In the 18 months since Congress passed the Nonadmitted andReinsurance Reform Act (NRRA), the NAPSLO Board, LegislativeCommittee and staff have been hard at work, with the help ofstamping offices and state associations, advocating for the law'sproper implementation to state legislatures, insurancecommissioners and insurance department staff and the National Assn.of Insurance Commissioners to fully realize the goals of thefederal law. To date:

1. Forty-four states have taken action to implement the NRRA.

   • 24 states representing 63 percent of nationwidepremium volume have no current plans for participating in taxsharing arrangements.

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   • 11 states plus Puerto Rico have signed theNonadmitted Insurance Multi-State Agreement (NIMA). Representingstates with 21.7 percent of nationwide premium, NIMA recentlydelayed its operational start from Jan. 1 to July 1, and Nebraskaprovided notice of its withdrawal from NIMA effective March 5.

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   • 9 states are working to implement the Surplus LinesInsurance Multistate Compliance Compact (SLIMPACT). With 5.23percent of nationwide premium, SLIMPACT is not yet operational andcannot be operational until July 1, 2013, at the earliest, and onlyif it achieves a tenth member.

2. The states have not agreed on a consistent tax sharingarrangement or clearinghouse model.
3. The current NIMA tax allocation methodology contains a detailedallocation formula requiring a substantial amount of state-specificdata to be collected by the surplus lines broker from the insured.It also requires the broker and insured to provide information forthe allocation of casualty insurance policies that is not normallyused in the underwriting process or currently gathered in thenormal course of business, all for the sole purpose of allocatingtaxes.
4. Some states have modified their surplus lines tax laws to taxthe portion of surplus lines premium allocated to other states atthe other states' tax rates, even when they are not participatingin any tax sharing arrangement. This creates a matrix for taxallocation and reporting purposes within a number of states whichis difficult, costly to administer and inconsistent with NRRA'sintent.
5. The cost/benefit of tax sharing is not clear. Most surpluslines transactions represent single-state transactions and based onrecent data from the Florida Office of Insurance Regulation and theMaryland Insurance Administration, any ultimate amount of taxsharing will likely be insignificant in relation to the cost of taxsharing.

NAPSLO continues its work with the states to promote and attainthe uniformity and efficiencies in surplus lines regulation theNRRA is intended to achieve.