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Member, Beacon International Group, Ltd.
Clearinghouse groups set up to collect and allocate surplus lines premium taxes among the states have named chairmen of their organizations and are moving forward with competing plans.
Mississippi Commissioner of Insurance Mike Chaney was chosen this week as chairman of the governing committee of the Nonadmitted Insurance Multi-State Agreement. NIMA is the arrangement backed by the National Assn. of Insurance Commissioners.
In August, Kentucky Insurance Commissioner Sharon Clark was tapped to chair the commission overseeing the Surplus Lines Insurance Multi-State Compliance Compact. SLIMPACT has the support of the National Assn. of Professional Surplus Lines Offices Ltd.
Many states undecided
Under the U.S. Nonadmitted and Reinsurance Reform Act, which took effect July 21, only the home state of a policyholder can collect premium taxes on surplus lines coverage, and state legislatures are required to approve a method to allocate them.
While most states have passed laws allowing for creation of a system to collect and allocate the taxes, many have yet to stipulate whether they will do so through the NIMA or SLIMPACT clearinghouses.
Insurance brokers, meanwhile, are left waiting on guidance as to their responsibilities in collecting and paying the taxes, and insurance buyers are uncertain as to whether the changes could mean new costs for them.
Legislation aimed at simplifying the collection and allocation of surplus lines premium taxes so far has created more uncertainty than guidance for brokers and raises questions about potential new costs for insurance buyers.