Nevada is leaving the surplus lines tax clearinghouse to which it belongs, Nevada’s insurance commissioner confirmed Tuesday.
Nevada’s departure is the latest in a string of states to exit the Non-Admitted Insurance Multi-State Agreement, Hawaii being another recent state to leave.
But Nevada Insurance Commissioner Scott Kipper said the decision has nothing to do with the way in which NIMA was run.
“No. There’s no problem with NIMA,” Kipper told Insurance Journal. “It’s very much a state-based decision. It’s about what’s best for our state and the collection of premium taxes. It’s more of a statewide decision rather than any sort of dissatisfaction with NIMA.”
NIMA is a mechanism for states to report, collect, allocate and distribute surplus lines tax revenues consistent with the Non-admitted and Reinsurance Reform Act under the Dodd-Frank Wall Street Reform legislation passed in 2010, which allows only the home state of an insured to require premium tax payments for non-admitted insurance in the absence of an agreement among states
Other states that have left NIMA recently include Mississippi, Nebraska and Alaska.
“We’ve actually been shrinking lately,” said Jack McDermott, direction of communications for the Florida Office of Insurance Regulation, which runs NIMA.
But McDermott noted that NIMA was officially launched only days ago, and he asserted his belief that new states will join, and others may return, once they see NIMA become a success.
“It is correct that we received notice from Nevada of their withdrawal,” McDermott said. “However, the clearinghouse was launched as expected on July 1. It is our hope that Nevada and other states may reconsider their decisions once they have seen NIMA’s success in implementing provisions of the NRRA.”
Kipper agreed with McDermott that NIMA’s success could bring states back into the fold, including Nevada.
“We’re certainly open to review of this decision eventually,” Kipper said. “And if there are other states that enter into NIMA, we’re cert not closing any opportunities to revisit the issue. We’re a big believer in state-based regulation.”
He added that NIMA was good for fostering state-based regulation, but “it just wasn’t optimal for Nevada at the moment.”
While NIMA is supported by the National Association of Insurance Commissioners, a competing agreement, the Surplus Lines Insurance Multi-State Compliance Compact, or SLIMPACT, has been embraced by other states.
Kipper said Nevada is not considering joining SLIMPACT.
“If all things were equal, which basically they are, we would rather have a state-based system,” Kipper said. “The state of Nevada has been one of the hardest hit states in the economic downturn. We just want to make sure we keep our revenues as high as possible.”
The agreement requires states to give notice of their departure. Nevada submitted its notice dated June 28. According to McDermott, the state remains an official NIMA member until Aug. 28.
Kipper’s letter states:
“Nevada appreciates having had the opportunity to participate in the formation of NIMA, Inc., and the Agreement. As more states become involved, or if the federal government amends the Nonadmitted and Reinsurance Reform Act of 2010 to require participation in a multi-state agreement, Nevada may once again, request to become a participating member.”