NAIC Surplus Lines Implementation Task Force Debate on Nonadmitted Insurance Multi-State Agreement To Continue November 16

 

The National Association of Insurance Commissioners (“NAIC”) Surplus Lines Implementation Task Force (“Task Force”) will review additional revisions to the proposed Nonadmitted Insurance Multi-State Agreement (“NIMA”) during a conference call at 2:30 p.m. (ET) on Tuesday, November 16, 2010.

The changes to be discussed are based on feedback from regulators and interested parties who participated ongoing Task Force meetings.  The result is a re-revised NIMA draft, which is available through the hyperlinks below and includes tracked changes.  The November 3 draft is also attached for comparative purposes.

The proposed revisions and other points of consideration discussed at the November 3 meeting are listed below:

• Should a definition of “clearinghouse” be inserted? (proposed by the State of Washington)
• Should a definition of “non-admitted insurer” be inserted? (proposed by Nevada and New York)
• Should a definition of “licensed” be inserted? (proposed by New York)
• Should a definition of “property and casualty insurance” be inserted? (proposed by New York)
• Should the definition of “admitted insurer” be changed? (proposed by Connecticut)
• Should a proposed definition of “home state” be accepted to account for situations in which a principal residence or principal place of business is located outside of the U.S.? (proposed by New York)
• Should New York’s proposed change to the sub-definition of “principal place of business” be accepted to account for the possibility that more than one state may be the “nerve center” of a corporation?
• Should New York’s proposed change to definition of “home state” be accepted to include a sub-definition of “group insurance?”
• Should the definition of “non-admitted insurance” be amended to change “state” to “home state” (proposed by Texas)
• Should a sub-definition of “agent of record” be inserted into definition of “surplus lines licensee” (proposed by Texas)
• Should the definitions of “surplus lines insurance” and “surplus lines insurer” be deleted in light of definitions of “non-admitted insurance” and “non-admitted insurer?”

Additional discussion on NIMA’s implementation, collaboration and allocation yielded the following topics of debate:

• Should NIMA include more detail about how decisions will be undertaken among the states?
• What types of computer software systems are acceptable? Should NIMA be changed to reflect a decision on this issue?
• Should New York’s suggestions on fees and taxation be accepted?
• Should language regarding “gifts or donations” be amended to permit them, but also explicitly state that independence shall not be compromised? (proposed by Nevada)
• Should paragraph 12 of NIMA be amended to provide explicitly that the stamping fee need not be included in the blended rate? (proposed by Texas)
• Should paragraph 13 (or paragraph 9) be amended to provide more detail about the method by which the “reasonable fee” shall be established?
• Should paragraph 13 be amended to provide participating NIMA states with the discretion to use stamping offices for processing, with the stamping offices then reporting data to a clearinghouse? (proposed by Texas)
• Are amendments to paragraph 18 necessary in regard to individual states’ laws or regulations relating to interest and penalties?

Other proposed changes and considerations include:

 

Part V – Dispute Resolution

• Should language about handling disputes and litigation in which the clearinghouse is a party be included?

 

Part VI – Participating States, Effective Date and Amendment

• Should NIMA be amended to provide greater specificity about the date the agreement will become effective, as well as the specific dates that additional states will be incorporated into the agreement and clearinghouse?

 

Annex A

• Should the Allocation table (Annex A) be kept as-is, or amended, as proposed by New York?

 

Annex B

• Should the definition of “tax entitlement year” be inserted into Annex B as suggested by Connecticut?
• Should the tax allocation formula be amended (proposed by Nevada and New York)?

To participate in the November 16 Task Force Teleconference, go to: https://services.choruscall.com/client/naic/registration/

 

Meeting materials:

• NIMA draft for 16 Nov 10 call (2).pdf
• NIMA draft for 3 Nov 10 call.pdf
• NIMA – list of issues for 10 Nov 10 call.doc
• 11-3 conf call agenda and comment ltrs.pdf
• NAIC NIMA_PCI_110910.pdf
• TX NIMA comments.pdf
• Draft of Nevada Comments on NIMA — November 2 2010 — Gennady Stolyarov II.pdf

 

 

Pursuant to the Non-admitted and Reinsurance Reform Act in Title V of H.R. 4173, the Dodd-Frank Act of 2010, the NAIC created the Task Force to develop and oversee implementation of state-based solutions addressing mandated surplus lines reform.  The executive-level group was formed during the NAIC’s 2010 Summer National Meeting.

 

 

Should you have any comments or questions, please contact Colodny Fass.