State NRRA Compliance Review
Legislation: SB 578 - NOTE: SB 578 is effective July 1, 2011.
Compact, NIMA, other: SLIMPACT, however if does not come into operation:
Home State Definition: Indiana is the Home State if the insured maintains its principal place of business or, in the case of an individual, the individual’s principal residence here. Indiana’s requirements regarding the placement of such business will apply if Indiana is considered the Home State. However, if 100% of the insured risk is located outside of Indiana, then the Home State is the State to which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated. With respect to an affiliated group, if more than one (1) insured from the affiliated group is a named insured on a single nonadmitted insurance contract, the home state is that of the member of the affiliated group that has the largest percentage of premium attributed to the member under the insurance contract.
SB 578 goes further to define "Principal Place of Business" as where the insured maintains its headquarters and where the insured’s high-level officers direct, control and coordinate the business activities of the insured. This definition is not a standard NRRA definition.
Exempt Commercial Purchaser: Surplus lines brokers seeking to procure or place nonadmitted insurance on behalf of an “exempt commercial purchaser” are not required to perform a diligent search if: 1) the broker has disclosed to the exempt commercial purchaser that insurance may or may not be available from the admitted market that may provide greater protection with more regulatory oversight; and 2) the exempt commercial purchaser has subsequently requested in writing for the broker to procure or place such insurance from a nonadmitted insurer. “Exempt Commercial Purchaser” and “Qualified Risk Manager” are not defined in SB 578, but standard NRRA definitions apply.
Eligibility: SB 578 allows the compact to adopt uniform eligibility requirements. Until that time, under the terms of the NRRA, brokers are permitted to place nonadmitted insurance with U.S. domestic insurers that are eligible in Indiana provided they are authorized to write such business in their State of Domicile and maintain minimum capital and surplus of $15 million or the minimum capital and surplus amount required in Indiana, whichever is greater. NRRA allows brokers to place business with non-U.S. carriers that are included on the NAIC’s Quarterly Listing of Alien Insurers.
Tax Reporting Status: No change until/if SLIMPACT (or other agreement) operational. Current surplus lines tax provision:
Tax Processing Fee: The commission shall collect a fee, payable by the insured directly or through a surplus lines licensee, on each transaction processed through the compact clearinghouse, to cover the cost of the operations and activities of the commission and the commission's staff.
Policyholder Notice: No change, however, the commission may adopt mandatory rules establishing foreign insurer eligibility requirements and a concise and objective policyholder notice.
Department Contact: Indiana Department of Insurance - 311 West Washington Street, Suite 300, Indianapolis, IN, 46204 (317) 232-2385