NAPSLO: No Tax-Sharing Contract Better Than Two Without Uniformity

NU Online News Service, March 5, 11:49 a.m. EST

The longer the debate over the tax-sharing option within the Nonadmitted and Reinsurance Reform Act  rages, the better off the surplus-lines industry is, say legislative-committee leaders of the National Association of Professional Surplus Lines Offices (NAPSLO).

At its midyear Leadership Forum in Scottsdale, Ariz., industry executives on the association’s legislative committee updated membership on the NRRA, saying no tax-sharing agreement is better than a system without uniformity.

“The longer it takes [states] to implement, the longer the 100-percent approach works,” says Brady R. Kelley, NAPSLO executive director.

NAPSLO supports the NRRA’s main intent to require each state to adopt nationwide uniform requirements, forms and procedures for the reporting, payment, collection and allocation of surplus lines premiums taxes. However, although the association is not opposed to tax-sharing, it is the option of the home state—and is not required by NRRA.

The competition among two tax-sharing arrangements (the Nonadmitted Insurance Multistate Agreement and the Surplus Lines Insurance Multistate Compliance Compact) has caused a departure from the NRRA’s intent to streamline processes and provide consistency within the industry, NAPSLO says.

Therefore, no arrangement is superior to two inconsistent ones. Kelley says NAPSLO does not support multiple tax-sharing contracts.

“That is not workable,” he says. “That is anything but uniform.”

The 100-percent approach—where each home state collects 100 percent of the tax on every surplus lines policy—is the “clear, simple approach for our industry,” says James Drinkwater, president of the brokerage division of AmWINS and co-chair of the NAPSLO legislative committee.

David E. Leonard, president of RSUI Group and co-chair with Drinkwater, says NAPSLO has been “pretty effective” in advising states of its opinion until a clear, uniform tax-sharing agreement is reached.

Nebraska recently withdrew from NIMA, Leonard reports, no one has signed a contract with a clearinghouse, and there is no funding to start such an operation.

NIMA, which NAPSLO strongly opposes, is “not the boon states thought it was originally,” says Leonard.

Comments

Resource Center

View All »

Making Coverage Letters Work for Your Clients

If you're a broker or insurance buyer with any length of service in the commercial...

Complimentary White Paper: The Compression of Workplace Time

How brokers and carriers respond to the compression of workplace time will create significant competitive...

The Changing Insurance Consumer: 6 Ways to Create Profitable Relationships

Today’s mobile and web-savvy consumers have new expectations when it comes to interacting with your...

Contractors General Liability Coverage 102

What is a prior work exclusion? Which option is right for my client? Why do...

Sign up today to get a 50% matching credit -...

Insurance marketing sometimes seems like it's a game of swings and misses, but we're here...

Guide: 5 Steps to Selling Cyber

Cyber risk and data security is on the agenda of every business owner and executive....

Citation Correlation

Do rigger and signalperson qualifications correlate with the cause of crane and rigging accidents? ...

Complete Guide to Electronic Signatures in Property & Casualty Insurance...

In property and casualty insurance, closing new business quickly is key. Learn how to leverage...

INSTANT ACCESS: Complimentary Sales Closer Questionnaires

Help property owners or managers compare your commercial residential property insurance coverage vs. the competition....

Determining Vacant Property Perils and Valuations

Are your clients fully covered for Vacant Properties? In this economic climate, your insureds may...

Looking for Markets?

Search Kirschner’s Insurance Directory to help service your hard to place risks.

497 Risk Categories | 70,000 P&C Insurance Markets

kirschners
Specialty Markets Insight eNewsletter

Receive updates and analyses on hard to place and challenging coverages. Sign Up Now!

Advertisement. Closing in 15 seconds.