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Member, Beacon International Group, Ltd.
FRANKFORT, Ky.—Kentucky on March 16 became the first state to enact a surplus lines insurance multistate compliance compact, or SLIMPACT.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, only the home state of a surplus lines insurance policyholder can collect premium taxes on that policy. Among other things, the law calls on states to work out a way to allocate taxes among themselves and promote uniformity in surplus lines regulation.
SLIMPACT would authorize a governing commission to establish allocation formulas to help states share premium tax dollars, uniform payment methods and reporting requirements for policyholders and surplus lines brokers, national eligibility standards, and a single policyholder notice to replace various forms used across the country.
The surplus lines provisions of Dodd-Frank take effect on July 21. Ohio enacted SLIMPACT legislation March 18, and legislation has passed both houses in New Mexico.
Ten states must enact legislation establishing a compact before the commission can be created.
State legislatures' slowness in considering how to implement surplus lines provisions of the federal financial services regulatory reform law dim the chances that a comprehensive approach to surplus lines will be in place by the time the law takes effect, observers say.