NCSL Drafts Resolution Supporting NCOIL's SLIMPACT Surplus Lines Plan

NU Online News Service, Dec. 1, 3:49 p.m. EST

WASHINGTON–The National Conference of Insurance Legislators (NCOIL) appears set to win the support of another state legislative trade group for its interstate compact designed to implement the surplus lines reform law passed by Congress earlier this year.

The National Conference of State Legislatures (NCSL) released a draft resolution it will vote on at its Dec. 10 meeting in Phoenix voicing strong support for "SLIMPACT Lite," as approved by NCOIL.

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

NCOIL and the National Association of Insurance Commissioners (NAIC) have proposed competing plans to implement the law.

The NCOIL version, often referred to as "SLIMPACT-Lite," is actually a "slimmed-down" version of the original SLIMPACT–a proposal for an interstate compact developed by 60 interested insurance professionals in 2007.

It would, among other things, 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 and 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.

Both the Council of Insurance Agents and Brokers and the American Insurance Association voiced qualified support for the NCSL's support of SLIMPACT.

Joel Wood, senior vice president for government affairs for the Council of Insurance Agents and Brokers, said, "We're grateful that NCSL, like NCOIL, agrees that the SLIMPACT approach is the best way to rationalize the nonadmitted market."

He said, "SLIMPACT may not be the path of least resistance or the lowest common denominator, but it is the solution that would set us down the path of full uniformity."

Pamela Young, AIA associate general counsel & director, surplus lines, said, "We are pleased to see NCSL throw its support behind NCOIL and SLIMPACT-Lite."

She added, "AIA is very much looking forward to being a part of the ensuing discussions to ensure that uniformity is achieved without unnecessarily burdening surplus lines carriers with inefficient or restrictive requirements."

The resolution drafted by the NCSL Financial Services and Interstate Commerce Committee states that "time be considered of the essence by all state insurance departments and legislatures to draft, introduce and seek passage of legislation to implement the mandatory provisions of the NRRA, in order to assure a timely implementation and smooth transition for all persons and licensees who will be materially impacted by the required statutory changes."