NU Online News Service, July 3, 10:36 a.m.,EDT

Nevada has become the latest state to withdraw from theNonadmitted Insurance Multistate Agreement (NIMA), leaving onlyfive states and Puerto Rico as members.

The decision prompted the Council of Insurance Agents andBrokers to declare the effort of the states to establish a uniformallocation system for surplus lines premium taxes “a clearfailure.”

But, says Joel Wood, CIAB senior vice president for governmentaffairs, Nevada's exit from NIMA moves the industry closer to thelegislative intent of the Nonadmitted and Reinsurance Reform Act of2010: “Only one set of rules governing a nonadmitted multistaterisk”

“For that, we are grateful,” Wood says.

Wood's statement was obtained through a bulletin sent to CIABmembers.

The bulletin says Nevada gave 60 days notice of termination June29, but that because Nevada withdrew from NIMA prior to NIMA'sSurplus Lines Clearinghouse effective date of July 1, the state isnot required to participate in any such allocation.

The five remaining NIMA states are Florida, Louisiana, Utah,South Dakota and Wyoming. The system is being managed by FloridaSurplus Lines Service Office.

NIMA is a revenue-sharing agreement designed to implement thetax-sharing provisions of NRRA, which was passed as part of theDodd-Frank Act in July 2010 and went into effect July 21, 2011.

Under NRRA, the insured's home state is the only jurisdictionover multistate surplus lines transactions and the only state thatcan require a tax to be paid by the broker.

Jack McDermott, a spokesman at the Florida Office of Insurancefor commissioner Kevin McCarty, confirms that Nebraska has sent anotice saying it will drop out.

“It is correct that we received notice from Nevada of theirwithdrawal [from NIMA].” McDermott says.

“However, the clearinghouse was launched as expected on July 1.And, it is our hope that Nevada and other states may reconsidertheir decisions once thay have seen NIMA's success in implementingprovisions of the NRRA.”

In comments to CIAB members, Wood calls the Nevada action“significant and welcome.”

Wood also says that a competing interstate compact, the proposedSLIMPACT, has not reached the requisite 10 participating states tobe effectuated.

Wood explains in the bulletin that Florida is the only largejurisdiction that has chosen not to simply collect 100 percent ofthe surplus lines premium taxes for multistate placements.

“All other large states and many others have chosen to take theless cumbersome route of taking 100 percent of the tax,” Woodsays.

According to data compiled by the National Association ofProfessional Surplus Lines Offices, 32 states representing 72percent of nationwide premium volume have no plans to participatein tax-sharing agreements.