Reinsurance Focus

There are two competing proposals to implement the Dodd-Frank Act’s provisions relating to nonadmitted insurance, which are found in the Nonadmitted and Reinsurance Reform Act of 2010 (“NRRA”) (Title V, Subtitle B Part I of the Dodd-Frank Act).  One proposal, called the “Surplus Lines Insurance Multistate Compliance Compact” or SLIMPACT, was created by the National Conference of Insurance Legislators, and has been endorsed by the Council of State Governments (“CSG”) and the National Conference of State Legislatures (“NCSL”).  The other proposal, called the “Nonadmitted Insurance Multi-State Agreement” or NIMA, was created by the National Association of Insurance Commissioners (“NAIC”).  While the NAIC’s NIMA is basically limited to the allocation of nonadmitted insurance premium taxes, NCLOI’s SLIMPACT covers other issues relating to nonadmitted insurance as well as the allocation of premium taxes.

Since our posting of February 10, 2011, there are at least 21 States that have proposed surplus lines insurance legislation to conform to the NRRA.

Among the States that have introduced SLIMPACT or legislation authorizing the commissioner to enter into SLIMPACT:

• Indiana — SB 578 (passed by Senate on 2/22/2011)
• Kansas — SB 206 / SB 178
• Kentucky — HB 167
• Maryland — HB 911 / SB 694
• New Mexico — SB 250 (passed by Senate on 3/4/2011
• North Dakota — HB 1123 (passed by House on 2/14/2011)
• Rhode Island — HB 5110 / SB 88
• Tennessee — HB 966 / SB 1025
• Texas — HB 1535
• Vermont — HB 164 / S 36

Among the States that have introduced NIMA or reference NIMA:

• Florida — HB 1227 / SB 1816
• West Virginia — HB 2963 / SB 435

Among the States that have introduced both SLIMPACT and NIMA legislation:

• Connecticut — SB 50 / HB 6363 (SLIMPACT) / SB 975 (NIMA)

Among the States that have introduced surplus lines legislation authorizing the commissioner to enter into a compact or multistate agreement without specifying either SLIMPACT or NIMA:

• Arizona — HB 2112 (passed by House on 2/17/2011)
• California – AB 315
• Hawaii — HB 1052 / SB 1279 (HB 1052 passed by House 3/8/2011; SB 1279 passed by Senate on 3/8/2011)
• New Hampshire — HB 424
• Oklahoma — HB 2073 / SB 959 (SB 959 passed by Senate on 3/7/2011)
• South Dakota — HB 1030 (adopted and signed by the Governor on 2/17/2011
• Utah — HB 316 (adopted on 3/11/2011)
• Wyoming — HB 242 (adopted and signed by the Governor on 3/2/2011)

Among the States that have introduced surplus lines legislation, but do not address multistate tax compacts or agreements:

• California — SB 716
• Nebraska — LB 70

Meanwhile, CSG, NCSL and NCOIL sent a letter to Congress requesting a one year extension of the effective date of the NRAA, to allow states more time to adopt legislation to conform to the NRRA and prevent state loss of critical insurance premium tax dollars.

This post written by Karen Benson.