Insurance regulators are considering changes that would align competing clearinghouse arrangements to distribute surplus lines premium taxes, which could end a sometimes contentious debate over which arrangement would best serve policyholders and brokers.

The proposal would revise the Nonadmitted Insurance Multi-State Agreement to allow the clearinghouse arrangement to work in the same way as the Surplus Lines Insurance Multi-State Compliance Compact to collect and allocate the surplus lines premium taxes.

Louisiana Insurance Commissioner James J. Donelon, who chairs the National Assn. of Insurance Commissioners’ Surplus Lines Implementation Task Force, said Friday that “we are examining that possibility as we speak. We have been approached by the industry as to the extent that we can make that happen.”

Brokers made concerns known

Mr. Donelon said surplus lines brokers, who are responsible for collecting the tax, have made their concerns known regarding NIMA. Brokers’ expressed the view is that having NIMA operate similarly to SLIMPACT “will greatly enhance the efficiency” of tax collections, he said.

The clearinghouses are being developed in response to the Nonadmitted and Reinsurance Reform Act, which became part of the Dodd-Frank Wall St. Reform and Consumer Protection Act and took effect July 21. The law stipulates, among other things, that only the home state of a policyholder can collect the premium taxes. It requires state legislatures to approve a method to allocate the taxes.

NIMA, SLIMPACT evolution

NIMA and SLIMPACT have evolved along different paths.

The National Assn. of Professional Surplus Lines Offices Ltd. backs SLIMPACT and has long argued that it is a more efficient, simpler and less costly method of allocating surplus lines premium taxes.

NIMA, developed by the NAIC, does not contain the same uniformity features as SLIMPACT and, in its original version, requires the cooperation of all 50 state insurance regulators to begin operating.

Nine states have approved the SLIMPACT approach, which needs 10 states to begin operations. A dozen states have signed on to the NIMA arrangement.

“We are studying the possibility of coordinating our system with SLIMPACT if and when it becomes operational,” Mr. Donelon said. “That would allow for similar, if not identical allocation and collection systems.”