End To SLIMPACT, NIMA Debate May Be In Sight As Compromise Eyed

The insurance industry is coalescing around a surplus-lines allocation formula proposed by Kentucky regulators as a means of breaking the impasse over implementation of the new federal surplus-lines reform and modernization law.

The Nonadmitted and Reinsurance Reform Act (NRRA) mandates that, as of July 21, the insured's home state is the only state with jurisdiction over multistate surplus-lines transactions and the only state that can require a tax be paid by the broker.

Two competing proposals have been developed to implement the law and create a system to share premium taxes among states.

The Surplus Lines Multistate Compliance Compact Commission (SLIMPACT) is one of two competing proposals being adopted by the states to implement NRRA. Officials of the National Conference of Insurance Legislators are coordinating SLIMPACT's adoption.

The other competing proposal is the Nonadmitted Insurance Multistate Agreement (NIMA), which is supported by the National Association of Insurance Commissioners (NAIC) and is being coordinated through the Florida Office of Insurance Regulation.

Most larger states, in terms of surplus-lines premiums, have opted not to join either compact, choosing instead to enact laws or publish regulations that don't require them to share revenues based on the risk in each state.

State insurance regulators and legislators will discuss later this month possible ways of breaking the impasse. It will be taken up at a government-liaison meeting Aug. 29 as part of the NAIC meeting in Philadelphia.

Five industry trade groups sent a letter to officials explaining that the Kentucky-regulator proposal would implement a tax-allocation formula that would distribute surplus-lines taxes based on exposures. However, brokers would not allocate most casualty risk, an approach similar to what has been in use.

Hank Halderman, co-chairman of the legislation committee for the National Association of Professional Surplus Lines Offices, says the Kentucky proposal allows brokers to continue to operate under a basically unchanged allocation system.

An industry lawyer involved in the issue cautions that while NCOIL and the NAIC are talking, no prompt solution to the issue is at hand.

Teen Drivers
The insurance industry is trying to build support for a Senate bill provision establishing minimum requirements for state graduated driver licensing (GDL).

In an effort to energize the public behind the bill, for example, Allstate conducted a survey and presented the results to members of the Senate showing that nearly six in 10 Americans favor the provision.

According to Allstate officials, the survey results show that support for a national law corresponds with low opinions about teen-driving skills, which received the lowest ranking among all ages surveyed. Eighty-one percent of respondents rate teenagers as “average” or “poor” drivers.

Melissa Shelk, vice president of federal affairs for the American Insurance Association, says, “Car accidents are the number-one killer of teenagers in the United States, and the provision, if enacted, would slow this dangerous trend and spare thousands of families the heartbreaking loss of a teenage child.”

The Safe Teen and Novice Driver Uniform Protection (STANDUP) Act is part of the Motor Vehicle and Highway Safety Improvement Act of 2011, which has recently been introduced in the Senate. The bill was introduced in the Senate Commerce Committee July 29.

Reactions to S&P Downgrade
The staff of the Senate Banking Committee is seeking information about Standard & Poor's decision to downgrade the U.S. credit rating, but no decision has as yet been made to hold hearings or take other action, according to a panel aide.

The committee staff decided to examine S&P's decision after Sen. Tim Johnson, D-S.D., panel chairman, called it “irresponsible” and said it may have profound spillover effects. “I am deeply disappointed in S&P's decision to enter into the game of political punditry,” he says.