The National Association of Insurance Commissioners will likelyadopt a minimal plan to collect surplus lines insurance taxeswithout tackling the bigger issue of uniform regulation between thestates after an association's task force vote last week.

Regulators on the Surplus Lines Implementation Task Force, andother interested parties, met on a conference call Tuesdayafternoon to decide on what plan to present to their legislators atthe beginning of the year.

Ultimately, the task force decided on a "bare bones" approach,said Louisiana Insurance Commissioner James J. Donelon, chair ofthe NAIC's Surplus Lines Implementation Task Force. The planaddresses the collection and allocation of premium taxes from theexcess and surplus lines industry, but does not deal with the issueof uniformity of regulation that the industry is pushing for. Theregulation issues include insurer eligibility and licensing betweenstates, said Mr. Donelon.

The plan getting the task force nod, SLIMA (Surplus LinesInsurance Multi-State Agreement), defers regulation of the surpluslines industry to the home state of the insurer.

Mr. Donelon said the decision was made after a long discussionwith 11 members voting to adopt the plan and Virginiaabstaining.

He said a proposal from Virginia to adopt the more comprehensiveSLIMPACT (Surplus Lines Insurance Multi-State ComplianceCompact) plan died after it received no support from any of theother 11 insurance regulators.

Insurance commissioners are working to adopt model legislationthat they can present to their legislative body by the beginning ofthe year in response to the Nonadmitted and Reinsurance Reform Act(NRRA), part of the Dodd-Frank financial reform act.

Mr. Donelon said the task force received letters from a numberof interested parties, all of whom supported the adoption ofregulations to streamline the regulation of the surplus linesbusiness.

Steve Stephan, director of government relations with theNational Association of Professional Surplus Lines Offices, Ltd.,told NU that the task force's decision "is not doinganything to streamline the system."

The purpose of NRRA is to make it easier for the E&Sindustry to do business and not burden wholesale brokers with amyriad of regulations and costs. He said the task force's proposedplan "would allow the existing system to continue to exist. It isgoing in the opposite direction of what NRRA intended."

Both Mr. Donelon and Mr. Stephan said one party that will carrya lot of weight going forward on this issue is the NationalConference of Insurance Legislators, which they say favors a morecomprehensive approach to the regulation of surplus lines.

Mr. Stephan said it has always been the position of NCOIL toendorse SLIMPACT, which he said is the right approach.

Mr. Donelon said NCOIL has indicated that it will discuss theimplementation of NRRA next month.

"It is conceivable that they would come out with a differentrecommendation than we did, and it is further conceivable that somestates will go [NCOIL's] route and some states will go our route,"Mr. Donelon observed.

A final version of the task force's proposal is expected to beposted on the NAIC's websitethis week, said Mr. Donelon. A vote on the measure will comesometime next week. The final proposal, with amendments will go tothe full association next month, he said.