NU Online News Service

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WASHINGTON–The National Conference of StateLegislatures (NCSL) voted unanimously to pass a resolution supporting The NationalConference of Insurance Legislators' (NCOIL) interstate compactplan designed to implement the surplus lines reform law passed byCongress earlier this year.

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NCSL drafted the resolution supporting the NCOIL plan earlier thismonth, and voted to approve it Friday.

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The issue involves how surplus lines reforms contained in the Nonadmitted and Reinsurance Reform Act(NRRA)–part of the Dodd-Frank financial services reformlaw–will be implemented.

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NCOIL's framework, called SLIMPACT, is actually a trimmed-down version of the originalSLIMPACT–a proposal for an interstate compact developed by 60interested insurance professionals in 2007.

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The model law, often referred to as "SLIMPACT-Lite," would,among other things, authorize a governing commission to establishallocation formulas to help states share premium tax dollars onnonadmitted transactions.

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Industry professionals have so far supported NCOIL's proposal over a competing planfrom the National Association of Insurance Commissioners (NAIC)called NIMA, or Nonadmitted Insurance Multistate Agreement.

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NIMA would establish a clearinghouse that would allocate surpluslines tax payments to applicable participating states. LouisianaInsurance Commissioner James J. Donelon, chair of the NAIC'sSurplus Lines Implementation Task Force, described the plan as a "bare bones" approach.

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While voting to support the NCOIL plan, NCSL also amended itsresolution to include a provision asking Congress to considerproviding state legislatures with a one-year extension until July2012, since State legislators only were provided a short window toenact the Slimpact Lite legislation.

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By statute, states have until June 11, 2011 to pass legislationimplementing the law.

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Last week, the Council of State Governments' executive committeealso voiced support for SLIMPACT-Lite.

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The NCSL resolution and the Slimpact Lite act will now bedistributed to state legislators around the country in preparationfor the 2011 legislative session, according to Rhode Island StateRepresentative Brian Patrick Kennedy.

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Kennedy, a past president of NCOIL and the immediate pastchairman of the NCSL Communications, Financial Services andInterstate Commerce Committee, was the sponsor of the NCSLresolution.

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In seeking passage of the resolution, Kennedy argued, "Statesmust act now to ensure that a viable system is in place to meet thedictates of the Dodd-Frank legislation, mandated by Congress aspart of the reforms contained in the Nonadmitted and ReinsuranceReform (NRRA) and to have a practical method to handle theallocation of surplus lines premium taxes." He said the NCSLExecutive Committee also offered its unanimous support as well onSaturday December 11th during the Fall Forum, held in Phoenix,Ariz.

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