Industry Continues To Support NCOIL SL Approach Over NAIC Plan

The current NCOIL SLIMPACT is actually a "slimmed down" version of the original SLIMPACT–a proposal for an interstate compact developed by 60 interested insurance professionals in 2007. The NCOIL SLIMPACT model law, often referred to as "SLIMPACT-Lite," would, among other things, authorize a governing commission to establish allocation formulas to help states share premium tax dollars on non-admitted transactions.

It authorizes the new governing commission to 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.

The NAIC's NIMA proposal would establish a clearinghouse that would allocate surplus lines tax payments to applicable participating states. Louisiana Insurance Commissioner James J. Donelon, chair of the NAIC's Surplus Lines Implementation Task Force, described the plan as a "bare bones" approach.

It addresses the collection and allocation of premium taxes from the excess and surplus lines industry, but does not deal with the issue of uniformity of regulation that the industry is pushing for.

Pamela Young, associate general counsel and director for surplus lines for the American Insurance Association, signaled cautious optimism on the NCOIL approach. "We see positive aspects to SLIMPACT-Lite and would consider it an improvement over the original SLIMPACT proposal, particularly as it pertains to the establishment of uniform surplus lines insurer eligibility standards," she said.

"That said, SLIMPACT-Lite only sets up the authority for such standards, and we want to be cautious of onerous requirements or a pile on of all states in reaching uniformity. AIA will look forward to participating in any and all discussions on insurer eligibility and other aspects of this proposal, but we also need to study this resolution a little more since it moved so quickly to really appreciate its impact."

Joel Wood, senior vice president, government affairs, the Council of Insurance Agents & Brokers, said, "We think the NCOIL proposal is better than the approach that is being pursued by the NAIC."

He said, "Over and over again through the years, we have witnessed a 'lowest common denominator' approach by the states when it comes to any matters of uniformity."

He added, "If states agree merely to share premium tax revenue, without resolving the thorny issues of how to share it, an opportunity will be lost as corporate consumers and brokers will continue having to play referee among the jurisdictions.

"At least the NCOIL resolution attempts to move in the direction of consistent standards," Mr. Wood said.

The Property Casualty Insurers Association of America also supports the NCOIL approach.

"We are pleased that NCOIL advanced the new SLIMPACT-Lite model to address surplus lines reform," said David Kodama, PCI senior director of research and policy analysis.

"PCI is a longtime advocate of the NRRA. We will continue to advocate that states' responses to NRRA adhere to the full intent of the legislation, including the uniformity of requirements, forms and procedures applicable to non-admitted insurance business," Mr. Kodama said.

"We do not support the NAIC's 'minimalist' approach that only considers development of a tax allocation scheme for multistate risk placements," he said.