National Association of Insurance Commissioners Surplus Lines Implementation Task Force Subgroup Discusses Clearinghouse Plan of Operation
Feb 3, 2011
On February 1, 2011, the National Association of Insurance Commissioners (“NAIC”) Surplus Lines Implementation Task Force Clearinghouse Plan of Operation Subgroup (“Subgroup”) held its first meeting to begin discussing the creation of a plan of operations for the Clearinghouse that would be required by the proposed Nonadmitted Insurance Multi-State Agreement (“NIMA”). The purpose of the Clearinghouse is to facilitate the collection and distribution of surplus lines taxes for those states that may adopt NIMA.
Once operational, the Clearinghouse will be responsible for the receipt, allocation and dispersion of multi-state premium taxes, explained Linda S. Hall, Subgroup Chairman.
Regulatory representatives from nine states participated in the discussion, including Florida, Delaware, Indiana, Illinois, Nevada, New York, South Dakota, Texas and Utah. The meeting focused on governance, licensing and account identification, recordkeeping, data collection, accounting and other tax assessment and allocation issues.
“The timeline is very short,” Chairman Hall said during the teleconference. “We have to have this up and running probably by June.”
Chairman Hall sought volunteers from the different states to come up with ideas and suggestions for each of the aforementioned nine topics relating to the operation of a Clearinghouse.
Discussion was brief, with some representatives from participating states suggesting the addition of subtopics, such as confidentiality.
Some discussion focused on the necessity of automatic updates on changes in state tax rates and tax laws to keep information in the Clearinghouse current.
“(Automatic updates)will be another issue with software,” Chairman Hall said. “We need to make sure we have a way to have that data immediately changed.”
One representative from a participating state noted that a section of NIMA already requires states to give the Clearinghouse at least 90 days notice of any changes to the state tax rate or statewide assessment.
Other discussion at the meeting focused on accounting issues, reporting requirements and start-up costs for the Clearinghouse. Participants agreed to review and propose revisions to the language on the various topics and meet again on February 10.
“We have a pretty monumental task,” Chairman Hall concluded.
The Council of Insurance Agents & Brokers submitted a letter to the Subgroup outlining a wide range of concerns, including queries about who will exercise oversight over the Clearinghouse and what type of security will be in place to protect sensitive personal information collected. The questions were not addressed during the meeting. The letter is attached for review, along with the meeting materials, which include procedures manuals for the International Fuel Tax Agreement, Florida Surplus Lines Service Office Independently Procured Coverage and the Surplus Lines Association of Illinois.
With no further business before the Subgroup, the meeting was adjourned.
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