Richard Bouhan, Executive Director of the National Association of Professional Surplus Lines Offices (NAPSLO), recently stated that the National Association of Insurance Commissioners (“NAIC”) is attempting to undercut the surplus lines reforms in the Nonadmitted and Reinsurance Reform Act (the “Act”), which becomes effective on July 21, 2011. The purpose of the Act, among others, is to simplify the payment of premium taxes by surplus lines agents on multi-state risks by requiring that all premium tax due on multi-state transactions be paid only in the insured’s home state. Implementation of the Act is left to the discretion of each state.

According to Bouhan, rather than encouraging states to ratify legislation that would streamline surplus lines regulation and tax remittance to keep consistent with a “one state” concept, the NAIC has “done nothing to ensure that the states’ laws will be consistent with the federal requirements when [the Act] becomes effective.” Instead, Bouhan writes, the NAIC task force has focused its efforts on the creation of an interstate company to allow states to share surplus lines tax revenue voluntarily.

To read Bouhan’s entire article, click here.