Posted on 23 Mar 2011
Kentucky became the first state to adopt a surplus lines compact advanced by the National Conference of Insurance Legislators (NCOIL). A similar bill in New Mexico has been sent to the governor.
Gov. Steve Beshear signed H.B. 167, legislation sponsored by former NCOIL President and state Rep. Robert Damron, D-Ky., that would join the state to the Surplus Lines Insurance Multi-State Compliance Compact. Under SLIMPACT, states will join a governing commission to set formulas for collecting and allocating premium tax dollars, establishing uniform payment methods and reporting requirements for insureds and surplus lines brokers, and developing national eligibility standards.
"The Dodd-Frank Act gave states a short period of time in which to act, but in Kentucky we were able to get it done," Damron said in a statement. "We look forward to broad SLIMPACT enactment -- including by our neighbors from Indiana, Ohio, and Tennessee, among others -- and we believe that all states will benefit both financially and otherwise from joining the national compact."
Under the Nonadmitted and Reinsurance Reform Act, part of the Dodd-Frank financial reform law, surplus lines taxation, regulatory and licensing authority will fall under the exclusive oversight of the home state of the insured, so that multistate policies would have premiums taxed in just one state. For reinsurers, regulatory authority is to be limited to the state where the company is domiciled. States are choosing between three options: letting the federal rule stand, adopting NCOIL's compact, or entering into a less-comprehensive agreement developed by the National Association of Insurance Commissioners known as the Nonadmitted Insurance Multi-State Agreement, or NIMA.
The NRRA is set to take effect in July. NCOIL members adopted a resolution at their spring meeting this month calling for Congress to defer for one year implementation of the act.
In New Mexico, legislation sponsored by NCOIL President and state Sen. Carroll Leavell is before Gov. Susana Martinez.