The Council of State Governments Provides Compact Expertise for Insurance Legislators: NCOIL Formally Endorses Surplus Line Compact
LEXINGTON, Ky.-The National Center for Interstate Compacts helped create language for a new insurance compact endorsed by the National Conference of Insurance Legislators, or NCOIL, at a state summit in Austin Sunday. The National Center is part of The Council of State Governments, the nation's only organization serving all three branches of state government.
The compact is called SLIMPACT-Lite--the Surplus Lines Insurance Multi-State Compliance Compact. The surplus lines industry provides an insurance market for hard-to-place risks that are not traditionally covered by standard insurance markets. Potential examples include such things as a policy to insure a dancer's legs or the possible future earnings of a highly talented athlete.
Earlier this year, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. In the Nonadmitted Insurance and Reinsurance Reform Act section of the bill, Congress recommended that states adopt uniform requirements, forms and procedures to facilitate the reporting, payment, collection and allocation of premium taxes for non-admitted insurance, including the surplus lines market. The act specifically allows states to develop an interstate compact to allocate taxes in multistate policies.
"With Dodd-Frank effective dates quickly approaching, it was incumbent on NCOIL and CSG to approve guidance that state legislatures can begin work on immediately," said Rep. Bob Damron of Kentucky, NCOIL's outgoing president and co-chair of CSG's Finance Committee. "SLIMPACT-Lite represents thoughtful consideration by numerous stakeholders. Without it, states stand to lose millions of dollars in premium tax revenue beginning next year. Such monies are especially important today as legislators wrestle with tough budget decisions brough about during the nation's financial crisis."
Crady DeGolian, senior policy analyst for the National Center for Interstate Compacts, and NCIC Special Counsel Rick Masters helped NCOIL and industry stakeholders draft the final compact language. Masters also gave a presentation at the meeting about why such an agreement was necessary to ensure the surplus lines insurance market was in compliance with the Dodd-Frank fiscal reform bill. CSG members will consider a resolution endorsing the compact at their annual meeting Dec. 3-6 in Providence, R.I.
"CSG is pleased to have been able to assist the National Conference of Insurance Legislators with revisions to the modified Surplus Lines Insurance Multi-State Compliance Compact," DeGolian said. "The newly drafted compact, which brings states in compliance with the Nonadmitted Insurance and Reinsurance Reform Act contained in the Dodd Frank fiscal reform bill, has wide support from both state legislators and industry officials and once again demonstrates CSG's unmatched convening power and unique interstate compact expertise."