NAIC Meeting: Compromise Nears for
Surplus-Lines Premium Tax Allocation
WASHINGTON WATCH
By Arthur D. PostAl
the outline for a compromise over a uniform mechanism to imple- ment the surplus-lines and reinsur-ance-modernization law emerged during
the national association of insurance
Commissioner’s fall meeting on oct. 28.
the insurance industry and regulators seem to be nearing an agreement on
the use of the compromise surplus-lines
premium tax-allocation formula developed
by the state of Kentucky—the concept most
widely supported by the industry. they are
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wrestling with creating the most efficient
way to implement the nonadmitted and
reinsurance reform act (nrra), a part of
the 2010 Dodd-frank act.
the law, which became effective July
21, says the insured’s home state will be the
only one with jurisdiction over multistate
surplus-lines transactions, and the only one
that can require a tax be paid by the broker.
the devil has been the inability to get
the states to initialize a simple method for
disbursing premiums owed to states where
the actual risk exists.
even if state officials and the industry
agreed on the ground rules for a uniform
interstate compact, it would not deal with
the fact that several large states (California
and texas, for example) have either passed
legislation or adopted regulations that do
not permit the sharing of surplus-lines
taxes they collect as the state of domicile
with the state where the risk is located.
Meanwhile, states that have adopted the
nonadmitted insurance Multistate agree-
ment (niMa) have postponed implementa-
tion until Jan. 1 because the clearinghouse
that would collect and distribute premiums
on their behalf is not yet functional.
the niMa member states decided in a
closed-door meeting nov. 4 to take steps to
incorporate niMa as a means of limiting the
liability of states involved in the system.
niMa is the compact naiC officials are sup-
porting, and addresses only the collection and
allocation of surplus-lines taxes. the national
Conference of insurance legislators (nCoil)
supports the Surplus lines Multistate Compli-
ance Compact (SliMPaCt), which would do
more to bring uniformity to surplus lines regu-
lation in general, according to naPSlo.
P&C Industry Looks to Limit FSOC Authority
By Arthur D. PostAl
It iS unneCeSSary for property and casualty insurance companies to be overseen by the financial Stability
oversight Council (fSoC) as potentially
“systemically significant,” and Congress
should move to take away that authority, a
P&C trade group contends.
in a letter to Congress, officials of the
national association of Mutual insurance
Companies (naMiC) say passage of three
bills sought by state regulators that would
severely roll back federal authority to over-
see insurance companies should only be
the start of legislative action to curb federal
oversight of insurance companies.
naMiC President/Ceo Charles Chamness signed the letter and sent it in advance
of a nov. 16 hearing by the subcommittee
on “insurance oversight and legislative
Proposals.”
the three bills supported by state regulators would, respectively, revoke the authority of the federal insurance office and the
office of financial research within the treasury to subpoena information from insurance
companies; “explicitly and entirely” exclude
insurance companies, including mutual insurance holding companies, from the federal
Deposit insurance Corp.’s “orderly liquidation
authority” for troubled large non-banks; and
“preclude” the federal reserve from establishing higher prudential financial standards to troubled insurance companies it
would oversee as ordered by the fSoC.
Chamness says these three legislative
proposals to be considered “represent an
excellent first step toward bringing much-needed certainty to insurance markets,”
but stressed the prevention of new and
unnecessary regulation of insurers by the
fSoC. NU
