The Florida Surplus Lines Office (FLSLO) has announced that Florida has made the decision to withdraw from the Nonadmitted Insurance Multi-State Agreement (NIMA), effective June 1, 2016. The decision marks the second state to leave the Agreement, with Louisiana previously leaving last October.
FSLSO made the announcement via a bulletin dated April 13 to provide guidance regarding the filing of multistate surplus lines policies where Florida is the home state of the insured. All multistate policies issued or renewed on or after June 1, 2016, and any subsequent endorsements to those policies, for which Florida is the home state will now be filed with FSLSO and not through the Surplus Lines Clearinghouse.
All Florida home state new and renewal policies with an effective date prior to June 1, 2016, as well as any endorsements to new and renewal policies effective prior to June 1, 2016, will be filed with the Surplus Lines Clearinghouse through May 31, 2017.
Pursuant to F.S.626.932, Florida will continue to tax premium exposures for multistate policies at the rate of the state in which the risk or exposure is located. Business rules for calculating the correct fees are programmed into FSLSO’s management systems. No changes need be made for SLIP or XML batch filing, however, you may need to contact your agency’s information technology vendor or staff regarding revisions to your agency management system that may be necessary.
However, FLSLO is still contracted with NIMA to serve as the Surplus Lines Clearinghouse provider, so other state’s filings are not affected by the State of Florida’s withdrawal from NIMA.
In a statement to Insurance Journal on April 15, the Florida Office of Insurance Regulation (OIR) said as a member since 2011, Florida was fully committed along with the other member states to the benefits envisioned by the multistate agreement, to include the reporting, payment, collection and allocation of premium taxes for non-admitted insurance.
“However, despite the achievement of these benefits, nationwide participation in NIMA, especially among large states, did not occur as expected and lead to the decision to withdraw. Florida will continue to use the Clearinghouse services on a single-state only basis via an independent contract separate from the NIMA arrangement. We appreciate the efforts and participation of all the other NIMA member states in this joint venture and look forward to the continued relationship with the FSLSO,” OIR said.
NIMA, Inc. was established in 2011 and is governed by NIMA. Members now just include South Dakota, Utah, Wyoming and Puerto Rico. Tennessee is an Associate Member of NIMA, Inc.
The Agreement provides a mechanism to report, collect, allocate and distribute surplus lines tax revenues consistent with the Non-admitted and Reinsurance Reform Act of 2010 (NRRA). The NRRA is part of the Dodd-Frank Wall Street Reform and Consumer Protection Act passed in 2010 and allows only the home state of the insured to require premium tax payments for non-admitted insurance in the absence of an agreement among states.
Florida Insurance Commissioner Kevin McCarty, who served as an officer for NIMA, told Insurance Journal last fall that he was disappointed there hadn’t been more participation in NIMA, especially since the agreement had been successful in generating additional revenue for the states participating.
“The detractors of NIMA have been successful at making the case that you just make more money if you keep it at home,” McCarty said. “I think many of the facts and statements they have made have been misleading.” (Hear podcast)
The National Association of Professional Surplus Lines Offices (NAPSLO) praised Florida’s decision, saying a top state legislative priority for the group remains achieving uniformity among all states on the regulation and taxation of surplus lines premium.
“NAPSLO continues to advocate that home state taxation, where surplus lines taxes are calculated at the home state’s tax rate on 100 percent of the premium and retained 100 percent by the home state, is the only viable and uniform national solution,” NAPSLO said in a statement. “With Florida’s withdrawal from NIMA, the reality of this uniformity envisioned by, and made possible with, [NRRA] is one huge step closer. We applaud Florida’s decision to effectuate this change.”
Florida is the second of the six NIMA jurisdictions to withdraw from the tax-sharing agreement since it became operational in July 2012, with Louisiana withdrawing from NIMA last October. Florida’s announcement leaves only Puerto Rico, South Dakota, Utah and Wyoming as full members of NIMA, along with Tennessee participating as an associate member. During associate membership in NIMA, states can utilize the Clearinghouse reporting platform, the Surplus Lines Automation Suite (SLAS), for a free trial period to allow for the reporting of single and multistate policy information without sharing tax revenue. Additionally, the Clearinghouse transaction fee is waived for associate members.
This announcement does not impact the remaining NIMA states’ filing procedures.
Related:
- McCarty: Despite Revenue Growth, No Traction with NIMA
- Louisiana to Withdraw from Multi-State Surplus Lines Clearinghouse
- Multi-State Surplus Lines Tax State Inaction Risks Loss of Premium Tax Revenue
- Ready or Not, New Surplus Lines Law Is Here
- Legislators, Surplus Lines Groups Weigh a Lighter SLIMPACT Tax Deal
- Florida Opens, Closes Surplus Lines Opportunities
- States Still Grappling with Surplus Lines Tax Sharing
- Surplus Lines Analysis: Multistate Clearinghouse Economics Don’t Work
Topics Florida Excess Surplus
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