Insurance Licensing: Surplus Lines - Multi-state Risk Changes - Supportive Insurance Services

The Nonadmitted and Reinsurance Reform Act (NRRA), adopted under the Dodd-Frank financial-services law, goes into effect on July 21, 2011.

Surplus Lines Brokers with multi-state risks need to be prepared for the changes as outlined in the federal law. Here are some suggestions:

1. Identify the home state of all of your insureds.

2. Document and use due diligence regarding your home state decision making process.

3. Know what the state tax rules are regarding premium tax. There could be multiple tax allocations as some states may adopt NIMA (a contract
with other states/clearing house) and some may adopt SLIMPACT-Lite (an interstate compact).

4. Make sure the companies providing the coverage to your insureds are on the approved LASLI list.

5. Understand that some states have passed new legislation that could be in conflict with the federal law. The federal law has precedence over
the state law.

6. Review the filing requirements for the tax allocation report. NRRA establishes an annual tax allocation report. Some states have passed
legislation requiring a quarterly tax allocation report.

7. Review the NRRA definition for Exempt Commercial Purchaser (ECP), Qualified Risk Manager (QRM). Not all states have adopted the NRRA
definition. States cannot have a more restrictive definition but may have a more liberal definition. States that did not include an ECP/QRM
definition in their legislative changes will follow the NRRA definition.

The insurance licensing information provided on this blog is not legal advice and the reader is advised to consult an attorney regarding application of this information in any particular situation.

This information is brought to you by Supportive Insurance Services… Licensing Experts Saving You Time and Money!

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