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Title

08

:
Banking and Insurance






Chapter

138A

:
SURPLUS LINES INSURANCE MULTI-STATE COMPLIANCE COMPACT











 

§

5055. Authority to establish mandatory rules

The Commission

shall adopt mandatory rules establishing:

(1) allocation

formulas for each type of non-admitted insurance coverage, which allocation

formulas must be used by each compacting state and contracting state in

acquiring premium tax and clearinghouse transaction data from surplus lines

licensees and insureds for reporting to the clearinghouse created by the

Compact Commission. Such allocation formulas will be established with input

from surplus lines licensees and be based upon readily available data with

simplicity and uniformity for the surplus line licensee as a material

consideration.

(2) Uniform

clearinghouse transaction data reporting requirements for all information

reported to the clearinghouse.

(3) Methods by

which compacting states and contracting states require surplus lines licensees

and insureds to pay premium tax and to report clearinghouse transaction data to

the clearinghouse, including processing clearinghouse transaction data through

state stamping and service offices, state insurance departments, or other state

designated agencies or entities.

(4)(A) That

non-admitted insurance of multi-state risks shall be subject to all of the

regulatory compliance requirements of the home state exclusively. Home state

regulatory compliance requirements applicable to surplus lines insurance shall

include:

(i) persons

required to be licensed to sell, solicit, or negotiate surplus lines insurance;

(ii) insurer

eligibility requirements or other approved non-admitted insurer requirements;

(iii) diligent

search; and

(iv) state

transaction documentation and clearinghouse transaction data regarding the

payment of premium tax as set forth in this Compact and rules to be adopted by

the Commission.

(B) Home state

regulatory compliance requirements applicable to independently procured

insurance placements shall include providing state transaction documentation

and clearinghouse transaction data regarding the payment of premium tax as set

forth in this Compact and rules adopted by the Commission.

(5) That each

compacting state and contracting state may charge its own rate of taxation on

the premium allocated to such state based on the applicable allocation formula

provided that the state establishes one single rate of taxation applicable to

all non-admitted insurance transactions and no other tax, fee assessment, or

other charge by any governmental or quasi-governmental agency be permitted.

Notwithstanding the foregoing, stamping office fees may be charged as a

separate, additional cost unless such fees are incorporated into a state's

single rate of taxation.

(6) That any

change in the rate of taxation by any compacting state or contracting state be

restricted to changes made prospectively on not less than 90 days' advance

notice to the Compact Commission.

(7) That each

compacting state and contracting state shall require premium tax payments

either annually, semiannually, or quarterly using one or more of the following

dates only: March 1, June 1, September 1, and December 1.

(8) That each

compacting state and contracting state prohibit any other state agency or

political subdivision from requiring surplus lines licensees to provide

clearinghouse transaction data and state transaction documentation other than to

the insurance department or tax officials of the home state or one single

designated agent thereof.

(9) The

obligation of the home state by itself, through a designated agent, surplus

lines stamping or service office, to collect clearinghouse transaction data

from surplus line licensees, and from insureds for independently procured

insurance, where applicable, for reporting to the clearinghouse.

(10) A method

for the clearinghouse to periodically report to compacting states, contracting

states, surplus lines licensees and insureds who independently procure

insurance, all premium taxes owed to each of the compacting states and

contracting states, the dates upon which payment of such premium taxes are due

and a method to pay them through the clearinghouse.

(11) That each

surplus line licensee is required to be licensed only in the home state of each

insured for whom surplus lines insurance has been procured.

(12) That a

policy considered to be surplus lines insurance in the insured's home state

shall be considered surplus lines insurance in all compacting states and

contracting states, and taxed as a surplus lines transaction in all states to

which a portion of the risk is allocated. Each compacting state and contracting

state shall require each surplus lines licensee to pay to every other

compacting state and contracting state premium taxes on each multi-state risk

through the clearinghouse at such tax rate charged on surplus lines

transactions in such other compacting states and contracting states on the portion

of the risk in each such compacting state and contracting state as determined

by the applicable uniform allocation formula adopted by the Commission. A

policy considered to be independently procured insurance in the insured's home

state shall be considered independently procured insurance in all compacting

states and contracting states. Each compacting state and contracting state

shall require the insured to pay every other compacting state and contracting

state the independently procured insurance premium tax on each multi-state risk

through the clearinghouse pursuant to the uniform allocation formula adopted by

the Commission.

(13) Uniform

foreign insurer eligibility requirements as authorized by NRRA.

(14) A uniform

policyholder notice.

(15) Uniform treatment

of purchasing group surplus lines insurance placements. (Added 2011, No. 49, §

1, eff. May 26, 2011.)