Industry Issues | Surplus Lines Reform

Surplus Lines State Legislative Update - Nebraska

Legislative Update - New Hampshire

February 3, 2019

Nebraska LB 469 has been introduced and would allow the director of insurance to provide written authority in the form of a certificate of authority to operate as a domestic surplus lines insurer in the State of Nebraska to a nonadmitted insurer domiciled in Nebraska, provided certain specified conditions are met.

In his Introducer's Statement of Intent, Senator Brett Lindstrom stated, At least sixteen other states have passed similar legislation. Passage of LB 469 will allow Nebraska to better compete in the attraction of surplus lines insurers to domestic[ate] in Nebraska and will provide Nebraskans who need surplus lines insurance an option to buy such insurance from an Nebraskan insurer regulated by the Nebraska Department of Insurance.

Pursuant to this bill, a domestic surplus lines insurer means a nonadmitted insurer domiciled in this state that has a certificate of authority to operate as a domestic surplus lines insurer in the State of Nebraska issued as provided in section 3 of this act. All financial and solvency requirements imposed by Chapter 44 upon a domestic admitted insurer would apply to a domestic surplus lines insurer unless domestic surplus lines insurers are otherwise specifically exempted.

In Section 8, LB 469 also amends the Property and Casualty Rate and Form Act to eliminate the mandate for rules related to qualifying commercial policyholders and the transition from subjective to objective rating systems.

Sec. 8. Section 44-7514, Reissue Revised Statutes of Nebraska, is amended to read:

 (1) The director shall adopt and promulgate rules and regulations to provide that the policyform approval requirements set forth in section 44-7513 shall not apply to policies writtenfor individual  commercial  risks  of  a  qualifying  multistate  commercial policyholder. For the purposes ofthis section, a qualifying multistate commercial  policyholder  is  an  entity  that  meets  the  following qualifications: that are headquartered in another state or jurisdiction. To determine whether acommercial risk is headquartered in this state,  such rules and regulations shall primarily considerwhere the largest number of the officers and senior management are physically located.

(a) The policyholder is commercial in nature;

(b) If the policyholder is comprised of multiple corporations or other entities, there is common ormajority ownership of each of the members by the same parent entity. Qualifying multistatecommercial policyholder does not include franchise arrangements or other groups where individual members of the group are under different ownership; and

(c) The office with the largest number of the officers and senior management of the policyholder islocated outside of Nebraska. If this criteria is not meaningful or is ambiguous for a policyholder, thenthe total premiums for lines of insurance subject to the Property and Casualty Insurance Rateand Form Act that are attributable to another jurisdiction must exceed those premiums attributable to Nebraska.

LB 469 is scheduled for a hearing before the Banking, Commerce and Insurance Committee on February 5. Email any member comment, question or concern to david.kodama@apci.org.


Nebraska Withdraws from Nonadmitted Insurance Multistate Agreement

The Nebraska Department of Insurance has withdrawn from the Nonadmitted Insurance Multistate Agreement, effective March 5, 2012. According to a regulatory notice dated January 5, 2012, the DOI stated that "the time frame offered to surplus lines brokers and insureds independently procuring nonadmitted insurance to report all such business transacted during a designated quarter directly conflicted with Nebraska statutory provisions."

Further implications on NIMA are unknown. As reported previously, the other participating states are dealing with the burden of the delayed establishment of the NIMA tax clearinghouse. Other published notices related to that delay are provided below:

Nevada, December 22, 2011
Florida FSLSO Bulletin 2012-01, January 4, 2012
Louisiana Bulletin 2011-04, December 29, 2011
Mississippi Bulletin 2011-11, December 22, 2011
Wyoming Memorandum and Information, December 22, 2011


Nebraska Introduces Legislative Bill 70, Surplus Lines Insurance Act

Sen. Rich Pahls has introduced Legislative Bill 70, an act relating to the Surplus Lines Insurance Act to amend related statutes of Nebraska; to define and redefine terms; to provide an exemption for commercial purchasers; to change provisions relating to records, annual statements, tax payments, solvency requirements, and nonadmitted insurers; to harmonize provisions; to provide an operative date; to repeal the original sections.

Sen. Pahls is the current Chair of the Banking, Commerce and Insurance Committee. He introduced LB70 on behalf of the Department of Insurance. At a January 18 Committee hearing, newly appointed Director Bruce Ramge stated that "this bill works to preserve as much of the state's surplus lines tax base" in response to the new taxing authority rules mandated by the NRRA.

The bill does not include a provision seen in many other DOI legislative proposals to delegate authority to the director to participate in a multistate agreement for purposes of tax allocation among states on multistate risks. Ramge however stated in his hearing testimony that it is "the department's preferred option that it be authorized to sign the Nonadmitted Insurance Multi-State Agreement (NIMA) developed by the NAIC in response to the federal requirements." In his opinion, the impending July 21, 2011 deadline does not provide enough time to attend to the additional issues addressed by SLIMPACT, such as eligibility standards and uniform policyholder notices.

Additionally, Ramge recommended that the legislature repeal the fire tax applicable to surplus lines policies. This would have the end-goal of eliminating a cumbersome fire tax that was administered in a very complicated formula but generated "minimal" tax revenue.