NU Online News Service, Nov. 17, 3:58 p.m. EST
WASHINGTON–State insurance legislators are winning support for a compromise model law designed to implement the federal surplus lines modernization act.
Members of the National Council of Insurance Legislators (NCOIL) will consider their compromise proposal, dubbed "SLIMPACT," at their annual meeting in Austin, Texas this weekend.
The proposal is viewed by industry members as a slimmed-down implementation vehicle for the new federal law, and a viable alternative to a more restrictive proposal adopted Nov. 3 by a National Association of Insurance Commissioners (NAIC) task force.
Insurance industry trade groups are unanimously opposed to the NAIC model.
In a statement, Nicole Allen, senior vice president, strategic resources, for the Council of Insurance Agents & Brokers, welcomed the NCOIL proposal, noting that it would address issues associated with the collection and allocation of surplus lines taxes.
She said the NCOIL proposal "will also promote the development and adoption of uniform surplus lines regulatory standards in compacting states, including eligibility standards."
By contrast, in a letter sent to the NAIC Monday, six trade groups contended that the NAIC proposed law "continues, by contract," the burdensome system that Congress sought to eliminate through the new law.
The law, the Non-admitted and Reinsurance Reform Act, was incorporated into the Dodd-Frank financial services reform legislation. States are required to act to implement the law by June 2011.
The compromise NCOIL model law, among other things, would authorize a governing commission to establish allocation formulas to help states share premium tax dollars on non-admitted transactions.
The governing commission would devise uniform payment methods and reporting requirements for insureds and surplus lines brokers, national eligibility standards.
The new panel would also have the authority to devise a single policyholder notice to replace the various forms used across the country, according to NCOIL President Rep. Robert Damron, D-Ky.
To streamline taxation, it would require a state to create a single tax rate for surplus lines insurance, allow states to charge their own rates, and set uniform payment due dates, among other things.
SLIMPACT stands for Surplus Lines Insurance Multi-State Compliance Compact.
Mr. Damron said the SLIMPACT proposal "could represent the breakthrough that stakeholders have been searching for since the President signed Dodd-Frank in July."
He said its structure is familiar to legislators in the 36 jurisdictions that have already approved an Interstate Insurance Product Regulation Compact.
Mr. Damron added that the powers the governing body of SLIMPACT will have "have been limited from the original draft to focus on those issues that are addressed by Dodd-Frank or are otherwise most needed to streamline surplus lines taxation and regulation."
Mr. Damron added, "We look forward to airing the proposal at the summit on Friday and believe that the state leaders in attendance will be able to advance a consensus proposal that state legislatures will welcome next year."
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