Decreto 1860 de Agosto 3 de 1994

CAPITULO 4. MARCO LEGAL

4.4 Decreto 1860 de Agosto 3 de 1994

Home State of the Insured NRRA definition + principal place of business definition

Premium Tax SLIMPACT; 100% to ND (taxed at rate of state where risk

is located) until SLIMPACT is in effect

Exempt Commercial Purchaser NRRA approach

Eligible Insurer NRRA approach unless/until SLIMPACT issues rule

Producer Licensing License required only for placements for ND insureds; silent on participation in NAIC or similar database by July 21, 2012.

Effective Date April 19, 2011

2011 ND H 1123

• Defining “Home State of the Insured”

The home state is where an insured maintains its principal place of business or, if the insured is an individual, the individual’s principal residence. § 26.1-44-01.1(4)(a)(1). Principal place of business is the state where the insured

maintains its headquarters and where the insured’s high-level officers direct, control, and coordinate the business activities of the insured. However, if 100% of the insured risk is located outside of the state of the principal place of business or principal residence, the home state is the state that collects the greatest percentage of the insured’s taxable premium. § 26.1-44-01.1(4)(a)(2). If more than one insured from an affiliated group are named insureds on a single nonadmitted insurance contract, the home state is the home state of the member of the affiliated group that has the largest percentage of premium attributed to it under the insurance contract. § 26.1-44-01.1(4)(b).

• Multi-State Risk Surplus Lines Premium Taxes

North Dakota adopted the SLIMPACT model approach to multi-state premium tax allocation. Under SLIMPACT, each compacting state must adhere to specified tax allocation formulas and data reporting requirements. § 26.1-44-11, Art. IV(1). The Premium Tax Data Allocation Formula determines each contracting state’s premium allocation. § 26.1- 44-11, Art. IV(1). Each state may then charge its own rate of taxation on that allocation. § 26.1-44-11, Art. IV(5). If a compacting state changes its rate of taxation, the state must give 90 days’ notice to the Compact Commission (the multi- state governing body for the SLIMPACT system). § 26.1-44-11, Art. IV(6).

Prior to SLIMPACT implementation, if North Dakota is an insured’s home state, in addition to the full amount of gross premiums charged by the insurer, the surplus lines producer shall collect and pay to the commissioner a sum equal to 1.75% of the gross premiums and fees, LESS any return premiums. § 26.1-44-03.1(1). If the insurance covers risks located both in and out of North Dakota, the sum payable must be computed based on:

o An amount equal to 1.75% on that portion of the gross premiums allocated to North Dakota PLUS

o An amount equal to the portion of the premiums allocated to other states on the basis of the tax rates and fees applicable to other risks located outside North Dakota LESS

o The amount of gross premiums allocated to this state and returned to the insured. §§ 26.1-44-03.1(1)(a) – (c).

© 2011 The Council of Insurance Agents & Brokers and Steptoe & Johnson LLC 97 If other states do not enter into SLIMPACT and portions of the risks are located in these other non-SLIMPACT states, North Dakota retains 100% of the net premium tax collected. § 26.1-44-03.1(3).

• Exempt Commercial Purchasers

North Dakota currently has an industrial insured exemption. That exemption will remain in effect. Additionally, North Dakota’s statute adds the NRRA definition of exempt commercial purchaser to the SLIMPACT model. Under § 26.1-44-01.1(3), an exempt commercial purchaser is a purchaser that procures insurance coverage through a qualified risk manager, paid at least $100,000 in property and casualty insurance premiums in the last year, and meets one of the following criteria:

o Had a net worth of over $20 million at the end of the preceding fiscal year;

o Had net revenues or sales over $50 million at the end of the preceding fiscal year;

o Has more than 500 full-time employees per individual company, or is a member of an affiliated group employing more than 1,000 employees in the aggregate;

o Is a municipality with a population of more than 50,000 people; or

o Is a nonprofit organization or public entity generating annual budgeted expenditures of at least $30 million.

• Surplus Line Insurer Eligibility Criteria

The Compact Commission is charged with promulgating uniform rules for compacting states regarding foreign insurer eligibility requirements as authorized by the NRRA. § 26.1-44-11, Art. IV(13).

North Dakota added a specific provision on insurer eligibility to the SLIMPACT Model. Under § 26.1-44-03(4)(a), surplus lines brokers shall not place coverage with a nonadmitted insurer unless, at the time of placement, the nonadmitted insurer:

o Is authorized to write such insurance in its domiciliary jurisdiction;

The commissioner may waive the minimum capital and surplus requirement for a nonadmitted insurer if he makes an affirmative finding of acceptability after considering: quality of management, capital and surplus of a parent company, company underwriting profit and investment trends, market availability, and company record and reputation within the industry. § 26.1-44-03(4)(a)(2). The commissioner may not make a finding of acceptability if the insurer’s capital and surplus is under $4.5 million. § 26.1-44-03(4)(a)(2).

Alien insurers must be on the NAIC quarterly listing of alien insurers. § 26.1-44-03(4)(b).

• National Producer Database

The North Dakota statute is silent on joining a national producer database, but the statute’s preamble recognizes that within two years of enactment of the NRRA, all states must participate in the NAIC producer database, or any other

© 2011 The Council of Insurance Agents & Brokers and Steptoe & Johnson LLC 98 equivalent uniform national database, for the licensure of surplus lines licensees and the renewal of such licenses if a state wants to continue collecting fees related to surplus lines licenses.

Ohio

Home State of the Insured NRRA definition + principal place of business definition

Premium Tax Multistate allocation agreement authorized following study;

100% to OH at rate of 5% unless/until state joins agreement

Exempt Commercial Purchaser NRRA approach

Eligible Insurer NRRA approach

Producer Licensing License required only for placements for OH insureds; OH law silent regarding participation in electronic licensing database

Effective Date June 17, 2011

2011 OH H 122

• Defining “Home State of the Insured”

The home state is where an insured maintains its principal place of business or, if the insured is an individual, the individual’s principal residence. § 3905.30(A)(1). Principal place of business is the state where the insured maintains the insured’s headquarters and where the insured’s high-level officers direct, control and coordinate the business activities of the insured. § 3905.30(A)(2). However, if 100% of the insured risk is located outside of the state of the principal place of business or principal residence, the home state is the state that collects the greatest percentage of the insured’s taxable premium. § 3905.30(A)(1)(a). If more than one insured from an affiliated group are named insureds on a single

nonadmitted insurance contract, the home state is the home state of the member of the affiliated group that has the largest percentage of premium attributed to it under the insurance contract. § 3905.30(A)(1)(b).

• Multi-State Risk Surplus Lines Premium Taxes

The statute directs the superintendent to conduct a fiscal analysis of the impact of entering into a multi-state agreement or compact for determining eligibility for placement of unauthorized insurance and for payment, reporting, collection and allocation of taxes on unauthorized insurance. § 3905.33(D). If the fiscal analysis indicates that entering into an agreement or compact is advantageous to Ohio, the superintendent may enter into SLIMPACT, NIMA or another multi-state agreement. § 3905.33(D). Meantime, 100% of premium tax is to be paid to Ohio, at a rate of 5% of the balance of the gross premiums charged for insurance placed or produced under the license after a deduction for returned premiums. § 3905.36(B).

• Exempt Commercial Purchasers

Ohio currently has an industrial insured exemption. That exemption will remain in effect. The NRRA commercial purchaser exemption is also in effect.

Under § 3905.331(A), an exempt commercial purchaser is a purchaser that procures insurance coverage through a qualified risk manager, paid at least $100,000 in property and casualty insurance premiums in the last year, and meets one of the following criteria:

o Had a net worth of over $20 million at the end of the preceding fiscal year;

o Has more than 500 full-time employees per individual company, or is a member of an affiliated group employing more than 1,000 employees in the aggregate;

o Is a municipality with a population of more than 50,000 people; or

o Is a nonprofit organization or public entity generating annual budgeted expenditures of at least $30 million.

§ 3905.33(B)(4) mandates that brokers procuring or placing insurance for an exempt commercial purchaser are not required to make a due diligence search to determine whether the full amount or type of insurance sought by the exempt commercial purchaser can be obtained from an admitted insurer if:

o The broker discloses to the exempt commercial purchaser that such insurance may or may not be available from the admitted market that may provide greater protection with more regulatory oversight; and

o The exempt commercial purchaser has subsequently requested in writing the broker to procure or place such insurance for a nonadmitted insurer.

• Surplus Line Insurer Eligibility Criteria

Under § 3905.33(A)(1), surplus lines brokers shall not place coverage with a nonadmitted insurer unless, at the time of placement, the nonadmitted insurer:

o Is authorized to write such insurance in its domiciliary jurisdiction; and

o Possesses capital and surplus – or its equivalent under the laws of its domiciliary jurisdiction – that equals the greater of the minimum capital and surplus requirements under the laws of Ohio or $15 million. Alien insurers must be on the quarterly listing of alien insurers maintained by NAIC. § 3905.33(A)(2).

• National Producer Database

The statute is silent on joining a national producer database for broker licensing and renewal of licenses. Under the NRRA, Ohio may not collect any fees relating to licensing of an individual or entity as a surplus lines broker in Ohio unless the state has in effect by July 21, 2012, laws or regulations that provide for participation by the state in the national producer database of the NAIC, or any other equivalent uniform national database, for the licensure of surplus lines brokers and renewal of such licenses.

Oklahoma

Home State of the Insured NRRA definition

Premium Tax Multistate allocation agreement authorized; 100% to OK

taxed at the rate of the state where the risk is located until state enters agreement

Exempt Commercial Purchaser NRRA approach

Eligible Insurer NRRA approach

Producer Licensing License required only for placements for OK insureds; allows participation in NAIC or similar database by July 21, 2012

Effective Date August 25, 2011

2011 OK S 778

• Defining “Home State of the Insured”

The home state is where an insured maintains its principal place of business or, if the insured is an individual, the individual’s principal residence. 36-1100.1(2)(a)(1). However, if 100% of the insured risk is located outside of the state of the principal place of business or principal residence, the home state is the state that collects the greatest percentage of the insured’s taxable premium. 36-1100.1(2)(a)(2). If more than one insured from an affiliated group are named insureds on a single nonadmitted insurance contract, the home state is the home state of the member of the affiliated group that has the largest percentage of premium attributed to it under the insurance contract. 36-1100.1(2)(d).

• Multi-State Risk Surplus Lines Premium Taxes

The commissioner may enter into written multi-state agreements with other state jurisdictions on behalf of Oklahoma to provide for cooperation and assistance among member jurisdictions in the administration and collection of taxes imposed on multi-state surplus lines insurance. 36-1100.2.

Until the insurance commissioner enters into a multistate agreement, if the insurance covers risks located both in and out of Oklahoma, the sum payable is computed based on the same 6% portion of gross premiums allocated to Oklahoma, PLUS an amount equal to the portion of the premiums allocated to other states on the basis of the tax rates and fees applicable to risks located outside of Oklahoma LESS the amount of gross premium unearned at termination of the SL insurance. 36-1115(A).

• Exempt Commercial Purchasers

Under 36-1106.1(B), an exempt commercial purchaser is a purchaser that procures insurance coverage through a qualified risk manager, paid at least $100,000 in property and casualty insurance premiums in the last year, and meets one of the following criteria:

o Had a net worth of over $20 million at the end of the preceding fiscal year;

o Had net revenues or sales over $50 million at the end of the preceding fiscal year;

o Has more than 500 full-time employees per individual company, or is a member of an affiliated group employing more than 1,000 employees in the aggregate;

o Is a municipality with a population of more than 50,000 people; or

o Is a nonprofit organization or public entity generating annual budgeted expenditures of at least $30 million.

As required under 36-1106.1(A), brokers procuring or placing insurance for an exempt commercial purchaser are not required to make a due diligence search to determine whether the full amount or type of insurance sought by the exempt commercial purchaser can be obtained from an admitted insurer if:

o The exempt commercial purchaser has subsequently requested in writing the broker to procure or place such insurance for a nonadmitted insurer.

• Surplus Line Insurer Eligibility Criteria

Per 36-1106(1)(a), a surplus lines broker may place insurance with a foreign insurer if:

o The insurer is licensed in its domiciliary jurisdiction; and

o The insurer has capital and surplus – or its equivalent under the laws of its domiciliary jurisdiction – that is the greater of the minimum capital and surplus requirements under the laws of this state or $15 million. The insurance commissioner may waive the minimum capital and surplus requirements for unauthorized foreign insurers if he makes an affirmative finding of acceptability after considering: quality of management, capital and surplus of a parent company, company underwriting profit and investment trends, market availability, and company record and reputation within the industry. 36-1106(1)(b). The commissioner may not make a finding of acceptability if the insurer’s capital and surplus is under $4.5 million. 36-1106(1)(b).

A surplus lines broker may place insurance with an alien insurer if that insurer is listed on the quarterly list of alien insurers maintained by the NAIC. 36-1106(1)(c).

• National Producer Database

Under the statute, the commissioner may utilize the national insurance producer database of the NAIC or any other equivalent uniform national database for the licensure and renewal of an individual or entity as a surplus lines broker in order to carry out NRRA requirements. 36-1106(2)

Oregon

Home State of the Insured NRRA definition

Premium Tax Multistate allocation agreement authorized; OR will tax on

a pro rata basis at 3% from July 21, 2011 until Jan. 1, 2012; after Jan. 1, 2012, unless/until OR enters an agreement, will tax 100% at a rate of 2.3%

Exempt Commercial Purchaser NRRA approach; broader standards

Eligible Insurer NRRA approach

Producer Licensing License required only for placements for OR insureds; OR law silent regarding participation in electronic licensing database

Effective Date January 1, 2012

OR H 2679

• Defining “Home State of the Insured”

The home state is where an insured maintains its principal place of business or, if the insured is an individual, the individual’s principal residence. However, if 100% of the insured risk is located outside of the state of the principal place of business or principal residence, the home state is the state that collects the greatest percentage of the insured’s taxable premium. If more than one insured from an affiliated group are named insureds on a single nonadmitted insurance contract, the home state is the home state of the member of the affiliated group that has the largest percentage of premium attributed to it under the insurance contract. ORS 735.405(8).

• Multi-State Risk Surplus Lines Premium Taxes

The Director of the Department of Consumer and Business Services is authorized to enter into a compact or to otherwise establish procedures with other states to allocate among the states the premium taxes paid to an insured’s home state. Under the new law, which is not effective until January 1, 2012, Oregon will tax 100% of premiums at a rate of 2% unless and until the state enters into an agreement. ORS 735.470(1)-(4).

According to guidance from the Oregon Insurance Division and the Oregon Surplus Lines Association, Oregon will tax policies with inception dates between July 21, 2011 and December 31, 2011 on a pro rata basis (on the portion of the risk allocable to Oregon) at a rate of 3%. For policies with inception dates on or after January 1, 2012, unless and until Oregon enters into a multi-state agreement, Oregon will tax 100% of premiums, regardless of where the risk is located, at a rate of 2.3%.

• Exempt Commercial Purchasers

Oregon has adopted the NRRA approach to exempt commercial purchasers, but has eased some of the requirements to qualify as such a purchaser. Under ORS 735.405(6), an exempt commercial purchaser is a purchaser that procures

insurance coverage through a qualified risk manager, paid at least $100,000 in property and casualty insurance premiums in the last year, and meets one of the following criteria:

o Had net revenues or sales over $20 million at the end of the preceding fiscal year;

o Has more than 50 full-time employees per individual company, or is a member of an affiliated group employing more than 100 employees in the aggregate;

o Is a municipality with a population of more than 50,000 people; or

o Is a nonprofit organization or public entity generating annual budgeted expenditures of at least $30 million.

Brokers procuring or placing insurance for an exempt commercial purchaser are not required to make a due diligence search to determine whether the full amount or type of insurance sought by the exempt commercial purchaser can be

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