a sense for a time frame on
SLIMPACT and NIMA states coming to any agreement, noting that
the Council supports the allocation
formula known as the “Kentucky
compromise” that received prelimi-nary support from the SLIMPACT
states because it more closely represents how surplus-lines brokers
operated before NRRA became
effective in terms of allocation.
“We would welcome and support adoption of this formula by
the NIMA states, and we have
contacted regulators about our support,” Allen says.
She adds, “We will continue our
work to ensure that NRRA is implemented as Congress intended.”
niMa: “iMPoSSiBLe To
iMPLeMenT”
Both Halderman and Allen
agree that the allocation methodol-
ogy currently being used or pro-
posed for use by NIMA “is impos-
sible to implement in many cases.”
Allen adds that the Council
“does not support NIMA for two
reasons: It addresses only the col-
lection and allocation of taxes
and does nothing to promote
greater uniformity in other areas
of surplus-lines regulation; and
the allocation formula used by the
NIMA states does little to simplify
the allocation process.
“In fact,” Allen continues, “it
has made the process in some cases
more unwieldy because it would
require the allocation of casu-
alty lines, which is generally not
required under current regulatory
schemes.”
Interestingly, Halderman says
his own experiences, and that of
other NAPSLO members he deals
with, indicates that states are not
complaining now that they are
being short-changed—but they are
expressing concerns that they may
be short-changed in the future.
“By and large, the states are
coming to brokers [for the neces-
sary premiums data],” Halderman
says. “But at least one state has
indicated an intention to seek data
from insurers.”
NAPSLO, Halderman says, “is
working to clarify that it is the bro-
ker that is the proper source of that
information.”
Iowa Intends to Exam
Surplus-Lines Insurers
The Iowa Insurance Division has sent notices that it intends to conduct an examination of some surplus-lines
insurers.
The exam will reportedly focus on surplus-lines recordkeeping, reporting, supervision of its
producers and premium-tax payments to Iowa.
NAPSLO opposes any market-conduct examination of a non-admitted insurer because the broker is the regulated party, the broker
pays the taxes and the broker maintains the records.
Surplus-lines business is exported to the carrier through the spe-
cially licensed broker who is intended to be the regulated party, so a
market-conduct exam of the carrier would appear to be unnecessary.
The Iowa exams are also in conflict with the NAIC’s objective of
eliminating duplicative exams because surplus-lines insurers are
examined by their state of domicile.
yru r
nCoiL on SLiMPaCT
The compact issue essentially boils down to state regulators,
headed by the National Association
of Insurance Commissioners
(NAIC), supporting NIMA; and
NCOIL, supporting SLIMPACT.
The NAIC declined comment
on the issue, but Susan Nolan, a
spokesperson for NCOIL, says her
group supports SLIMPACT because
it is “the only existing surplus-lines
tax-collection and allocation pro-
posal to respond fully to the intent
of the NRRA and those who lobbied
for surplus-lines reform.”
She adds that NCOIL will con-
tinue to work with any and all states
that have not yet joined SLIMPACT,
as the organization looks to add a
10th state, and more, to the list of
those already supporting it.
(SLIMPACT can only begin
acting as a clearinghouse —i.e. having the legal authority to process
premiums between the participating
states—when 10 states, or states constituting 40 percent of the nation’s
surplus-lines premiums, join.)
Says Nolan: “We are attempting
to make them aware of the many
benefits that SLIMPACT offers,
including proper delegation of state
authority; accountability and trans-
parency in its voting and governing
structure and processes; a viable
allocation formula supported by the
industry that worked for reform; as
well as the consistency that NRRA
asked for, as evidenced in its uni-
form policyholders’ notice and
foreign-eligibility requirements.”
She says NCOIL is now final-
izing appointment of its four
members—one from each NAIC
zone—to serve on the SLIMPACT
Commission Legislative Committee.
“While NCOIL wants to work
toward one uniform approach,
and has invited the NAIC to join
SLIMPACT, NCOIL cannot sup-
port an approach that does not
have accountability and transparen-
cy, that allows decisions to be made
behind closed doors, that is subject
to change without due process, and
that has an allocation process that
has been described by the industry
as more burdensome than what is
in place now,” Nolan says.
The National Conference of
State Legislators also will choose
four members.
empire State on Top
6 MOS. PREMIUM (MILL) 6 MOS. ITEMS
STATE 2011 2010 CHG 2011 2010 CHG
AZ $172.6 $167.3 3.2% 31,629 30,922 2.3%
CA 1,983.3 $1,905.2 4.1% 228,482 209,545 9.0%
FL $2,208.9 $2,347.2 - 5.9% 460,453 525,121-12.3%
ID 26. 4 30.6 - 13.7% 6,978 6,675 4.5%
IL 492.4 503.4 - 2.2% 85,108 72,495 17.4%
MN 150.0 147.9 1.4% 17,806 16,340 9.0%
MS 163.6 179.0 - 8.6% 51,863 54,211 - 4.3%
NV 83.2 99.5 - 16.4% 13,827 13,296 4.0%
NY 2,522.4 1,356.9 85.9% 105,746 101,317 4.4%
OR 109.0 120.3 - 9.4% 18,653 19,371 - 3.7%
PA 387.9 386.0 0.5% 85,324 82,316 3.7%
TX 1,571.4 1,590.7 - 1.2% 415,926 417,130 -0.3%
UT 83.1 $76.2 9.1% 10641 9,612 10.7%
WA 247.4 245.6 0.7% 44,133 41,239 7.0%
TOTAL $10,201.6 $9,155.8 11.4% 1,576,569 1,599,590 - 1.4%
NY data is gross premium; 2011 net premium
= $1,588.1 million. Items include certain nonpremium filings in IL, NV, & TX.
FL data includes premium & items for independently procured insurance.
TX data is net premium, excluding $385.0 million in “other state” & $77.0 million in “tax
exempt” premium.
Source: Surplus Lines Stamping Office of Texas
Surplus Lines Stamping / Service Offices
First Half 2011 / 2010 Comparative Statistics
New York had the largest volume of surplus-lines premiums for the first half of 2011—
overtaking Florida, which led in both 2010 and 2009.
