Florida Office of Insurance Regulation: NIMA States Amend Exposure Allocation Methodology Following May 22 Kentucky Proposal Adoption
May 31, 2012
The Florida Office of Insurance Regulation (“OIR”) announced today, May 31, 2012, that those states participating in the Nonadmitted Insurance Multi-State Agreement (“NIMA”), have voted to amend the “Exposure Allocation Methodology” section of the agreement. Specifically, this section outlines the surplus lines tax premium allocation methodology consistent with the Non-Admitted and Reinsurance Reform Act (NRRA).
The updated NIMA is expected to be available shortly.
The OIR announcement is reprinted below.
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NIMA, Inc. Formally Amends Agreement
TALLAHASSEE, Fla. – On Tuesday, May 29th, NIMA participating states voted to officially amend the “Exposure Allocation Methodology” portion of the NIMA document, which outlines the surplus lines tax premium allocation methodology consistent with the Non-Admitted and Reinsurance Reform Act (NRRA). The Exposure Allocation Methodology of Annex A appears on pages 14-17 of the current agreement. The adoption of this allocation methodology is another milestone in creating a uniform national system envisioned by the Dodd-Frank Act.
This decision follows NIMA’s actions on May 22 to formally adopt the “Kentucky Proposal” and exclude the majority of casualty surplus lines premium from multi-state allocation. During the May 29th conference call, NIMA members formally voted to amend the NIMA document, and continued to express optimism that this change will encourage other states to consider joining NIMA, Inc. Under the amended agreement, the home state will continue to collect most surplus lines tax for casualty insurance unless a casualty policy is rated on a state or location-specific basis.
As soon as the amended NIMA document is finalized, it will be posted on the NIMA website.
About NIMA, Inc.
NIMA, Inc., is a non-profit corporation established by NIMA states that will provide a mechanism to report, collect, allocate and distribute surplus lines tax revenues consistent with the Non-Admitted and Reinsurance Reform Act (NRRA). The NRRA became part of the Dodd-Frank Wall Street Reform legislation passed in 2010 that allows only the home state to require premium tax payments for non-admitted insurance absent an agreement. Through the NIMA document, participating states will be able to collect premium taxes owed to their state when they are not the home state of the policy, thus protecting each participating state’s tax revenue on surplus lines policies.
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