National Insurance Multi-State Agreement (NIMA) To Dissolve

May 3, 2016


The National Association of Professional Surplus Lines Offices (“NAPSLO”) advised today, May 3, 2016, that the Non-Admitted Insurance Multi-State Association unanimously decided to dissolve the National Insurance Multi-State Agreement (“NIMA”).  The announcement states that a “wind-down” plan was adopted yesterday to allow for an orderly conclusion to the NIMA by December 2017.  

NAPSLO anticipates that the dissolution will be effective October 1, 2016 and include a 12 month run-off period ending September 30, 2017 to allow endorsements on policies effective prior to October 1, 2016 to be filed through the Surplus Lines Clearinghouse.  “The news that NIMA has elected to dissolve the agreement is applauded by NAPSLO,” NAPSLO’s advisory said.

“Although we know the states will now retain 100 percent of the surplus lines premium taxes they collect on multi-state risks, we are awaiting compliance guidance from the individual states to confirm how taxes will be calculated on home state risks post NIMA,” NAPSLO continued.  “Our review of the four remaining member states and associate member Tennessee’s surplus lines premium tax statutes appears to show that the states likely have the below taxing authority when the home state is:

South Dakota:   Tax calculated 100 percent at South Dakota rate, 2.5 percent

Utah:   Tax calculated 100 percent at Utah rate, 4.25 percent, but only on risks located in Utah

Wyoming:  Tax calculated at the rate where the risk resides.

Tennessee:  Tax calculated 100 percent at Tennessee rate, 5 percent.

Puerto Rico:  NAPSLO is seeking clarification in how this statute will be interpreted

NAPSLO said it is working to confirm details for all impacted states, and that its top state legislative priority remains achieving uniformity among all states on the regulation and taxation of surplus lines premium.  

“Since its passage, the Nonadmitted and Reinsurance Reform Act of 2010 (“NRRA”) has produced significant benefits for the surplus lines industry.  Its home state approach has brought efficiency, clarity and uniformity to the regulation and taxation of surplus lines insurance by creating a modern and efficient regulatory framework.  The dissolution of NIMA means that the reality of this uniformity envisioned in and made possible by the NRRA is very near on the horizon,” NAPSLO concluded.



Should you have any questions or comments, please contact Colodny Fass.


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