The clearinghouse that is the core of the Nonadmitted Insurance Multi-State Agreement (NIMA) tax-sharing compact is set to begin operation July 1, the 11 states and territories that comprise it announced this week.
However, an industry lawyer who specializes in issues related to the implementation of the Non-Admitted and Reinsurance Reform Act (NRRA) says he will believe it when he sees it.
“Just because the clearinghouse is set up, doesn’t mean it will be operational,” says Richard A. Brown, a senior lawyer with an accounting background who is a sole practitioner inSan Francisco. “A lot of details have to be ironed out before there is any actual tax sharing.”
And, in effectively what is an update on implementation of the NRRA, Joel Wood, senior vice president, government affairs, at the Council of Insurance Agents and Brokers, says that “unless there is a far greater critical mass of states that are engaged, this entire venture amounts to spending a dollar to collect a dime.”
Wood says the Council doesn’t see any momentum in large states—New York, California, Texas, Illinois, Ohio, etc.—to join in this effort.
“I don't see any real movement, either, to reconcile the NIMA and SLIMPACT (Surplus Lines Insurance Multistate Compliance Compact) models,” Wood adds.
In a statement released by the Florida Office of Insurance Regulation, NIMA member-state representatives say they met via conference call March 30 and approved both a premium-tax-clearinghouse-services agreement and license agreement.
The members of NIMA say that through the agreements, NIMA, Inc. will contract with the Florida Surplus Lines Service Office (FSLSO) to serve as its central clearinghouse provider for the collection and allocation of surplus lines premium-tax payments for multi-state surplus-lines policies.
The FSLSO will serve as the technology platform provider and will also provide all clearinghouse-administrative duties.
The clearinghouse will begin receiving filings for policies issued or renewed on or after July 1, 2012.
“We have taken a big step this week toward implementing the business plan of NIMA, Inc.,” saysSouth Dakota’s Director of Insurance Merle Scheiber.
“This is good public policy for multi-state surplus lines, and I’m looking forward to the success of this endeavor,” he adds.
Corrected to remove inaccurate information. A previous version of this story indicated that the FSLSO spent $1.8 million to "entertain agents and brokers." The budget item was listed as "Agent and insurer relations." The FSLSO responded with the following information:
In 2010, the FSLSO allocated $1.8 million to its Agent and Insurer Relations department (now called Agent and Insurer Services). This department is responsible for overseeing and facilitating the statutory compliance of Florida’s surplus lines agents and insurers. Budget money provided to this department is used for various efforts to further these goals including programming maintenance and improvements made to our electronic filing systems, compliance monitoring programs, training efforts and other such services.