Crady deGolian, Director of CSG's National Center for Interstate Compacts, outlines the top 5 compacts to watch in 2013, including those dealing with the siting of electricity transmission lines, surplus insurance lines, interstate reciprocity regarding online education, and EMS licensing.  

Interstate Compacts to Watch in 2013

Dating back to America’s colonial past, interstate compacts are among the few tools specifically granted to states by the U.S. Constitution. The modern compact provides states with a sophisticated administrative mechanism, allowing interstate collaboration to resolve complex policy challenges.

Compacts, which are governed by the tenets of contract law, give states an enforceable, sustainable and durable tool capable of ensuring permanent change without federal intervention. With more than 215 interstate compacts in existence today and each state belonging to an average of 25 compacts, the legal and historical precedence for the development and use of the tool is considerable.

Only one more state must approve a multi-state agreement that would ensure states are in compliance with an important section of the Dodd-Frank Wall Street Reform and Consumer Protection Act for it to move forward.

With the vast majority of states back in session, several pieces of compact legislation were filed this week.  In Hawaii SB 2168 would allow the state to join the Surplus Lines Insurance Multistate Compliance Compact, developed jointly by CSG’s National Center for Interstate Compacts and the National Conference of Insurance Legislators.  Once adopted by one more state SLIMPACT will have reached the minimum threshold of states to trigger commission activity and allow for the formation of an online clearinghouse for the payment and allocation of surplus lines premium taxes.

Dating back to America’s colonial past, interstate compacts are one of the few tools specifically granted to states by the U.S. Constitution. The evolution of the modern compact has provided states and territories ("the states") a sophisticated administrative mechanism, allowing interstate collaboration to resolve complex policy challenges, while simultaneously avoiding federal intervention.  Policymakers should have several compacts on their radar in 2012.  Below is list of some important compacts and a status update for each. 

The Nebraska Department of Insurance has decided to withdraw from the Nonadmitted Insurance Multi-State Agreement over concerns about the proposed clearinghouse for the payment and allocation of surplus lines premium taxes.  Nebraska Insurance Director Bruce R. Ramge said the state will withdraw from NIMA effective March 5, 2012.  With the withdrawal of Nebraska, NIMA, developed by the National Association of Insurance Commissioners, has been adopted by 10 states.

Kentucky Insurance Commissioner Sharon Clark was recently voted interim Chair of the new SLIMPACT Commission.  The election of Commissioner Clark represents another significant accomplishment for the new Surplus Lines Insurance Multi State Compliance Compact.  With nine state having already joined the compact during the 2011 legislative session and work beginning on the adoptions of rules, bylaws and an allocation formula it has been a busy eight months for the fledgling commission.

Rick Masters, representing CSG’s Compact Center, delivered a presentation about SLIMPACT at last week’s NCSL Legislative Summit.  The session provided state legislators and staff members an opportunity to learn about the Surplus Lines Insurance Multi-state Compliance Compact, along with the competing NIMA proposal offered up by the National Association of Insurance Commissioners.  SLIMPACT enjoys the endorsement of multiple state legislative associations, including CSG, NSCL and the National Conference of Insurance Legislators (NCOIL). 

A recent opinion issued by the Legislative Counsel in Oregon reaffirms the role the state’s legislature must play in the interstate compact adoption process.  Specifically at issue is Section 4 of Oregon HB 2679, which allows the Director of the Department of Consumer Protection and Business Services to enter into an interstate agreement to allocate state surplus line premium taxes without first seeking legislative approval.  In the opinion, the Legislative Counsel argues that the legislation as drafted represents an unconstitutional delegation of legislative authority.  

In order to get the new SLIMPACT Commission up and running in July, The Council of State Governments (CSG), the National Conference of Insurance Legislators (NCOIL), and the National Conference of State Legislatures (NCSL) will be hosting a series of conference calls beginning Friday, June 24. The purpose of the Webinars is to review and tentatively approve draft SLIMPACT bylaws, and an initial draft rule to adopt, amend, and repeal Commission rules.   The draft bylaws and rule, which can be found by clicking here, are based on the Interstate Insurance Product Regulation Compact (IIPRC), much as SLIMPACT itself was based on the IIPRC structure. 

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