§5050. Findings

Link to law: http://legislature.vermont.gov/statutes/section/08/138A/05050
Published: 2015

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Title

08

:
Banking and Insurance






Chapter

138A

:
SURPLUS LINES INSURANCE MULTI-STATE COMPLIANCE COMPACT











 

§

5050. Findings

The General

Assembly makes the following findings of fact:

(1) The

Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub.L. 111-203, was

signed into law on July 21, 2010. Title V, Subtitle B of that act is known as

the Non-Admitted and Reinsurance Reform Act of 2010 (NRRA). NRRA states that:

(A) the

placement of non-admitted insurance shall be subject to the statutory and

regulatory requirements solely of the insured's home state; and

(B) any law,

regulation, provision, or action of any state that applies or purports to apply

to non-admitted insurance sold to, solicited by, or negotiated with an insured

whose home state is another state shall be preempted with respect to such

application; except that any state law, rule, or regulation that restricts the

placement of workers' compensation insurance or excess insurance for

self-funded workers' compensation plans with a non-admitted insurer shall not

be preempted.

(2) In

compliance with NRRA, no state other than the home state of an insured may

require any premium tax payment for non-admitted insurance; and no state other

than an insured's home state may require a surplus lines broker to be licensed

in order to sell, solicit, or negotiate non-admitted insurance with respect to

such insured.

(3) NRRA intends

that the states may enter into a compact or otherwise establish procedures to

allocate among the states the premium taxes paid to an insured's home state;

and that each state adopt nationwide uniform requirements, forms, and

procedures, such as an interstate compact, that provides for the reporting,

payment, collection, and allocation of premium taxes for non-admitted

insurance.

(4) After the

expiration of the two-year period beginning on the date of the enactment of NRRA,

a state may not collect any fees relating to licensing of an individual or

entity as a surplus lines licensee in the state unless the state has in effect

at such time laws or regulations that provide for participation by the state in

the national insurance producer database of the National Association of

Insurance Commissioners (NAIC), or any other equivalent uniform national

database, for the licensure of surplus lines licensees and the renewal of such

licenses.

(5) A need

exists for a system of regulation that will provide for surplus lines insurance

to be placed with reputable and financially sound non-admitted insurers, and

that will permit orderly access to surplus lines insurance in this State and

encourage insurers to make new and innovative types of insurance available to

consumers in this State.

(6) Protecting

the revenue of this State and other compacting states may be accomplished by

facilitating the payment and collection of premium tax on non-admitted

insurance and providing for allocation of premium tax for non-admitted

insurance of multi-state risks among the states in accordance with uniform

allocation formulas.

(7) The

efficiency of the surplus lines market may be improved by eliminating

duplicative and inconsistent tax and regulatory requirements among the states,

and by promoting and protecting the interests of surplus lines licensees who

assist such insureds and non-admitted insurers, thereby ensuring the continued

availability of non-admitted insurance to consumers.

(8) Regulatory

compliance with respect to non-admitted insurance placements may be streamlined

by providing for exclusive single-state regulatory compliance for non-admitted

insurance of multi-state risks, thereby providing certainty regarding such

compliance to all persons who have an interest in such transactions, including

insureds, regulators, surplus lines licensees, other insurance producers, and

surplus lines insurers.

(9) Coordination

of regulatory resources and expertise between state insurance departments and

other state agencies, as well as state surplus lines stamping offices, with

respect to non-admitted insurance will be improved under the surplus lines

insurance multi-state compliance compact.

(10) By July 21,

2011, if Vermont does not enter into a compact or other reciprocal agreement

with other states for the purpose of collecting, allocating, and disbursing

premium taxes and fees attributable to multi-state risks, the State could lose

up to 20 percent of its surplus lines premium tax collected annually. In fiscal

year 2010, Vermont's surplus lines premium tax was $938,636.54. A revenue loss

of 20 percent would be $187,727.31. (Added 2011, No. 49, § 1, eff. May 26,

2011.)
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