WASHINGTON—The Council of Insurance Agents & Brokers on Friday said states should tax and retain 100% of surplus lines premium after reports that three states intend to withdraw from the Nonadmitted Insurance Multi-State Agreement.

Alaska, Connecticut and Mississippi reportedly indicated their intent to withdraw from NIMA, the Washington-based council said in a statement.

The council's board of directors reaffirmed its stance on the taxation issues raised by the implementation of the Nonadmitted and Reinsurance Reform Act provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act legislation, according to a statement.

NIMA, which is supported by the National Assn. of Insurance Commissioners and goes into effect July 1, was developed to respond to the law, which stipulates, among other things, that only the home state of a policyholder can collect premium taxes.

“The misinterpretation of the new law is causing mass marketplace confusion and we are increasingly concerned about the unintended results that are exacerbating the existing compliance burdens and challenges,” said Ken A. Crerar, president and CEO of the council, in the statement.

“Ideally, there would be one clearinghouse, one agreement among all the states, and everything could flow through it,” he said. “But given the frustrations the NRRA implementation has been (seen) at the state level, we now think it's better for states to take 100% of the tax for their home-state insureds.”

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In addition to the intended withdrawals of Alaska, Connecticut and Mississippi, which would reduce the number of participating states to eight, the Nebraska Department of Insurance withdrew from NIMA in January because of administrative difficulties.

Alaska and Connecticut confirmed reports of their intent to withdraw from the clearinghouse arrangement, citing operational and technological challenges. Connecticut, which joined NIMA in June 2011, signed a withdrawal from NIMA effective June 9, said Debra Korta, legislative program manager for the Connecticut Department of Insurance in Hartford, in an email.

“Commissioner (Thomas) Leonardi has concerns about NIMA's viability and length of time it has taken to become operational,” Ms. Korta said. “NIMA is not yet operational, so this will have no effect on Connecticut filings.”

Alaska, which signed on to NIMA in July 2011, gave notice of its withdrawal from the clearinghouse on April 25 to be effective 60 days from the date of notice, said Linda Hall, director of the Alaska Division of Insurance in Juneau, in an email.

Alaska withdrew from NIMA “due to the inability of the clearinghouse to provide the technology platform that complies with Alaska statutory requirements,” Ms. Hall said.

Mississippi's department of insurance did not return calls for comment.