August 1, 2010

There's a  lot of stuff in the recently passed Financial Reform bill. Believe it or not, the part about surplus-line insurance hasn't received a lot of play in the media. According to our trade association NAPSLO - National Association of Professional Surplus Line Offices - non-admitted insurers and brokers came out winners in this legislation.

Paying premium taxes on multi-state risks has always been a problem. The broker has had to work its way through a maze of conflicting state laws as each state want its share of premium tax for risks with exposure in its state. Some states take the position that they should get all the tax if any part of the exposure in in their state. Many want all the tax if an insured is based in their state. And of course different states have different rates of tax and stamping fees and rules for surplus-line filings.

NAPSLO and others have been lobbying several years for national legislation that would simplify the tax issues. The Dodd-Frank bill includes provision for the "home state" of an insured to regulate the payment of taxes for a multi-state risk. Now the states have a year to work out agreement for the allocation and payment of taxes. We'll see how that goes.

George Rothert