Members of a surplus lines industry group unveiled a draft proposal for an interstate compact to regulators at the National Association of Insurance Commissioners meeting this week.

The compact proposes a mechanism for states to work out distribution of surplus lines premium taxes for those risks that cover more than one state.

Surplus lines brokers currently retain the responsibility for apportioning out premium taxes from multistate risks, and have long considered the task burdensome and unwieldy.

Meanwhile, there is legislation in the House, introduced earlier this year, which would complement the proposed compact by allowing the broker to pay the premium to the home state of the insured and leave it up the states to distribute it.

HR 1065 suggests that the states could set up an interstate compact to distribute the funds but does not mandate it.

Dick Bouhan, executive director of the National Association of Professional Surplus Lines Offices, Kansas City, Mo., said he expects the House to approve the bill this session with Senate approval likely but not as soon since hearings will be required.

While passage of the bill will in a sense solve the brokers' concern, Mr. Bouhan said a compact will tie up all of the relevant issues.

The industry compact group is seeking backing for its proposal from the NAIC and the National Conference of Insurance Legislators, he added.

But unlike the Interstate Compact now in operation for review of life products, the surplus lines compact is not an NAIC-driven effort.

Once a consensus draft is achieved with approval from legislative and regulatory groups, Mr. Bouhan said draft compact legislation will be introduced in the states.

Special Reports /

Surplus Lines Compact At NAIC Meeting

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