HOUSTON–The Nonadmitted Insurance Multistate Agreement is nowoffering states an associate membership at no cost for one year,banking on the prospect that states will see that they areleaving money on the table, and join up.

NIMA, a surplus-lines revenue-sharing agreement, iscurrently supported by six states and the National Association ofInsurance Commissioners.

States can contact NIMA states about using theclearinghouse services for a trial period to allow for thereporting of single and multistate policy information withoutsharing tax revenue.

They will have access to the filing platform at no cost as theysee how much premium they can tax, according to Merle Scheiber,South Dakota insurance director and NIMA chair.

Scheiber unveiled his pitch at the closed insurancecommissioners' roundtable meeting in Houston at the NAIC SpringNational meeting and later in an interview.

"Over 20 states contacted us, plus four Midwestern-zone states,"says Scheiber, who adds that insurance regulators fromother states were really enthused by the presentation once they sawwhat was possible.

The data will show the entire premium a state could have taxed,and will be accurate, which is key to providing more premium tax,he said.

The software platform has caught $247 million in premiums sinceabout 2000, with $13 million in saved in the last nine months NIMAhas been operation, according to Scheiber's presentation.

"We need to show them the money," the insurance director said,regarding the other states' hesitancy.

Florida Insurance Commissioner and NIMA Secretary, KevinMcCarty, says NIMA is "a proven successful and beneficialtax-sharing arrangement for participating member states. The newsssociate membership is an advantageous concept for those nonmemberstates who would like reliable statistical information to gauge thepotential financial benefits of joining NIMA without a long-termcommitment."

"There's money being left on the table," says Scheiber'sinsurance department deputy, attorney Joshua Andersen.

Andersen notes all six states have banked premium taxon the positive side of the ledger, and as of April 1,NIMA has collected $6 million in reported premium.

NIMA has $266 million in premium reported to date and$11.7 million in taxes reported to date, for the threequarters it has been operational.

"We don't think states are going to lose as much as they think,"Scheiber said.

Some have suspected Florida is getting the lion's share of thepremiums to tax.

Since Jan. 1, 2012 six states (Alaska, Connecticut,Hawaii, Mississippi, Nebraska and Nevada) have withdrawn from NIMA,leaving Florida, Louisiana, Puerto Rico, South Dakota, Utah andWyoming as the only jurisdictions to have adopted auniform system to implement the premium-tax-sharing component ofthe Nonadmitted and Reinsurance Reform Act, adopted as part of tehDodd-Frank Act.

NIMA began operation July 1, 2012. It is being run by theFlorida Surplus Lines Office. Brokers are now able to submit datato the clearinghouse via the Surplus Lines Information Portal(SLIP).

SLIP utilizes the Surplus Lines Automation Suite (SLAS) platformto collect policy data and calculate surplus-lines taxes and feeson behalf of the NIMA-participating states. It is used by about 10states and processes more than one-third of the nation'ssurplus lines premium, according to Scheiber's presentation.He expects more to join on.

Additionally, NIMA states can review and regulate policyinformation submitted by brokers in real time using the RegulatoryAdministration Platform. This provides them with up-to-date,transaction-level information for multistate surplus-lines coveragewritten in their state.

Scheiber said he does not believe that the currently predominanthome-state tax allocation approach other states are using fulfillsthe spirit of the NRRA statute under the Dodd-Frank Act.

"It's not uniformity what we have now," Scheiber said. Groupsthat now support home state allocation, absent the nationalclearinghouse that was contemplated before Dodd-Frank was enactedas it is today, backed their approach.

"The spirit of the law is that there should be one set of rulesgoverning access to a multistate placement of a surplus linesproduct. In 46 jurisdictions, that's what we now have," said JoelWood with the Council of Insurance Agents & Brokers (CIAB).CIAB members annually place more than 80 percent of all U.S.insurance products and services protecting industry, business,government and others, according to Congressional testimony.

CIAB has been critical of NIMA's formula because it says itmakes it more difficult and costly to comply rather thanstreamlining the whole tax payment process. The statute allowsstates to form a compact if they wish to share premium taxes ormerely allow only the home state to impose taxes on a nonadmittedinsurance transaction.

Brady Kelley, executive director for the National Association ofProfessional Surplus Lines Offices says the association'smembers continue to believe the cost of tax sharing will far exceedthe reallocation of surplus lines tax dollars among any statesparticipating in a tax sharing arrangement.

"When you break down the relatively low percentage of surpluslines premium on multistate risks, and further break down theproportion of multistate premium allocable outside the insured'shome state, the resulting tax allocations become relativelyimmaterial," he says.

"In contrast, the home-state tax approach is working in 46states representing more than 80 percent of nationwide premium,creating significant efficiencies and dramatically reducingmultistate tax filing and tax allocation issues for the surpluslines industry," Kelley said, who is a former CFO for the NAIC.

There are also nine states that have signed up for the SurplusLines Multistate Compliance Compact (SLIMPACT), but Scheiberdoesn't think it will get to 10.