Surplus Lines Insurance and the Nonadmitted and Reinsurance Reform Act

2012 Legislation

Last updated: January 11, 2013

NCSL Staff Contacts: Heather Morton, 303.364.7700 (Denver); James Ward, 202.624.8683 (D.C.)

Surplus or excess lines insurance is insurance coverage that is not available from insurers licensed in the state, called admitted companies, and must be purchased from a non-admitted carrier. A consumer may need to purchase surplus lines insurance if the consumer needs more unique insurance than what is available from admitted insurers for property and casualty coverages such as commercial general liability insurance, fire insurance, mobile home policies, automobile physical damage coverage, and medical malpractice insurance.

The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law by President Obama on July 21, 2010. Incorporated into the law is language addressing excess and surplus lines insurance, the Nonadmitted and Reinsurance Reform Act (NRRA). The NRRA, by its various provisions will preempt or supersede portions of the excess and surplus lines law as they exist today in the states. Of particular significance to states, on July 21, 2011, when most of the provisions of the NRRA take effect, only the Home State of the insured will be authorized to tax a surplus lines transaction, and the states will not be able to allocate the tax revenue unless the states adopt an interstate compact or other uniform, national tax allocation procedures. This leaves little time for states to amend their excess and surplus lines insurance statutes to conform to the mandatory provisions and definitions contained in the NRRA. The failure of the states to modernize this important area of insurance regulation may result in the loss of valuable premium dollars and add momentum to proponents of a greater federal role in the regulation of insurance industry.

Accordingly, an interstate compact (SLIMPACT-Lite) was drafted with input from state insurance regulators, state legislators, industry trade organizations and others. SLIMPACT-Lite will streamline regulatory requirements by providing for: uniform premium tax allocation formulae; a clearinghouse to facilitate the correct calculation and reporting of premium taxes due to the compacting states; and improved coordination of regulatory resources and expertise between state insurance departments and other state agencies, as well as state surplus lines stamping offices. SLIMPACT-Lite is endorsed by the National Conference of State Legislatures (NCSL), the National Conference of Insurance Legislators (NCOIL) and the Council of State Governments (CSG).

The National Association of Insurance Commissioners endorsed a different model agreement, the Nonadmitted Insurance Multi-State Agreement (NIMA).

Alabama, Indiana, Kansas, Kentucky, New Mexico, North Dakota, Rhode Island, Tennessee and Vermont have joined SLIMPACT-Lite; it needs one more state to become operational.

In the 2012 legislative session, 13 states had pending legislation to comply with the NRRA or amend their surplus lines tax provisions. Colorado, Indiana, Iowa, Oklahoma, South Carolina, West Virginia, Wisconsin and Wyoming enacted legislation in 2012.

Related Web Pages:

2011 Legislation Letter to State Legislative Leaders on SLIMPACT-Lite
  Text of NCOIL's SLIMPACT-Lite
  Text of NAIC's NIMA Model Agreement
  NCSL Resolution in Support of the Surplus Lines Insurance Multistate Compliance Compact
  Council of State Governments Summary of Legal Analysis of NIMA Model Agreement


CA | CO | DE | HIIN | IA | NJ | NY | OKSC | WV | WI | WY

S.B. 716
Returned to secretary of Senate pursuant to Joint Rule 56 1/31/12
This bill declares that it is the intent of the Legislature to reconcile California surplus lines and reinsurance law with the recent changes to federal law to minimize any possibly adverse effects of preemption by the Dodd-Frank Wall Street Reform and Consumer Protection Act.


H.B. 1215
Signed by governor 4/13/12, Chapter 104
Conforms the Nonadmitted Insurance Act to the requirements of the federal Nonadmitted and Reinsurance Reform Act of 2010.


H.B. 162
Withdrawn from further consideration 3/20/12
This Act makes two changes to Delaware’s surplus lines insurance: First, this Act allows surplus lines insurers who are domesticated in Delaware to write surplus lines insurance in Delaware. Currently, such insurers are not allowed to write surplus lines insurance in Delaware. A domestic surplus lines insurer would have to prove adequate solvency and be approved by the Insurance commissioner. Secondly, the Act will also expand the market of surplus lines insurance for Delaware residents, which is particularly beneficial to those with property in the coastal areas of the state. The second provision of the Act makes it clear that surplus lines insurers, including the domestic surplus lines insurer established herein, are exempt from rate and form filings. This would codify the current practice of exempting surplus lines insurers from rate and form filings.

District of Columbia
not available

S.B. 2168
Passed Senate 3/6/12
Directs the insurance commissioner to join the surplus lines insurance multi-state compliance compact. Enacts the surplus lines insurance multi-state compliance compact into law.


H.B. 1009
Signed by governor 2/22/12, Public Law 6
Relates to numerous technical corrections; resolves technical conflicts between differing 2011 amendments to Indiana Code sections; other technical problems in the Indiana Code, including incorrect statutory references, nonstandard tabulation, grammatical problems, and misspellings, including to surplus lines provisions enacted in 2011.


H.B. 2145
Signed by governor 3/29/12, Chapter 1025
H.S.B. 534
Became H.F. 2145 1/27/12
This bill establishes new regulations to permit increased access to surplus lines insurance in the state, and contains penalties, coordinating provisions, repeals, and effective date provisions. The bill creates new Code chapter 515I which contains regulations that permit the sale of surplus lines insurance in the state by insurers who are not licensed to do insurance business in the state. Such insurers shall be listed as eligible surplus lines insurers if they meet the requirements of the Code chapter and are approved to sell such insurance by the commissioner of insurance.

No Regular 2012 Session
No Regular 2012 Session
New Hampshire
New Jersey

A.B. 2043
This bill decreases the premium receipts tax for surplus lines coverage, whether procured directly by the insured or through a surplus lines agent, from five percent to three percent. This decrease represents a reduction in this tax to the same level at which it existed prior to the enactment of P.L.2009, c.75. Additionally, in response to this decrease, the bill clarifies that of the three percent premium receipts tax paid, all of it shall be paid to the treasurer of the New Jersey State Firemen’s Association in the case of any surplus lines policies that cover fire insurance on property located in a municipality or fire district with a duly incorporated firemen’s relief association.

New Mexico
New York

A.B. 9783
S.B. 6808
Passed Senate 6/12/12
Relates to domestic excess line insurance companies.

North Carolina
North Dakota

H.B. 2458
Signed by governor 4/16/12, Chapter 45
Relates to the Unauthorized and Surplus Lines Insurance Act; modifies definitions; specifies the Insurance commissioner shall not be compelled to join certain agreements or compacts; allows exception; modifies prohibited insurer actions; modifies domestic surplus lines insurer requirements; modifies service of process requirement; modifies exemption from service of process; modifies attorney fee allowance; modifies capital and surplus requirements.

S.B. 1617
Signed by governor 6/8/12, Chapter 365
Relates to the Unauthorized Insurers and Surplus Lines Insurance Act; updates short title; specifies purpose; modifies definitions; authorizes the Insurance commissioner in his or her discretion to enter into certain agreement if deemed to be in the best interest of the state; clarifies that certain actions must be performed by a broker or licensee as defined in the Unauthorized Insurers and Surplus Lines Insurance Act.

Puerto Rico
Rhode Island
South Carolina

S.B. 1419
Signed by governor 6/29/12, Act 283
Amends Chapter 45, Title 38, relating to insurance brokers and surplus lines insurance, so as to define terms, provides that the revenue collected from the broker's premium tax rate must be credited to a special earmarked fund, provides the manner in which the fund may be used and disbursed, authorizes the director of the Department of Insurance to conduct examinations of broker records, allows the Department of Insurance to promulgate regulations necessary to implement the chapter, provides the manner in which the Nonadmitted and Reinsurance Reform Act of 2010 may be implemented; and amends §38-7-160, relating to municipal license fees and taxes, so as to disallow a municipality from charging an additional license fee or tax based upon a percentage of premiums for purposes of surplus lines insurance.

South Dakota
West Virginia

H.B. 4165
Authorizes the Insurance commissioner to promulgate a legislative rule relating to surplus lines insurance.

S.B. 287
Signed by governor 4/3/12, Chapter 104
Authorizes the Insurance commissioner to promulgate a legislative rule relating to surplus lines insurance.


S.B. 378
Signed by governor 4/6/12, Act 224
This bill makes a few changes related to surplus lines insurance, which is defined in the bill as insurance that is permitted to be placed through an agent or broker with an insurer that is not authorized to do an insurance business in this state and that covers an insured for which this state is the home state, which is defined in the bill as:  1) the state in which the insured maintains its principal place of business; 2) the insured’s principal residence if the insured is an individual; or 3) if 100 percent of the insured risk is outside this state, the state to which the greatest percentage of the insured’s taxable premium for the insurance is allocated. Under current law, the policyholder of surplus lines insurance generally must pay a three percent tax on gross premium.  If a policy covers risks in more than one state including this state, the tax payable to this state is computed on the premium allocated to this state for the portion of the risk located in this state.  Under the bill, that computation applies only for policies issued or renewed before July 21, 2011. For policies issued or renewed on or after that date, the tax is payable to this state only if this state is the home state of the insured, and it is computed on the entire premium, including premium attributable to risks outside of this state.


H.B. 15
Signed by governor 3/8/12, Chapter 37
Provides for regulation of surplus lines; provides for independently procured insurance; imposes a premium tax on such insurance; provides definitions; repeals inconsistent provisions; and provides for an effective date.

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