NU Online News Service, Dec. 8, 4:07 p.m. EST
The Council of State Governments' (CSG) executive committee is voicing support for a National Conference of Insurance Legislators' (NCOIL) interstate compact designed to implement the surplus lines reform law passed by Congress earlier this year.
The announcement comes a week after the National Conference of State Legislatures (NCSL) released a draft resolution in support of NCOIL's plan that NCSL will vote on at its Dec. 10 meeting in Phoenix.
The CSG panel's resolution endorsing the so-called Surplus Lines Insurance Multistate Compliance Compact, or SLIMPACT, was passed unanimously Monday at its national conference in Rhode Island.
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's current SLIMPACT plan is actually a trimmed-down version of the original SLIMPACT–a proposal for an interstate compact developed by 60 interested insurance professionals in 2007.
The 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 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.
Industry professionals have so far supported NCOIL's proposal over a competing plan from the National Association of Insurance Commissioners (NAIC) called NIMA, or Nonadmitted Insurance Multistate Agreement.
NIMA 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.
Both the National Association of Professional Surplus Lines Offices (NAPSLO) and NCOIL immediately lauded the CSG executive committee endorsement of SLIMPACT.
"We are pleased to see the Council of State Governments adopt SLIMPACT as a method to handle the allocation of surplus lines premium taxes," said Richard Bouhan, NAPSLO executive director.
"Over the next year all states will have two major issues in front of them in connection with the NRRA," he said.
First, he noted, states must bring their laws into compliance with the new federal law, and second, the NRRA encourages states to agree on a tax compact to handle allocation of taxes. SLIMPACT "will solve the second issue in a manner that allows the brokers to retain the efficiencies in premium tax remittance that Congress created in passing the NRRA," Mr. Bouhan said.
Rep. George Keiser, R-N.D., president of NCOIL, said, "CSG acted decisively to support SLIMPACT-Lite as the only appropriate mechanism to respond to Dodd-Frank, and we value the timely endorsement."
He added, "NCOIL legislators look forward to coordinating with CSG–which represents state executive, judicial and legislative branch officials–in our race to get something done before next July."
He also said, "With vast numbers of new faces entering state government in 2011–many for the first time–consensus guidance from leading national organizations will go a long way to assure passage of the effective surplus lines tax compact."
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