State NRRA Compliance Review
NEBRASKA
Legislation: L 70 Effective July 21, 2011
Bulletins/Regulations/Rules: June 17, 2011 Implementation of Federal NRRA in Nebraska
October 28, 2011 - Surplus Lines Requirements
October 28, 2011 - Surplus Lines Insurance Act Revisions
Nebraska Supplemental Surplus Lines Reporting Form
January 5, 2012 - Nebraska Withdraws from NIMA
Compact, NIMA, other: NOTE: This state has withdrawn from NIMA.
NOTE: New material in bold, deleted material in strikethru
Sec. 5. Section 44-5506, Reissue Revised Statutes of Nebraska, is amended to read:
44-5506 Every surplus lines licensee transacting business under the Surplus Lines Insurance Act shall annually, on or before February 15 in each
year, make and file with the department a verified statement upon a form prescribed by the department which shall exhibit the true amount of all such
business transacted during the year ending on December 31 next preceding the filing thereof. The licensee shall, at the time such statement is filed,
pay to the department a tax of three percent on the total gross amount of direct writing premiums received by the licensee on such business and the fire
insurance tax prescribed in section 81-523. In no event shall such taxes be determined on a retaliatory basis pursuant to section 44-150. For purposes
of this section, direct writing and premiums shall be as defined in section 77-907.
(1) For purposes of carrying out the Nonadmitted and Reinsurance
Reform Act of 2010, which is Subtitle B of the Dodd-Frank Wall Street
Reform and Consumer Protection Act, Public Law 111-203, as such act existed on January 1, 2011, the director may enter into the Nonadmitted Insurance Multi-State Agreement in order to facilitate the collection, allocation, and disbursement of premium taxes attributable to the placement of nonadmitted insurance, provide for uniform methods of allocation and reporting among nonadmitted insurance risk classifications, and share information among states relating to nonadmitted insurance premium taxes.
(2) The director may participate in the clearinghouse established through the NonadmittedInsuranceMulti-StateAgreement for the purpose of collecting and disbursing to reciprocal states any funds collected applicable to properties, risks, or exposures located or to be performed outside of this state. To the extent that other states where portions of the properties, risks, or exposures reside have failed to enter into a compact or reciprocal
allocation procedure with the State of Nebraska, the net premium tax shall be retained by the State of Nebraska. If the director chooses to participate in the clearinghouse for the purpose authorized by this subsection, the director may also participate in such clearinghouse for purposes of surplus lines policies applicable to risks located solely within this state…
Home State Definition: Nebraska is the insured's Home State if the insured maintains its principal place of business here or, in the case of an individual, if the individual's principal residence is here. If Nebraska is considered the insured's Home State, only
Nebraska's requirements regarding the placement of such business will apply. If 100% of the insured risk is located outside of Nebraska, then the insured's Home State is the state to which the greatest percentage of the insured's taxable premium for that insurance contract is allocated. If more than one insured from an affiliate group are named insureds on a single nonadmitted insurance placement,
Nebraska will be considered the Home State for that placement if Nebraska is the Home State of the member of the affiliated group that has the largest percentage of premium attributed to it under such insurance contract. For an affiliated group of insured entities, the “Home
State” is the principal place of business of the group member to which the largest percentage of premium is allocated.
The term affiliated group means any group of entities that are affiliated. An affiliate means (a) with respect to an insured, any entity that controls, is controlled by, or is under common control with the insured. An entity has control over another entity if the entity: (i) directly or indirectly or acting through one or more other person owns, controls or has the power to vote twenty –five percent or more of any class of voting securities of the other entity; or (ii) controls in any manner the election of a majority of the directors of trustees of the other entity.
The following definition is not in the NRRA but is in L 70: When determining the home state of the insured, the principal place of business is the state in which the insured maintains its headquarters and where the insured’s high-level officers direct, control, and coordinate the business activities of the insured.
Exempt Commercial Purchaser: On or after July 21, 2011, a surplus lines licensee seeking to procure or place nonadmitted insurance on behalf of an "exempt commercial purchaser" is not required to perform a diligent search if: 1) the licensee 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 licensee to procure or place such insurance from a
nonadmitted insurer. "Exempt commercial purchaser" is defined in Neb.Rev.Stat. §44-5502(5). “Qualified risk manager” is not defined in L 70. The NRRA definition applies.
NOTE: Previous section 44-5502 was repealed:
(5) Industrial insured means an insured that:
(a) Procures the insurance of any risk or risks other than sickness and accident insurance and life and annuity contracts, has fifty full-time employees, and has aggregate annual premiums for insurance on all risks other than workers’ compensation insurance that total at least one hundred thousand dollars; and
(b) Uses, to procure such insurance, the services of a salaried full-time employee who counsels or advises his or her employer regarding the
insurance interests of the employer or the employer’s subsidiaries or business affiliates, if the employee does not sell or solicit insurance or receive a commission.
Eligibility: The NRRA restricts the eligibility requirements a state may impose on nonadmitted
insurers. See 15 U.S.C. §8204. For nonadmitted insurers domiciled in a U.S. jurisdiction, a licensee is permitted to place nonadmitted insurance with such insurers 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 Nebraska, whichever is greater. For nonadmitted insurers domiciled outside the U.S., a licensee may place business with such insurers provided the insurer is listed on the Quarterly Listing of Alien Insurers maintained by the International
Insurers Department of the NAIC.
Tax Reporting Status: See also bulletin above. NOTE: New material in bold, deleted material in strikethru
Sec. 5. Section 44-5506, Reissue Revised Statutes of Nebraska, is amended to read:
44-5506…(3) Every surplus lines licensee transacting business under the
Surplus Lines Insurance Act shall, on or before February 15 for the quarter
ending the preceding December 31, May 15 for the quarter ending the preceding March 31, August 15 for the quarter ending the preceding June 30, and November 15 for the quarter ending the preceding September 30 of each year, make and file with the department a verified statement upon a form prescribed by the department or a designee of the director which shall exhibit the true amount of all such business transacted during that period.
(4)(a) Every surplus lines licensee transacting business under the Surplus Lines Insurance Act shall collect and pay to the director or the director’s designee, at the time the statement required under subsection (3) of this section is filed, a sum based on the total gross premiums charged, less any return premiums, for surplus lines insurance provided by the licensee pursuant to the license. In no event shall such taxes be determined on a
retaliatory basis pursuant to section 44-150.
(b) When the insurance covers properties, risks, or exposures located or to be performed solely in this state on behalf of an insured whose home state is the State of Nebraska, the sum payable shall be computed based on an amount equal to three percent of the premiums to be remitted to the State Treasurer in accordance with section 77-912.
(c) When the insurance covers properties, risks, or exposures located or to be performed both in and out of this state, the sum payable shall be computed based on:
(i) For purposes of the portion that is attributable to instate risks, an amount and rate equal to that set forth in subdivision (4)(b) of this section; plus
(ii) For purposes of the portion that is attributable to out-of-state risks, an amount equal to the portion of the premiums allocated to each of the other states or territories and at a rate as established by each state or territory as being applicable to the properties, risks, or exposures located or performed outside of this state. The tax on any portion of the premium unearned at termination of insurance having been credited by the state to the licensee shall be returned to the policyholder directly by the surplus lines licensee or through the producing broker, if any. The surplus lines
licensee is prohibited from rebating, for any reason, any portion of the tax.
(5) The director may utilize or adopt the allocation schedule included in the Nonadmitted Insurance Multi-State Agreement for the purpose of allocating risk and computing the tax due on the portion of premium attributable to each risk classification and to each state in which properties, risks, or exposures are located.
Tax Processing Fee: Silent
Policyholder Notice: No substantive change, but addressed in L 70:
44-5510 (1) If an applicant for insurance is unable to procure such insurance as he or she deems reasonably necessary to insure a risk or exposure from an admitted insurer, such insurance may be procured from a nonadmitted insurer upon the following terms and conditions:
(1) (a) The insurance shall be procured from a surplus lines licensee;
(2) (b) The insurance procured shall not include any insurance described in subdivisions (1) through (4) of section 44-201;
(3) (c) Not later than thirty days after the effective date of such insurance, the insured shall provide, in writing, his or her permission for such insurance to be written in a nonadmitted insurer and his or her acknowledgment that, in the event of the insolvency of such insurer, the policy will not be covered by the Nebraska Property and Liability Insurance Guaranty Association;
Department Contact: Nebraska Department of Insurance - 941 O Street, Suite 400 - Lincoln, NE 68508 - (402) 471-2201
