With an eye toward jump-starting national momentum for reform, a North Dakota committee became the country's first legislative body to approve a Surplus Lines Insurance Multistate Compliance Compact (SLIMPACT) this month, with Kentucky close behind.
SLIMPACT, which is supported by key organizations comprising state legislators—the National Conference of Insurance Legislators (NCOIL), the Council of State Governments (CSG) and the National Conference of State Legislatures (NCSL)—as the appropriate response to the Dodd-Frank Act's surplus lines provisions, also went before a Vermont committee and may soon be the subject of a legislative hearing in New Mexico.
The state legislator groups adopted resolutions in November and December supporting SLIMPACT.
The Dodd-Frank Wall Street Reform and Consumer Protection Act generally retains state regulation of insurance. It does, however, give federal financial regulators authority to prevent future market meltdowns by forcing prompt corrective action. In a pinch it allows federal takeover of failing institutions—including an insurer—deemed to constitute a potential systemic risk.
NCOIL President Rep. George Keiser—who chairs the North Dakota House Industry, Business & Labor Committee that unanimously approved H.B. 1123 on Monday, Feb. 7—stated that "North Dakota and Kentucky have taken the first steps toward approving compact legislation that appropriately responds to Dodd-Frank recommendations for surplus lines taxation and regulation."
He noted, "We need to work quickly to hit the 10-state tipping point to get the Compact Commission up and running. SLIMPACT—unlike any other surplus lines multistate proposal—enjoys widespread support from major legislative and industry associations that could push it across the finish line."
NCOIL Immediate Past President Rep. Robert Damron, who came in a close second by ushering H.B. 167 through the Kentucky House Banking and Insurance Committee in a unanimous vote on Feb. 10, said, "It is incumbent on the states to work together on SLIMPACT to demonstrate to Congress and the new Federal Insurance Office that we can enact uniform national reform."
"Our success in gaining widespread adoption of SLIMPACT, while beneficial from a state revenue perspective, should also help ward off future federal intervention in state insurance markets," he said.
SLIMPACT is in the queue in several states. The Vermont Senate Finance Committee—chaired by NCOIL leader Sen. Ann Cummings—held a hearing on SLIMPACT. NCOIL President-Elect Sen. Carroll Leavell's New Mexico SLIMPACT bill is scheduled to go before the Senate Corporations and Transportation Committee this month.
NCOIL said Sens. Vi Simpson and Travis Holdman have introduced SLIMPACT in Indiana, and NCOIL Past President Rep. Brian Kennedy and Sens. Dave Bates and William Walaska, along with numerous cosponsors, have introduced companion legislation in Rhode Island.
NCSL Committee Chair Sen. Delores Kelley also introduced SLIMPACT in Maryland, and NCOIL leaders have indicated they are developing legislation in Alabama, Connecticut, New York, Tennessee and Texas.
Rep. Keiser said that once operational, SLIMPACT "will ensure that member states receive their fair share of surplus lines premium tax revenue, while addressing any state solvency concerns through uniform eligibility standards developed by the commission."
NCOIL said its State-Federal Relations Committee will review state SLIMPACT activity and other efforts to comply with the Dodd-Frank Act—including a joint NCOIL, NCSL and CSG letter to Congress urging an extension of the Dodd-Frank Act's surplus lines provisions—when it convenes on Friday, March 4, during the upcoming NCOIL Spring Meeting March 4-6 in Washington, D.C.
More information is available at www.ncoil.org.
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