regulation of nonadmitted insurance other than for premium tax. The bill does incorporates the NRRA's exempt commercial purchaser (ECP) exemption and generally adopts the NRRA's uniform eligibility requirements for insurers.

Maryland to Tax 100% of Risk Under NRRA Legislation; Examine Actions by Other States

2011-05-20T09:54:00.000-05:00

The Maryland Governor signed legislation on Thursday which would require the payment of premium tax based on 100% of the premium when Maryland is the home state. The bill also will require the Insurance Commissioner to conduct a study of the approaches taken by other states to implement the NRRA.

Maryland is the 21st state to pass NonAdmitted and Reinsurance Reform Act related implementation legislation and during the session. NAPSLO provided draft legislation and worked with a local member to provide testimony on the issue.

The NRRA mandates that beginning July 21 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance.

Maryland's bill requires the payment of premium tax at the Maryland rate and based on 100% of the premium when Maryland is the home state. In addition, the Commissioner is required to conduct a study of the approaches taken by other states to implement the NRRA, paying particular attention to action taken by contiguous states, and issue a report of findings to the Senate Finance Committee and the House Economic Matters Committee by the begining of next year.

The report must include information regarding relevant legislative enactments; execution of relevant agreements or compacts; the impact on state premium tax revenues (for Maryland and other states); future plans for implementation and relevant guidance from Congress; the industry and various industry organizations (e.g., NCOIL, NAIC).

The bill would require brokers and insureds to provide an allocation report in a form and subject to deadlines to be established by regulation. The bill generally incorporates the exempt commercial purchaser (ECP) exemption and home state exclusive regulation mandates of the NRRA, by cross-referencing the specific statutory definitions of an ECP and "home state" from the NRRA rather than incorporating the definitions into Maryland law.

The bill generally adopts the NRRA insurer eligibility standards, but retains authority for the Commissioner to prohibit placements with an insurer that "is not in a safe or solvent financial condition" or "has refused to pay just claims," and to impose other eligibility requirements that are preempted by the NRRA. The home state exemption from the surplus lines broker licensing requirement is conditioned on the broker being licensed in the insured's home state, which condition is preempted by the NRRA.

Kansas Approves Bill Adopting SLIMPACT-lite Tax Sharing Agreement

2011-05-16T10:26:00.000-05:00

The Kansas governor signed into law on Friday a bill which would adopt the SLIMPACT-lite tax sharing agreement.

Kansas is the 20th state to sign into law NonAdmitted and Reinsurance Reform Act (NRRA) implementation legislation and the sixth state to adopt SLIMPACT-lite or SLIMPACT-lite authorizing legislation. In connection with Kansas' NRRA implementation efforts, NAPSLO provided draft legislation, comments on the legislation, and Director of Government Relations Steve Stephan testified before the legislature.

The NRRA mandates that beginning July 21 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result, states are working to bring their laws into compliance.

The Kansas bill adopts SLIMPACT-lite, which provides for the creation of a Compact Commission that would adopt rules on tax allocation, reporting, collection and distribution, and uniform insurer eligibility requirements.This legislation is intended to streamline and improve the efficiency of the surplus lines market by eliminating duplicative and inconsistent tax and regulatory requirements among the states.

Georgia Enacts Legislation Allowing State to Enter Tax Sharing Agreement

2011-05-13T12:18:00.007-05:00

On May 12, the Georgia Governor signed legislation implementing certain provisions of the Nonadmitted and Reinsurance Reform Act (NRRA). Notably, Georgia’s NRRA legislation authorizes the Governor, in consultation with the Commissioner, to enter into an agreement with other states to collect and share premium taxes on multi-state risks, subject to certain conditions and limitations. In connection with Georgia’s NRRA efforts, NAPSLO provided draft legislation and comments to the legislature. Georgia is the 19th state to pass NRRA implementing legislation during this session.

The NRRA mandates that beginning July 21, an insured's home state is the only state with jurisdiction over surplus lines transactions, and therefore, the only state that can require a tax be paid by the broker. In the wake of the NRRA, many states are working to bring their laws into compliance.

As amended, Georgia’s legislation authorizes the Governor, in consultation with the Commissioner, to enter into a tax-sharing agreement substantially in the form of Slimpact-lite or NIMA. The Governor is required to select the agreement, if any, that provides the best financial advantage to the state. In determining which agreement is most advantageous (if any), the Governor, in consultation with the commissioner, must consider the impact on the state’s gross receipt of premium tax and the potential additional administrative burden to the state and surplus line brokers procuring or placing surplus line insurance. In the event the Governor enters into a tax-sharing agreement, notice of the action must be communicated to certain legislative officials, and the commissioner must submit an annual report to those legislators assessing whether the agreement continues to be in the best interest of the state.

Georgia’s legislation also adopts the NRRA's uniform eligibility requirements for U.S. domestic and non-domestic insurers and incorporates the NRRA’s exempt commercial purchaser exemption. The legislation further incorporates the NRRA’s definition of home state, however, does not otherwise provide for exclusive home state regulation or taxation. Georgia’s bill further requires brokers to apply the tax rates of each state to the applicable portions of multi-state risks, and continues to require submission of quarterly transaction reports.

Montana NRRA Implementing Legislation Authorizes Compact – Subject to Certain Conditions

2011-05-13T12:08:00.006-05:00

On May 6, the Montana Governor signed legislation implementing certain provisions of the Non Admitted and Reinsurance Reform Act (NRRA). Notably, Montana's NRRA legislation authorizes the Commissioner to enter into an agreement with other states to collect and share premium taxes on multi-state risks, subject to certain conditions and limitations. In connection with Montana's NRRA efforts, NAPSLO provided draft legislation and amendments to the legislature, met with insurance department officials and hired a lobbyist to spearhead local efforts.

The NRRA mandates that beginning July 21, an insured's home state is the only state with jurisdiction over surplus lines transactions, and therefore, the only state that can require a tax be paid by the broker. In the wake of the NRRA, many states are working to bring their laws into compliance.

As amended, Montana's NRRA legislation provides that, following negotiated rulemaking, the Commissioner may enter into a multi-state agreement for collecting and sharing premium tax, such as Slimpact-lite or NIMA. The legislation mandates that the allocation methodology of any agreement entered into by the commissioner be based on readily available data and provide for simplicity and uniformity. Any multi-state agreement must also provide for uniform eligibility standards, uniform methods for allocating and reporting surplus lines insurance risk classifications, and generate positive revenues for Montana.

Montana's NRRA legislation also adopts the NRRA's mandate of exclusive home state regulation of surplus lines insurance and the NRRA's uniform eligibility requirements for U.S. domestic and non-domestic insurers. The legislation further incorporates the exempt commercial purchaser exemption from the NRRA.

Treasury Department Announces Formation of Federal Advisory Committee on Insurance

2011-05-12T12:34:00.000-05:00

The U.S. Treasury Department this week announced the formation of a Federal Advisory Committee on Insurance (FACI) to inform and counsel the department and recently named Federal Insurance Office Director Michael McRaith on all matters related to insurance. This announcement comes on the heels of significant protest from industry and state regulators about the lack of insurance expertise and representation on the new Financial Stability Oversight Council (FSOC), the federal body charged with monitoring the U.S. financial system for potential systemic threats similar to those that brought the economy to the brink of collapse in 2008.

The FACI will include up to 15 members chosen from the spectrum of insurance expertise who will serve two year terms. Half of the committee will consist of state insurance regulators. The remaining members will be chosen from applicants to an upcoming Federal Register notice (a release date has not been announced). Submissions are required within 15 days of the notice’s posting. A Treasury press release suggests that the committee will include representatives from the “property and casualty insurance industry, the life insurance industry, the reinsurance industry, the agent and broker community, public advocates, and academia.”

The FACI is expected to meet with Director McRaith on a regular basis, and will likely advise him as he fulfills his duties on the FSOC, represents U.S. insurance interests internationally, and conducts what is expected to be a far-reaching study on the modernization of insurance regulation. A large number of applications can be expected, as this Committee will have direct access and influence on the decisions of the federal government’s primary source for insurance expertise and policy guidance.

Treasury Department Announces Formation of Federal Advisory Committee on Insurance

2011-05-12T12:19:00.000-05:00

Indiana Approves Bill Adopting SLIMPACT-lite Tax Sharing Agreement

2011-05-11T11:30:00.002-05:00

The Indiana governor signed into law on Tuesday a bill which would adopt the SLIMPACT-lite tax sharing agreement.

Indiana is the 18th state to pass NonAdmitted and Reinsurance Reform Act (NRRA) implementation legislation during this session. In connection with the NRRA implementation efforts, NAPSLO provided draft legislation, and comments on the legislation and representatives of B&D Consulting testified at a committee hearing.

The NRRA mandates that beginning July 21 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result, states are working to bring their laws into compliance.

Indiana's bill adopts SLIMPACT-lite, which provides for the creation of a Compact Commission that would adopt rules on tax allocation, reporting, collection and distribution, and may adopt uniform insurer eligibility requirements. Indiana's bill provides for exclusive home state regulation of surplus lines compliance, however does not incorporate the NRRA's exempt commercial purchaser (ECP) exemption from state diligent search requirements.

As amended, the bill provides that if SLIMPACT does not take effect or becomes ineffective, the Indiana Department of Insurance has the authority to enter into contracts to implement the requirements of the NRRA, subject to certain restrictions. The DOI may not enter into such a contract (compact or multistate agreement) "that is related to reporting, payment, collection, or allocation of fees or taxes on nonadmitted insurance, unless the Indiana department of insurance has done all of the following: (1) Completed a fiscal analysis of the impact of the contract. (2) Studied the expected effect of the contract on Indiana's gross receipt of premium tax. (3) Reviewed whether the contract will create undue administrative burdens on the state of Indiana or surplus lines licensees. (4) Concluded that entering into the contract: (A) is in Indiana's financial best interest; and (B) is consistent with the requirements of the NRRA."

Florida, Hawaii Legislatures Approve NRRA Compliance Bills; States Could Join Compact

2011-05-04T20:50:00.000-05:00

Legislatures in Florida and Hawaii have approved bills intended to implement the Nonadmitted and Reinsurance Reform Act (NRRA) and the bills have been sent to the respective governors to be signed. Both bills would allow the states to join a tax compact.

Florida's bill, SB1816, would generally authorize the Department of Financial Services and the Office of Insurance Regulation to enter into an agreement with other states to share taxes. Hawaii's bill, HB1052, would allow the insurance commissioner to participate in tax sharing system.

NAPSLO worked with legislators in both states during the legislative session and was pleased to see the final legislative bills contained requirements for additional legislative oversight and involvement in connection with the decision to join a compact.

Legislation in 16 states has been signed into law and seven other states (including Hawaii and Florida) are awaiting action by their governor. More information on the various state actions is available on NAPSLO's website.

The NRRA mandates that beginning July 21 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance.

E&S School Registration Deadline is May 6

2011-04-29T08:20:00.000-05:00

Limited space remains for the 2011 NAPSLO E&S School, scheduled to take place June 21-24 at the Eric P. Newman Education Center in St Louis. The deadline to register is May 6 and the cost of the school is $1,200. Registration materials can be downloaded from NAPSLO's website.

The E&S School's curriculum will focus on seven segments: Risk Takers - and various markets; Distribution System - purpose & variations; MGA's and Brokers - managing the business; Market Dynamics - changing environments; Cops - regulatory agencies; Where's the Money? - reviewing financial statements and accounting procedures; and E&S Marketing.

A focal point of the school will be the Perspectives from the Top by John Latham, President, Wholesale Division, Markel. In addition, there will be an Executive Panel featuring Orville Jones, Assistant to the Chairman, CRC; Patti Nunnally, President, Royal Oak Underwriters, Inc.; Matthew B. Scott, President, Penn-America Group/United National Group; and F. Marshall Turner, President/CEO, Maxum Specialty Insurance Group.

Nebraska Approves Legislation Allowing State to Enter into NIMA Tax Allocation Compact

2011-04-27T11:36:00.000-05:00

Nebraska's Governor signed a bill on Tuesday which authorizes the Insurance Director to enter into the NIMA tax allocation compact to facilitate the collection, allocation and disbursement of premium taxes.

Nebraska is the 16th state to enact NonAdmitted and Reinsurance Reform Act (NRRA) implementation legislation. During the legislative session NAPSLO provided draft legislation and comments opposing the NIMA allocation approach, and Director of Government Relations Steve Stephan met with Insurance Department representatives.

The NRRA mandates that beginning July 21 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance.

The bill would authorize the Director to enter into NIMA, participate in the clearinghouse, and adopt the allocation schedule established through NIMA. Nebraska law already provides for premium tax to be imposed on the total gross amount of surplus lines premiums.

The bill also provides for exclusive home state regulation of surplus lines placements and replaces the current definition of an industrial insured with the more narrow definition of an exempt commercial purchaser (ECP) from the NRRA.

The bill incorporates the NRRA eligibility requirements for U.S. domestic insurers, prohibits a surplus lines licensee from placing insurance with non-U.S. insurers unless the insurer is International Insurers Department (IID) listed, and removes the existing eligibility criteria for non-U.S. insurers so that there is no alternative to IID listing to become eligible.

Replay of NRRA Implementation Status Webinar Available to View

2011-04-25T10:17:00.000-05:00

Information on the status of implementation of surplus lines reforms signed into law in 2010 and their impact on surplus lines brokers and carriers was the subject of a NAPSLO sponsored webinar on April 19 and a copy of the webinar is available to view online at http://webinar.napslo.org.

More than 1,000 people signed up to view the program, The NRRA and Surplus Lines Reforms - An Update: Will You and the States Be Ready on July 21, 2011? The webinar reviewed state's actions to implement the NonAdmitted & Reinsurance Reform Act and what agents, brokers, carriers should expect when the law goes into effect.

In addition to a copy of the webinar being posted on the NAPSLO website, the PowerPoint presentation is also available to download. Answers to questions submitted during webinar will be posted in the next few weeks.

The NRRA mandates that beginning July 21 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. To comply, states are revising their laws. Many states are also considering forming a tax compact to handle allocation of surplus lines premium taxes. This may impose some additional reporting requirements for brokers and could impact companies.

The webinar included presentations from Richard Bouhan, NAPSLO Executive Director, Steve Stephan, NAPSLO Director of Government Relations, Libby Baney, B & D Consultants, NAPSLO Washington D.C. Lobbyist, Michael Byrne, Partner, Dewey & LeBoeuf LLP, and Dan Maher, Executive Director, Excess Line Association of New York.

North Dakota Approves SLIMPACT-Lite Compact As Part of NRRA Compliance Legislation

2011-04-21T08:38:00.002-05:00

North Dakota has approved legislation on Tuesday which would adopt the SLIMPACT-lite type of tax allocation compact.

North Dakota is the 15th state to pass NonAdmitted and Reinsurance Reform Act related implementation legislation and during the session NAPSLO provided draft legislation and comments on proposed legislation, met with legislators and department of insurance officials, and hired a lobbyist to work with legislators on the issue.

The NRRA mandates that beginning July 21 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance.

North Dakota's bill would adopt the SLIMPACT-lite type of tax allocation compact and the bill adopts the NRRA eligibility requirements for U.S. domestic insurers and requires the surplus lines licensee to confirm a non-U.S. insurer is on the International Insurers Department list (the bill removes the existing eligibility criteria for non-U.S. insurers). It also provides for exclusive home state regulation and incorporates the NRRA's exempt commercial purchaser (ECP) exemption from the diligent search requirement.

Arizona Approves Legislation Allowing State to Enter Tax Allocation Compact

2011-04-19T21:19:00.000-05:00

The Arizona Governor has signed House Bill 2112 on Monday which generally authorizes the Director of Insurance to enter into a compact or agreement such as SLIMPACT or NIMA.

Arizona is the 14th state to pass NonAdmitted and Reinsurance Reform Act (NRRA) implementation legislation during this session. In connection with Arizona’s NRRA implementation efforts, NAPSLO provided draft legislation and Director of Government Relations, Steve Stephan, testified twice before the legislature.

The NRRA mandates that beginning July 21 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance.

Arizona’s bill generally authorizes the Director to enter into a tax compact; however, prior to joining any compact, the Director must conduct an administrative hearing demonstrating that participation in a compact is in the best interests of Arizona. In reaching this determination, the following factors must be considered (1) the impact on the state’s gross receipt of premium taxes, (2) the regulatory burden and costs placed on insurance companies, surplus lines brokers and agents; (3) the cost impact on insureds resulting from any regulatory requirements attributable to a compact; (4) any other factors raised by the director or any other interested party.

The bill also replaces the existing "industrial insured" exemptions from the diligent search and insurer licensing/"doing business" requirements with exemptions from such requirements for an exempt commercial purchaser (ECP) as defined by the NRRA.

The bill also incorporates the U.S. domestic insurer eligibility requirements from the NRRA, as well as automatic eligibility for non-U.S. insurers upon International Insurers Department listing and provides for exclusive "home state" regulation as required by the NRRA.

The bill would subject surplus lines brokers to quarterly reporting with the clearinghouse of transactions involving the multistate risks of an Arizona home state insured.

NAPSLO Leads National Campaign to Implement the NRRA

2011-04-18T07:07:00.000-05:00

NAPSLO is leading a nationwide effort to inform state lawmakers, insurance regulators and others about changes needed in laws and regulations to properly implement the Nonadmitted Reinsurance Reform Act (NRRA), which became law last year through the landmark Dodd-Frank legislation.

"For years, NAPSLO has led efforts to secure the enactment of surplus lines legislative reform in both the states and in Washington. With the passage of the NRRA within Dodd-Frank, this effort now moves to every state, necessitating that NAPSLO take this initiative to engage state lawmakers and insurance commissioners across the country to ensure this key section of Dodd-Frank is properly implemented in every state," NAPSLO Legislative Committee co-Chair Hank Haldeman said.

The NRRA mandates that beginning July 21st, the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a broker to pay taxes. To comply with these rules, states are revising their laws, and many states are also considering forming a tax compact to handle allocation of surplus lines premium taxes.

"With the NRRA implementation clock ticking, NAPSLO has expanded its resources to ensure our members, clients and other stakeholders are properly protected," said NAPSLO President Letha Heaton. "This issue is of great importance to our members and is a top priority of the entire organization."

As part of the effort that focuses on lawmakers, regulators and the general public, NAPSLO has hired outside counsel nationally as well as lobbyists on the ground in key states. The organization has also developed a special section of the NAPSLO website (New Surplus Lines Laws) to provide detailed state-by-state information on the latest developments and other important information for NAPSLO members and brokers.

"Appropriate state implementation of the NRRA is a top priority for NAPSLO and for all of our members. Several states have already acted this year, and we expect others to take action before many state legislative sessions adjourn in the coming months. NAPSLO is committed to achieving the best implementation possible in every state, and to keeping all our members updated on the latest developments," added Legislative Committee co-Chair Dave Leonard.

Washington Approves NRRA Legislation; Premium Taxes Not Shared

2011-04-15T08:37:00.002-05:00

Washington's Governor signed NRRA implementation legislation this week which does not include sharing premium taxes on multi-state risks.

During the session NAPSLO provided draft legislation, supplied comments on early drafts of legislation that included tax allocation provisions and Director of Government Relations Steve Stephan met with Insurance Department representatives twice on the legislation. NAPSLO applauded the decision to study the allocation issue further to determine if any allocation system will benefit the state.

The NRRA mandates that beginning July 21 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result states are working to bring their laws into compliance.

Washington's bill does not provides for sharing premium taxes on multi-state risks. For property and casualty insurance if Washington is the insured's Home State, the surplus lines tax would be imposed on 100% of the premium even if the policy covers multi-state risks. Other lines of insurance would be taxed only on the portion of the premium allocated to Washington risks.

The bill incorporates the NRRA's Home State definition, plus a definition of "principal place of business." It provides for exclusive Home State regulation of surplus lines placements of property and casualty insurance. Incorporates the ECP exemption from the NRRA. Generally incorporates the NRRA uniform standards for insurer eligibility, and limits placement with non-U.S. insurers to insurers on the IID list.

Several States Pass NRRA Related Legislation; Changes Tracked on NAPSLO's Website

2011-04-13T09:04:00.001-05:00

NRRA-related legislation was signed into law recently in Washington, New Mexico, Arkansas and Idaho and is awaiting action by the Governors in Arizona, Maryland and North Dakota.

To date legislatures in 16 states have passed legislation related to the NRRA. Legislation in New York, Virginia, Washington, Maryland and Idaho did not address compacts while Kentucky, Ohio, New Mexico and North Dakota passed legislation favoring the Surplus Lines Insurance Multistate Compliance Compact (SLIMPACT) type of compacts. South Dakota and West Virginia favored the NAIC's Nonadmitted Insurance Multistate Agreement (NIMA) while Arkansas, Arizona, Mississippi, Wyoming, and Utah approved legislation authorizing the Commissioner to enter into an agreement or compact.

To keep up to date on what is going on in each state, you can follow changes on the NAPSLO website under New Surplus Lines Law and there is a state-by-state table (New Statues) showing the most recent action by legislators

Will You Be Ready in July for the NRRA? Sign-up for April 19th Webinar on Implementation Status

2011-04-12T13:59:00.000-05:00

With only three months to go before the Nonadmitted and Reinsurance Reform Act (NRRA) goes into effect, legislators, regulators, and the industry are working to be ready when the law goes into effect.
To help NAPSLO members be prepared, information on the status of implementation of surplus lines reforms and the impact on surplus lines brokers and carriers will be the subject of a NAPSLO sponsored webinar next Tuesday, April 19 at 2:00 p.m. Eastern.

The webinar, The NRRA and Surplus Lines Reforms - An Update: Will You and the States Be Ready on July 21, 2011?, will review state actions to implement the NonAdmitted & Reinsurance Reform Act, contained in the financial services reform bill approved in July 2010, and what agents, brokers, and carriers should know and expect when the law goes into effect.

There is no charge to attend the webinar and people can register online at https://www1.gotomeeting.com/register/676571968 or through a link on the NAPSLO website.

NAIC Tries to Undercut Surplus Lines Reform

2011-04-08T10:52:00.000-05:00

In the "Sounding Board" column of the April 2011 issue of American Agent & Broker magazine NAPSLO Executive Director Richard Bouhan writes that the National Association of Insurance Commissioners (NAIC) has done nothing to ensure that the states’ laws will be consistent with the federal requirements when NRRA becomes effective in July.

Rather the NAIC has concentrated on creating an interstate compact/agreement to allow the states to voluntarily share surplus lines tax revenue even though under the NRRA a compact is not mandatory and its provisions contain no deadline or effective date.

In addition, the NAIC's NIMA (Nonadmitted Insurance Multistate Compact) proposal "includes an excruciatingly detailed premium tax allocation formula which imposes data demands that go well beyond the requirements of the current premium tax allocation system."

The full article is available at the Property Casualty 360 website.

No OFC Fight – For Now

2011-04-07T09:55:00.000-05:00

Rep. Judy Biggert (R-IL), Chairman of the House Financial Services Subcommittee on Insurance, Oversight, and Community Opportunity announced late last week that her subcommittee would not consider any optional federal charter (OFC) legislation during the current session of Congress, according to NAPSLO's Washington, D.C. Lobbyists, B&D Consulting.

Rep. Biggert and her staff stated that their priorities for the term are primarily reform of the National Flood Insurance Program and oversight of the Dodd-Frank Wall Street Consumer Protection and Wall Street Reform Act, specifically the Financial Stability Oversight Council and the Federal Insurance Office.

This pause in the federal vs. state regulator debate is just that, though: a pause. Rep. Ed Royce (R-CA), who earlier this year sought the Financial Services Committee chairmanship without success, has voiced his plan to introduce new OFC legislation later this year. Rep. Royce has backing in this effort from many trade associations and from (generally larger) insurance companies, whose support stems from desire for a federal regulator to represent U.S. insurer interests on international and reinsurance matters. Stakeholders can rest assured that this debate will continue far into the future.

Rejection of Tax Compact Authorization in NY NRRA Compliance Legislation May Signal Difficulties for Establishing National Compact

2011-04-04T11:52:00.000-05:00

New York's decision to reject authorizing the state to join a surplus lines tax allocation compact may indicate that forming such a national tax sharing arrangement for surplus lines is not feasible, according to NAPSLO officials. In passing the legislation, signed into law on Thursday by Gov. Andrew Cuomo, the state Legislature removed provisions that would have authorized the state to join a tax compact.

The legislation, which brings state laws into compliance with the Nonadmitted and Reinsurance Reform Act (NRRA), provides for the state to tax 100% of each surplus line policy's written premium when New York is the "Home State of the insured.

“Along with California’s expected decision not to include compact language in their NRRA compliance legislation, New York’s action brings into question whether large states are willing to participate in an allocation compact,” said NAPSLO Executive Director Richard Bouhan. “Without the large states a compact might not be practical.”

In 2009, the four largest states (Florida, California, Texas and New York) reported approximately $16 billion of the $32 billion in surplus lines premiums. The Florida legislature has not approved legislation to allow the state to join a compact. In Texas, the Comptroller already has authority to have the state join a compact however the legislature is considering a proposal to join the revised Surplus Lines Insurance Multi-State Compliance Compact, referred to as SLIMPACT-Lite.

The NRRA mandates that beginning July 21 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. To comply, states are revising their laws. Many states are also considering forming a tax compact to share surplus lines premium taxes, however they are not required to join a compact under the NRRA legislation.

“Starting July 21 surplus lines brokers will benefit from the NRRA by only having to pay premium taxes to the home state of the insured and states will then be responsible for any allocation of taxes,” said Mr. Bouhan. “The NRRA legislation noted that states may allocate taxes among the states through a compact however there was neither a mandate for a compact nor a deadline to establish one. It is up to the states whether and how to allocate these taxes."

NJSLA to Present Honoree of the Year Award to Steven R. Gross

2011-03-30T14:52:00.001-05:00

The Surplus Lines Association of New Jersey will present its 2010 Honoree of the Year Award to Steven R. Gross for outstanding dedication and achievement on behalf of the Surplus Lines Insurance profession.

The award will be presented on Thursday, April 14, 2011. Please see the attached invitation for details. Dinner invitation registration and checks must be received by April 8.

Mr. Gross is Chairman/CEO and Founder of Metro Insurance Services, Inc. located in Springfield, NJ. He also currently serves on the Board of Directors for NAPSLO, serving as Co-Chair of the Career Awareness & Internship Committee.

In addition Mr. Gross is on the Board of Directors of Commissioners Producer Advisory Counsel in the State of New Jersey, is a past President of the New Jersey Surplus Lines Association, and serves as a board Member of the New Jersey Golf Foundation, the charitable arm of the NJ Section of the PGA of America.

NAPSLO Applauds California Legislators Plan to Drop Open-Ended Surplus Lines Tax Compact Authorization in NRRA Compliance Legislation

2011-03-28T10:15:00.001-05:00

The expected removal by California legislators of a provision that would have authorized the state’s Board of Equalization and Franchise Tax Board to enter into an open-ended surplus line premium tax compact, or agreement, is a positive step toward having the state define how it will allocate surplus lines taxes in the future, according to NAPSLO officials.

"We didn’t believe it was appropriate to pass a law providing broad authority for agencies to enter into a compact or agreement where the exact nature, terms and financial impact of the agreement are not yet known," said NAPSLO Executive Director Richard Bouhan. "NAPSLO, and California brokers, worked with legislators to explain the need for any compact legislation to include specifics on how it would operate and are pleased to hear the compact provision in question will be dropped."

The compact provision was part of legislation (AB315) currently being considered by California legislators to bring the state into compliance with the NonAdmitted and Reinsurance Reform Act (NRRA), which goes into effect in July.

The NRRA mandates that beginning July 21 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. To comply, states are revising their laws and many states are also considering forming a tax compact to handle allocation of surplus lines premium taxes.

Under the compact provision of AB315 that is expected to be dropped this week, the California Board of Equalization and the Franchise Tax Board, with the approval of the Department of Finance, could have become a party to a reciprocal surplus line premium tax compact providing for the administration, collection, and enforcement of the taxes imposed on multistate risks. However the details of establishing the compact (or agreement) would have been developed by state agencies rather than by the state legislature.

"NAPSLO believed that it was important for the state legislature to debate and approve the specific details of establishing a compact," said NAPSLO President Letha Heaton. "We are pleased that it appears the California legislators concur."

FIO Director Named; SLIMPACT Approved by Kentucky, Ohio

2011-03-25T09:55:00.000-05:00

llinois Insurance Director Michael McRaith has been named by Treasury Secretary Timothy Geithner as the first Director of the Federal Insurance Office created by the Dodd-Frank Wall Street Reform and Consumer Protection Act. McRaith’s naming has received generally positive reviews from industry, consumer groups, and state regulators. He will oversee a much-anticipated report to Congress on the modernization of insurance regulation due in January 2012, and will hold a non-voting seat on the Financial Stability Oversight Council. McRaith is expected to assume the post in late May at the earliest.

Kentucky Governor Steve Beshear signed legislation into law last week which makes Kentucky the first state to adopt the surplus lines insurance multistate compliance compact, or SLIMPACT-lite. Ohio Governor John Kasich followed suit by signing similar legislation shortly thereafter. SLIMPACT-lite gives a governing commission the authority to establish formulas for premium tax allocation and collection, national eligibility standards, and consistent payment methods and regulations for multistate surplus lines policies. Ten states must adopt SLIMPACT-lite legislation before the governing commission can be established. A bill for SLIMPACT-lite passed through both of New Mexico’s legislatures now awaits their governor’s signature.

Ohio Governor Signs Surplus Lines Legislation

2011-03-24T10:05:00.000-05:00

Ohio Gov. John R. Kasich signed House Bill 122, legislation continuing Ohio’s involvement in the “surplus lines” insurance market. HB 122 permits the Director of the Ohio Department of Insurance to join a compact if deemed advantageous to the state and harmonizes Ohio insurance law with federal requirements imposed through the Non-Admitted and Reinsurance Reform Act (NRRA), a provision included in the Dodd-Frank legislative package passed by Congress in 2010.

The NRRA goes into effect in July 2011 and each year Ohio collects approximately $27 million from surplus lines premium taxes, and the NRRA requires states to enter into either a compact or multi-state agreement in order to continue collection of surplus lines premium taxes on multi-state risks.

NAPSLO to Offer Webinar on NRRA Implementation Status on April 19

2011-03-21T15:20:00.002-05:00

Information on the implementation status of surplus lines reforms signed into law in 2010 and their impact on the surplus lines industry will be the subject of a NAPSLO sponsored webinar on Tuesday, April 19 at 2:00 p.m. Eastern.

The webinar (The NRRA and Surplus Lines Reforms - An Update: Will You and the States Be Ready on July 21, 2011?) will review state actions to implement the NonAdmitted & Reinsurance Reform Act and what agents, brokers, carriers should know and expect when the law goes into effect.

The NRRA mandates that beginning July 21 the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. To comply, states are revising their laws. Many states are also considering forming a tax compact to handle allocation of surplus lines premium taxes. This may impose some additional reporting requirements for brokers and could impact companies.

There is no charge to attend the webinar and you can register on-line. You will receive an email with information on accessing the webinar. If you have any registration questions, please contact Mike Ardis at 816-741-3910.

Registration Now Open for NAPSLO's E&S School

2011-03-17T09:40:00.000-05:00

Registration is now open for NAPSLO's E&S School, June 21-24, 2011 at the Eric P. Newman Education Center in St. Louis, MO and the brochure can be downloaded from the NAPSLO website.

The NAPSLO E&S School is designed for insurance professionals with less than five years experience in the surplus lines industry. Persons with more than five years surplus lines experience are encouraged to attend the NAPSLO Advanced School, offered each Fall.

The curriculum will focused on seven segments: Risk Takers-and various markets; Distribution System - purpose & variations; MGA's and Brokers-managing the business; Market Dynamics-changing environments; Cops - regulatory agencies; Where's the Money - reviewing financial statements and accounting procedures and E&S Marketing.

Michael Byrne Named to Next Generation Board

2011-03-16T14:43:00.003-05:00

Michael Byrne, a partner with the law firm of Dewey & LeBoeuf LLP in New York, has been named to the NAPSLO Next Generation Board of Directors and will be the Next Generation PAC/Legislative chair.

Mr. Byrne has served on the NAPSLO Legislative Committee for five years and is currently assisting NAPSLO on efforts involving implementation of the Nonadmitted and Reinsurance Reform Act (NRRA) portion of the Dodd-Frank Wall Street Reform and Consumer Protection Act at the state level. He has been with the law firm since 1998, after receiving his law degree from Rutgers University and a clerkship with the New Jersey Superior Court, Appellate Division."

The NAPSLO Next Generation was formed to provide industry training, social networking, leadership and other skills necessary for the development and success of young insurance professionals. More information is available at http://www.napslonextgen.org.

NAPSLO, IMCA Marketing Award; Entry Deadline is April 1

2011-03-15T10:35:00.000-05:00

The deadline to enter the newly established marketing award program contest developed by NAPSLO and the Insurance Marketing and Communications Association (IMCA) is April 1.

The IMCA holds an annual communications and marketing awards contest and beginning this year there is a separate category just for NAPSLO members - the NAPSLO Marketing Campaign Award. The creative judging team for IMCA's annual Showcase Award competition will judge the competition but the NAPSLO award will be presented at NAPSLO's Annual Convention in October in San Diego.

The NAPSLO Marketing Campaign Award competition is open to NAPSLO members only and the materials must have been in the marketplace between January 1, 2010 and March 15, 2011. More information and entry forms are also available at the NAPSLO website.

Campaign entries must include a minimum of two communication vehicles (non-electronic and/or electronic) that share a common campaign theme. The deadline to enter is April 1 and the cost to enter is $100 per entry.

NAPSLO Executive Leadership School Sells Out

2011-03-08T15:52:00.000-06:00

NAPSLO's 2011 Executive Leadership School, set for April 27-30, 2011, at the University of Virginia Darden School of Business, Charlottesville, Va. has sold out and NAPSLO is putting together a waiting list.

Forty students have signed up for the NAPSLO Executive Leadership Program, which is designed for senior-level members who wish to broaden their perspectives on important social, political, and economic issues influencing the insurance industry.

Participants will enhance their leadership skills and become more able to 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

Legislative, Leadership Top Mid-Year Program Topics

2011-03-04T13:22:00.001-06:00

Legislative and Leadership issues were the focus of programs at the 2011 NAPSLO Mid-Year Leadership Forum in Naples, Fla.

NAPSLO Executive Director Richard Bouhan and Director of Government Relations Steve Stephan reviewed recent legislative action at at the state level to bring laws into compliance with the NonAdmitted and Reinsurance Reform Act (NRRA). A copy of their slide presentation is available to download.

A leadership panel featuring Joel Cavaness, Anthony Markel, and Kevin Westrope also talked about current leadership and business topics. A slide show with information on the programs is available online from the National Underwriter.

E&S Firms Can List Business in Best's Review

2011-02-23T21:28:00.000-06:00

Excess & Surplus Lines carriers, managing general agents and surplus lines brokers can list their business at no charge in the May 2011 edition of Best's Review magazine.

Excess & Surplus Lines carriers and wholesalers can list themselves online. Submissions will be published in the May edition of Best's Review, as space permits. The deadline for submitting a listing is March 18, 2011.

The listing will appear as part of a package on the excess & surplus lines businesses that will include the latest installment of an ongoing series profiling specialty producers and an Issues & Answers special section, Excess & Surplus Lines Showcase 2011.