NU Online News Service, Nov. 23, 3:51 p.m. EST
WASHINGTON–The National Council of Insurance Legislators' passed a revised version of its "SLIMPACT" proposal to implement the federal law modernizing the surplus lines industry, but it did so without support from the National Association of Insurance Commissioners.
The SLIMPACT proposal passed Sunday at the NCOIL annual meeting in Austin is acceptable to industry as an implementation vehicle for the law, the Nonadmitted and Reinsurance Reform Act (NRRA), according to officials of various trade groups representing underwriters and brokers.
But a competing NAIC document, the Nonadmitted Insurance Multi-State Agreement, or NIMA, is opposed by the industry.
As noted by Richard Bouhan, executive director of the National Association of Professional Surplus Lines Offices (NAPSLO), the SLIMPACT product would have a different allocation formula and different requirements for compliance.
If some states adopt the NCOIL model and others adopt the NAIC model, "we see the potential in this of the worst of all possible worlds," Mr. Bouhan said.
He noted that if there is an impasse and neither NCOIL nor the NAIC proposal is put into place by any state, "that would be better than having two competing proposals adopted by different states."
NRRA was incorporated into the Dodd-Frank financial services reform legislation enacted in August. States are required to act to implement the law by June 2011.
The implementation draft adopted by NCOIL was revised from the original SLIMPACT crafted by Rep. Robert Damron, D-Ky., outgoing NCOIL president.
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 nonadmitted transactions.
It authorizes the new governing commission to devise uniform payment methods and reporting requirements for insureds and surplus lines brokers, as well as 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, Rep. Damron said.
Rep. Damron cautioned in seeking support from the insurance legislators that the "implementation dates for Dodd-Frank are quickly approaching" and it was "incumbent on NCOIL to approve guidance that state legislatures can begin work on immediately."
He said that if states fail to act, "there's no doubt in my mind that industry interests will successfully return to Congress for further federal intervention."
The NAIC NIMA proposal would establish a clearinghouse that would allocate tax payments to the applicable participating states.
Industry trade groups contended in a letter that the NIMA proposal "continues, by contract," the burdensome system Congress sought to eliminate through the new law.
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