NAIC Surplus Lines Clearinghouse Plan of Operation Subgroup Approves Draft Clearinghouse Plan Today, June 3, 2011
Jun 3, 2011
After months of discussion, the National Association of Insurance Commissioners (“NAIC”) Surplus Lines Implementation Task Force Clearinghouse Plan of Operation Subgroup (“Subgroup”) voted via teleconference today, June 3, 2011, to approve a draft Plan of Operation (“Plan”) for the NAIC’s Nonadmitted Insurance Multi-State Agreement (NIMA) proposed Clearinghouse, which will be responsible for the receipt, allocation and dispersion of multi-state surplus lines premium taxes.
Regulatory representatives from Alaska, Connecticut, Delaware, Florida, Indiana, Illinois, Nevada, Texas and Utah participated in today’s meeting.
The Subgroup reviewed the draft Plan section by section, while considering previously submitted comments from the states of Texas, Connecticut, Nevada and New York, as well as comments made during the meeting.
Revisions made at today’s meeting include:
- The elimination of the Plan’s “Governance” section. Subgroup members voted unanimously to eliminate this section after much discussion on its relevance to Clearinghouse operations. Several Subgroup members expressed concern that inclusion of such a management structure did not belong in the Plan.
- The elimination of language requiring the Clearinghouse to verify that an agency has a producer license for surplus lines in its home state. Representatives from Nevada were strongly opposed to such a requirement, saying each state is already required to verify whether or not a broker is properly licensed. A representative from Texas said that State’s stamping offices already perform that function. The Subgroup voted unanimously to strike the language.
- Making the Clearinghouse solely responsible for the entry of information that will be used to calculate rates, with a provision that affected states will be able to view any changes. Original language in the draft Plan provided for remote access by state regulators and/or stamping office personnel to a module of software that would have allowed for entry of information pertaining to tax rates, stamping office fees, and the determination of refunds and penalties. Representatives from Texas suggested these revisions, which drew strong support from Florida and Indiana, and unanimous Subgroup approval.
- Empowerment of the Clearinghouse to audit transactions that come through it, as well as the subjection of the Clearinghouse to an audit of its operations. Subgroup members unanimously approved these revisions.
The Subgroup also approved other minor changes involving terminology. John Bauer, General Counsel for the NAIC, said the amended document will be forwarded to the Florida Surplus Lines Service Office (“FSLSO”) National Clearinghouse Committee next week for consideration.
The FSLSO and the NAIC were the only two respondents to present at the NAIC’s 2011 Spring National Meeting in response to a Request for Information related to Clearinghouse services that was issued by the NAIC in March, 2011.
Alaska Insurance Director and Subgroup Chairman Linda Hall thanked Subgroup members for their work, acknowledging that, although there was not 100 percent consensus, everyone worked together to achieve it.
With no further business before the Subgroup, the meeting was adjourned.
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