NCSL Vote Solidifies Support For NCOIL SLIMPACT Plan

NU Online News Service, Dec. 13, 4:01 p.m. EST

WASHINGTON–The National Conference of State Legislatures (NCSL) voted unanimously to pass a resolution supporting The National Conference of Insurance Legislators' (NCOIL) interstate compact plan designed to implement the surplus lines reform law passed by Congress earlier this year.

NCSL drafted the resolution supporting the NCOIL plan earlier this month, and voted to approve it Friday.

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 framework, called SLIMPACT, 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.

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.

While voting to support the NCOIL plan, NCSL also amended its resolution to include a provision asking Congress to consider providing state legislatures with a one-year extension until July 2012, since State legislators only were provided a short window to enact the Slimpact Lite legislation.

By statute, states have until June 11, 2011 to pass legislation implementing the law.

Last week, the Council of State Governments' executive committee also voiced support for SLIMPACT-Lite.

The NCSL resolution and the Slimpact Lite act will now be distributed to state legislators around the country in preparation for the 2011 legislative session, according to Rhode Island State Representative Brian Patrick Kennedy.

Mr. Kennedy, a past president of NCOIL and the immediate past chairman of the NCSL Communications, Financial Services and Interstate Commerce Committee, was the sponsor of the NCSL resolution.

In seeking passage of the resolution, Mr. Kennedy argued, "States must act now to ensure that a viable system is in place to meet the dictates of the Dodd-Frank legislation, mandated by Congress as part of the reforms contained in the Nonadmitted and Reinsurance Reform (NRRA) and to have a practical method to handle the allocation of surplus lines premium taxes." He said the NCSL Executive Committee also offered its unanimous support as well on Saturday December 11th during the Fall Forum, held in Phoenix, Ariz.