Indiana, Kansas, Georgia Join SLIMPACT

NU Online News Service, May 18, 3:46 p.m. EST

More than half of the states have passed bills implementing federal legislation reforming and modernizing regulation of the surplus lines and reinsurance industries.

The legislation has been enacted in 20 of those states. The latest states to fully comply are Kansas, Indiana and Georgia.

According to officials of the National Association of Professional Surplus Lines Offices (NAPSLO), 27 states have approved legislation implementing the law.

Awaiting signature is legislation implementing the federal law in seven other states: Alaska, Florida, Hawaii, Missouri, Maryland, Oklahoma, and Vermont.

However, legislation implementing the law is not uniform. For example, Kansas and Indiana adopted a Surplus Lines Insurance Multistate Compliance Compact (SLIMPACT) tax sharing agreement supported by the industry.

At the same time, Georgia approved legislation allowing the state to enter into a tax-sharing agreement such like SLIMPACT, but a less comprehensive system drafted by the National Association of Insurance Commissioners (NAIC), which is opposed by industry. http://www.propertycasualty360.com/2011/04/01/naic-tries-to-undercut-surplus-lines-reform

"We are pleased to see additional states adopting NRRA (Nonadmitted and Reinsurance Reform Act) compliance legislation," says NAPSLO Legislative Committee Co-Chair Hank Haldeman.

"With these approvals basically half of all jurisdictions have now passed compliance legislation and we think a vast majority of states will approve legislation by the NRRA effective date," he adds.

The Nonadmitted and Reinsurance Reform Act is a provision of the Dodd-Frank financial services reform law.

The NRRA mandates that beginning July 21, the insured's home state will be the only state with jurisdiction over surplus lines transactions and the only state that can require a tax be paid by the broker. As a result, states are working to bring their laws into compliance.

Of the 27 states whose legislatures have approved NRRA compliance legislation, six states did not include wording to authorize a compact. Nebraska's legislation only authorized the use of the Nonadmitted Insurance Multistate Agreement (NIMA), seven states authorized SLIMPACT-lite, and 13 states authorized a compact in general.