In 2010, as part of the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Congress incorporated significant changes to surplus lines regulation. These changes were outlined in the Non-admitted and Reinsurance Reform Act (NRRA), which went into effect in July 2011. The NRRA simplified the regulation and taxation of surplus lines by establishing the insured’s home state as the only jurisdiction to regulate and tax surplus lines.
In response to NRRA, two agreements were formed by the States: the Non-Admitted Insurance Multi-State Association (NIMA) and the Surplus Lines Insurance Multistate Compliance Compact (SLIMPACT). SLIMPACT never became operational, while NIMA went operational in July 2012.
On May 2, 2016, NIMA dissolved the association, which will be effective October 1, 2016. The run-off period ends September 30, 2017, which will allow endorsements on policies effective prior to October 1, 2016 to be filed through the Surplus Lines Clearinghouse.
Now, all U.S. jurisdictions will collect and retain 100% of the surplus lines premium tax paid to them as the "home state" of the insured.
The "home state" approach of the NRRA does the following:
- Eliminates multiple filings and separate regulatory requirements for multi-state insurance risks
- Improves the process
- Reduces the administrative cost of surplus lines compliance
- Reduces the need for brokers and insurers to comply with differing sets of rules, disclosures, and requirements.
Since the dissolution of NIMA, your agency may be impacted by changes to surplus lines tax filings. Using InsCipher will help you correctly submit surplus lines tax filings and automates the process. You’ll receive notifications which will tell you what documents you need to file and when the deadlines are.
InsCipher updates our rules and regulations database on a weekly basis, so you can rest assured that your agency is current even in the midst of a rapidly changing regulatory environment. We’ve untangled the complexity of the new requirements for you.
With InsCipher, your agency will receive:
- Step by step submission guidance
- Courtesy filings options
- Automated surplus lines tax calculator
- Comprehensive compliance and error notifications
- Instant access to all documents and online filing capability
- Guidelines for state stamp requirements
- 24/7 access to your filing information in one centralized location
For more information about InsCipher and surplus lines tax filings, please call Chris Taylor at (801) 216-8273.