Emmanuel Flashcards
Nonadmitted and Reinsurance Reform Act
-2011
-limited regulatory authority of surplus lines transactions to the home state of the insured to create a simplified and efficient system
-established federal standards for collection of premium tax, insurer eligibility, commercial purchaser exemptions
What is the definition of an insureds home state?
-state in which insured maintains its principal place of business
If consumer, primary residence
-if 100% of the risk is located outside the state above, the state to which the greatest % of the insured’s taxable premium is allocated
What does one state compliance mean under NRRA?
only the insureds home state has authority to regulate the placement of surplus lines insurance
meaning, only they can require a surplus line broker to be licensed, etc
How are premium taxes properly allocated to states?
insureds home state (only one that collects premium tax) requires surplus lines brokers (and those who bought insurance without a broker) to file….
tax allocation reports that allocate premium to exposures in each state
What is the definition of an exempt commercial purchaser (ECP) ?
someone who….
-employs NRRA qualified risk manager
-paid > $100k in commercial P&C premiums in previous 12 months
at least one of….
- net worth > 22m
- generates annual revenues > 55.1m
- employs > 500 FT/FTE employees
- municipality > 50k people
and….
-discloses to purchaser that insurance may be available in admitted
-purchaser requests in writing that broker place coverage with surplus lines carrier
how do the states participate in the national producers database?
NRRA encourages the states to participate in the NAIC national producer DB
- states that don’t are prohibited from collecting surplus lines licensing fees
What are export lists?
-lists that some jurisdictions provide, refer to known / accepted coverages unavailable in the admitted market
-relieves broker from having to try and place it 1st with an admitted carrier
NAIC non-admitted insurance model act
-requires a foreign surplus lines insurer
-be authorized in dom state to write the type of insurance it wants to write elsewhere
-have capital and surplus greater than the greater of…
- insureds home state minimum
- 15m
What does the NRRA prohibit in terms of eligibility requirements?
prohibits these except for when
- standards conform with NAIC model act
-nationwide uniform reqs are enacted based on a state agreement
Quarterly Listing of Alien Insurers
-states can’t prohibit a SL broker from placing insurance with a non-U.S, non-admitted insurer in this list
-states can allow coverage with insurers not on this list
direct placement (independent procurement)
-insured buys insurance from unauthorized carrier (direct or broker not licensed in jurisdiction of the risk)
-allowed due to State BOI vs Todd Shipyards Co)
State BOI v Todd Shipyards Co (1962)
-preserved the right of the buyer to avoid tax if only contact with state is the fact that the risk is located there
direct placement is allowed if
-doesn’t access non-admitted market via broker/agent
-no activity by insurer in the state in the making of the contract
-transaction only takes place outside the state of the insured
National Association of Registered Agents & Brokers (NARAB)
-established in 2015
-national clearinghouse for “one stop licensing system” for agents/brokers not in their home state
-governed by board of state insurance commissioners
-applies licensing, CE, and producer standards on a multi-state basis, while preserving the state regulation of insurance
- must meet strict standards & ethical reqs
Alien Insurer requirements
o Must be included on NAIC Quarterly Listing of Alien Insurers (IID List)
o Must establish trust fund for the benefit of US PH
o Companies must also provide:
Copies of articles of incorporation and by laws
Biographies of all D&O
Business plan describing insurer’s global business followed by description of proposed US business
Domestic Surplus Lines Companies Criteria
-usually surplus can’t write in dom state
PH Surplus > $15M
Eligible surplus lines insurer in at least 1 other domicile
Insurer’s BOD passed resolution seeking to become DSLI in state
Commissioner approved the company and issued certificate of authority
