Breaking News – Louisiana Governor to Sign NIMA Today – Surplus Lines Legislation Signed by Governor
Jul 1, 2011
Louisiana Governor Bobby Jindal has signed House Bill 469, providing authority to Commissioner of Insurance Jim Donelon to enter into the Nonadmitted Insurance Multi-State Agreement (“NIMA”) developed by the National Association of Insurance Commissioners (“NAIC”). Commissioner Donelon will be signing NIMA today at 2 pm CDT. The Commissioner presently serves as the NAIC Vice-President for 2011. He additionally serves on the Executive Committee of the NAIC, and is chairman of its Surplus Lines Task Force.
NIMA will allow participating states to facilitate the collection, allocation and reporting of premium taxes for multi-state surplus lines insurance transactions pursuant to the Nonadmitted and Reinsurance Reform Act, part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “NRRA”). Florida, Mississippi and Hawaii have been reported as the lead states in forming the agreement. Sources have indicated that Connecticut has also joined NIMA, and other states are expected to join.
Louisiana HB 469 was signed by the Governor on June 29th and becomes Act No. 361. Highlights of HB 469 include the following provisions:
- Requires the Commissioner, on behalf of the state, to enter into NIMA or other cooperative compacts or agreements with other states regarding:
- The receipt, allocation, and disbursement of multi-state surplus lines premium taxes.
- A uniform method of allocating and reporting among surplus lines insurance risk classifications.
- The sharing of information among states relating to surplus lines insurance premium taxes.
- Such other purposes that are necessary and proper to maintain the state’s revenues from surplus lines insurance premium taxes and to comply with the NRRA.
- Requires that the compact or agreement be in writing and filed with the Commissioner prior to taking effect;
- Amends certain quarterly report requirement to apply to only single-state Louisiana risks;
- Requires brokers to remit 5% tax on gross premiums for single-state Louisiana risks;
- Requires tax on all premiums paid for multi-state policies when LA is the home state pursuant to the following computation:
- An amount equal to 5% on portion of gross premiums allocated to LA,
- Plus an amount equal to the portion of premiums allocated to other states based upon those states’ applicable tax rates and fees that participate in a reciprocal allocation procedure,
- Less the amount of gross premiums allocated to LA and returned to the insured,
- Less the net premium tax collected on risks allocable to states that do not participate in a reciprocal allocation with LA;
- Requires quarterly reports for multi-state risks when Louisiana is the home state of the insured;
- Section of the bill implementing certain NRRA provisions becomes effective when Commissioner enters into an agreement with other states, other sections effective upon Governor’s signature.
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